Tax Type
Local Taxes
Description
Catereers; County Food and Beverage Tax
Topic
Basis of Tax
Exemptions
Local Power to Tax
Local Taxes Discussion
Date Issued
06-23-1989
[Opinion - Virginia Attorney General: 1989 at 318]
REQUEST BY: Mr. Bernard J. Natkin County Attorney for Rockbridge County P.O. Box 4205 Lexington, Virginia 24450
OPINION BY: Mary Sue Terry, Attorney General
OPINION:
You ask whether caterers are subject to a county food and beverage tax authorized by § 58.1-3833 of the Code of Virginia, which restricts this tax to food and beverages consumed on the "premises" where they are sold.
I. Applicable Statute
Section 58.1-3833(A) authorizes a county to levy a tax on food and beverages "sold for human consumption and consumed on such premises not to exceed four percent of the amount charged for such food and beverages."
II. Food and Beverage Tax Is Applicable to Caterers Who Control Premises Where Food and Beverages Are Sold and Consumed
The determination whether a county food and beverage tax applies to caterers requires an interpretation of the term "premises," as it is used in § 58.1-3833. Although neither the Supreme Court of Virginia nor prior Opinions of this Office have construed the term, the Supreme Court of Ohio has defined "premises," as it was used in an Ohio constitutional provision concerning excise taxation, as "the limited portion of a building, structure, enclosure or other area, where sales or purchases of foods for human consumption are made, which is in the actual possession or under the actual control of the vendor." See Castleberry v. Evatt, 67 N.E.2d 861 (Ohio 1946).
Castleberry involved an interpretation of Art. XII, § 12 of the Constitution of Ohio, which provided that "'no excise tax shall be levied or collected upon the sale or purchase of food for human consumption off the premises where sold.'" 67 N.E.2d at 862.1 The Court held that the purpose of this constitutional language was "to tax only sales of food which is sold and served in restaurants or other similar places under the control of the vendor." Id. at 863. The term "premises" refers to a distinct place of business open to the public and controlled by the vendor. People v. Rizzo, 47 A.D.2d 468, 367 N.Y.S.2d 523, 526 (1975) (construing statute permitting tax commission to examine books of person in possession or control of any "premises" where cigarettes are placed, stored, sold or offered for sale). See also Automatic Merchandising Council of N.J.v. Glaser, 127 N.J. Super. 413, 317 A.2d 734 (1974) (distinguishing statutory language referring to "premises where sold" from language referring to "for consumption off the premises"; the former language was held to refer to the sale of food and drink in restaurants, taverns or other establishments; the latter was held to refer to catering operations).
Based on the above, it is my opinion that caterers are subject to a county tax on the sale of food and beverages pursuant to § 58.1-3833 only when the caterer sells food for human consumption in a distinct place of business that is open to the public and over which the caterer exercises control.2
1 The primary question decided in Castleberry was whether the sale of milk through a vending machine located in an area in which caterer had no control was sold for human consumption "off the premises where sold" and, as a result, nontaxable. The Ohio Supreme Court held that the sale of milk through a vending machine was consumed "off premises" because the vendor had no control over the premises where the vending machine was located. 67 N.E.2d at 863.
2 This conclusion is supported by a comparison of the "sold and consumed on the premises" limitation of the meals tax authorized by § 58.1-3833 with the meals tax provision in § 58.1-3840, which applies to certain cities and contains no similar limitation.
Attorney General's Opinion