Revenue Administrative Bulletin 1988-42

Approved: June 10, 1988

SALES TAX - CATERED MEALS

RAB-88-42. This Bulletin clarifies the application of sales tax with respect to catered meals purchased by exempt entities.

All meals sold by caterers are subject to sales tax except catered meals sold to qualified exempt entities as "not for resale."

"Not for resale" means that the catered meals are paid from funds of the exempt entity with no reimbursement from individuals attending the event.

Example: The United Way puts on a luncheon for people who participated in the campaign. The catered luncheon is paid from United Way's funds with no reimbursement from individuals attending the luncheon.

An example of a taxable catered meal would be an exempt entity conducting a fund raising dinner by selling tickets for a fixed amount which includes the cost of the meal.

Example: A meal is purchased from a caterer for resale by an exempt entity in the course of raising funds. The individuals attending the event pay for the meal. The excess monies paid for the ticket are profit to the exempt entity.

An entity which is licensed under the Sales Tax Act to make sales at retail may validly claim resale when purchasing catered meals. The exempt entity, as a licensed retailer, is required to file a sales tax return and remit sales tax on the gross proceeds attributable to the price of the meal. When an exempt entity is purchasing food from caterers not for resale, the exemption certificate must indicate there will be no reimbursement to the exempt entity to defray the cost of catered meals.

The Department of Treasury requires a seller, in this instance the caterer, to retain the exemption certificates to substantiate nontaxable sales.

The following sample exemption statement is prescribed for use by exempt entities when claiming exemption on meals purchased "not for resale" from catering firms.