Tax Type
Retail Sales and Use Tax
Description
Catering; Party favors and other paper products
Topic
Exemptions
Date Issued
03-05-1993
March 5, 1993
Re: Request for Ruling: Retail Sales and Use Tax
Dear**************
This will reply to your letter of November 3, 1992 in which you seek information regarding the application of the sales and use tax to certain transactions within the hospitality industry.
FACTS
The Taxpayer operates a resort and conference center and provides a variety of activities which generally include the provision of food services. The Taxpayer requests a ruling regarding the proper application of the tax to its purchases and/or rental of supplies, flowers, balloons, photographers' services, costumes, party favors and like items used in the rendition of its services.
RULING
Virginia Regulation (VR) 630-10-64(F) provides that "items purchased by a restaurant for its own used in preparing and serving meals, such as kitchen equipment...tablecloths, and similar items are taxable and may not be purchased under a Certificate of Exemption." The same is equally true of a catering business which purchases or leases these items for its own use in preparing and serving meals.
Based on the above regulation, the Taxpayer is advised to pay the tax to its vendors on its purchases and rentals of the following:
-
- _ supplies used to prepare and/or serve food;
_ flowers and balloons as items incorporated into a floral arrangement or otherwise provided in conjunction with the provision of food and/lodging services; and
_ costumes provided as part of the catered event.
- _ supplies used to prepare and/or serve food;
Photographers' services constitute a nontaxable service and as such the Taxpayer is not subject to the tax at the time of purchase.
The cited regulation also discusses paper products furnished with meals and exempts certain items which are disposed of after use by only one customer. As such, party favors and like items may be purchased under the resale exemption. The resale exemption is also applicable in instances where the Taxpayer purchases or rents tangible personal property and subsequently sells or rents these items to its customers without the provision of food services or lodging.
I have enclosed PD 89-167 (5/22/89) and Virginia Tax Bulletin 92-10 to further illustrate the application of the tax regarding tangible personal property used in the rendition of catering services.
I hope the foregoing has responded to your inquiry. If you have additional questions please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/6528J
Rulings of the Tax Commissioner