Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2014
 

Sales and Use Tax Annotations


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T

550.0000 TAXABLE SALES OF FOOD PRODUCTS—Regulation 1603

Annotation 550.1365

(g) EMPLOYEES', TEACHERS' AND STUDENTS' MEALS

550.1365 Sale of Meals to Executives. An employer required its executives to eat in the company dining room when hosting business guests and to pay the bill on their personal credit card. To obtain reimbursement for the meals, the executives would include the charges for meals on their weekly expense report.

These transactions were sales from the employer to the executives. When the executives paid by credit card, they incurred a legal responsibility to repay the credit card company regardless of whether or not they were reimbursed by the employer. Although the employer could have structured and accounted for these transactions to be non-taxable, the employer chose to sell the meals to the executives in the same manner as it would sell to anyone else, and then reimburse the executive. Having made this business decision, the employer is bound by the form it has chosen. Therefore, the sales of meals to the executives remain subject to tax and do not represent nontaxable intra-company sales. 4/3/92.