Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013
 

Sales and Use Tax Annotations


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T

550.0000 TAXABLE SALES OF FOOD PRODUCTS—Regulation 1603

Annotation 550.1370

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

550.1370 Sales of Meals and Food Products at Schools and Colleges. An independent food service contractor operates food service facilities at schools and colleges. Following is a description of the sales transactions which occur at these school facilities:

(1) Cash sales. Food and beverage sales are made directly to students and faculty members. The company retains all receipts.

(2) Charge sales. Students purchase meal tickets from the school or college as part of their room and board plan. Meal tickets are redeemed by the company at the school cafeteria and the school is billed directly by the company for each ticket redeemed at a predetermined price per meal.

(3) Special event sales. The company provides catering services at school functions and events and bills the school directly. These services are also made available to student organizations.

(4) Vending machine sales. The company sells food, beverages, snacks, and cigarettes through vending machines located on school premises.

Tax applies to the gross receipts from the company's retail sale of meals, food, beverages, and other tangible personal property described under transactions (1) though (4), unless such gross receipts are otherwise exempt from taxation.

Students receiving board from a school or college are considered to be purchasing meals in the school cafeteria or dining facility from the school rather than from the company provided

(a) the students contract only with the school or college for the board,

(b) all payments for meals and food products are made directly to the school or colleges, and

(c) the school or college is solely responsible for providing board to the students.

To the extent that the sales of meals and food products under transaction (2) represent board meals, the company's gross receipts received from the school may be regarded as receipts from sales for resale and the receipts received by the school for the students' board meals are exempt from tax. Effective August 1, 1983, assuming that the company is the operator of the vending machines located on the school premises, tax applies to the gross receipts from the company's sale of hot and cold food product and other tangible personal property through vending machines regardless of the price charged for such items. 1/23/84. (Am. 2004–2).

(Note: Subsequent statutory change re vending machine sales.)

(Note: Subdivision (j)(2) of Regulation 1603 was amended to add new subdivision (D), effective June 13, 2002, which provides that sales made by caterers of meals or food products for human consumption to students of a school are not subject to tax under certain conditions.)