Tax Type
Retail Sales and Use Tax
Description
Catered meals; Nonprofit university
Topic
Taxability of Persons and Transactions
Date Issued
11-07-1984
November 7, 1984
Re: Ruling Request: Sales and Use Tax
Dear *********
This will reply to your letter of July 21, 1984 concerning the application of sales and use tax to meals and catering services.
FACTS
The continuing education center and the student center of ***** (the "University"), a nonprofit state university, operate food service facilities and frequently sell meals and catering services to University departments. Occasionally, departments schedule meetings at the continuing education center, which provides lunch or refreshments, or take prospective candidates to the center for lunch or dinner. On other occasions, the student center provides refreshments to departments for receptions or meetings. The continuing education center or student center then bills the department for the services provided, with the bill usually being sent to the individual who arranged for the event.
The University presently is assessed and pays, from its state budget, sales tax on these charges.
DETERMINATION
Sales tax is imposed upon a person who sells at retail tangible personal property within Virginia. Taxation is the rule and exemptions are strictly construed (Virginia Retail Sales and Use Tax Regs. 1-35.2). Meals are made subject to the sales tax as "the furnishing, preparing, or serving for a consideration of any tangible personal property consumed on the premises of the person furnishing, preparing, or serving such tangible personal property" (§ 58-441.2(b) of the Code of Virginia).
Accordingly, sales of meals and catering services by the University centers are subject to sales tax unless an exemption exists. Virginia Retail Sales and Use Tax Regs. 1-45(b) exempts sales of school lunches served to pupils and employees of schools and subsidized by any level of government, but provides that all other sales by the state and its political subdivisions are taxable (unless otherwise exempt).(See also Virginia Retail Sales and Use Tax Regs. 1-96.) The University cannot avail itself of the "School lunch" exemption, which applies to primary and secondary schools. Moreover, Virginia Regs. 1-96(a) provides that a nonprofit educational institution must collect sales tax on retail sales of meals to students or others if the price of the meals is not included in room, board or tuition charges or fees.
On the basis of the foregoing discussion, the imposition of sales tax on meals and catering services furnished as set forth above is proper and should continue.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner