Tax Type
Retail Sales and Use Tax
Description
Catering service; Flowers and equipment rentals
Topic
Property Subject to Tax
Taxability of Persons and Transactions
Date Issued
03-07-1994
March 7, 1994
Re: §58.1-1821 Application: Retail Sales and Use
Dear**************
This will reply to your letter of June 28, 1993 in which you seek correction of sales and use tax assessed to ******** (the Taxpayer), as a result of an audit for the period October, 1990 through March, 1993.
FACTS
The Taxpayer operates as a restaurant and catering service and as a result of the department's audit was assessed tax on purchases of flowers and equipment rentals provided in connection with its catering service. The Taxpayer protests the assessment and contends that payment of the tax to its vendors prior to applying the tax to the charge to its customers constitutes double taxation.
DETERMINATION
Virginia Regulation (VR) 630-10-64(F) provides that "items purchased by a restaurant for its own use 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 items for its own use in the provision of its catering service. The application of the tax to a caterer's purchase or rental of tangible personal property for use in providing food services and the subsequent taxation of the caterer's total charge to its customers for the provision of such services does not constitute double taxation in that these are two separate and distinct transactions for purposes of the application of the sales and use tax.
The application of the tax to the transactions under discussion is a matter of established policy and as such I have enclosed P.D. 93--33 (2/24/93), P.D. 89-167 (5/22/89), P.D. 88-147 (6/20/88) and Tax Bulletin 92-10, all of which further discuss this issue.
Based on the foregoing, I find no basis for correction of the assessment. The Taxpayer will receive an updated "Notice of Assessment" reflecting interest accrued to date which should be paid within 30 days to avoid the accrual of additional interest charges and collection activity.
Sincerely,
Danny M. Payne
Acting Tax Commissioner
OTP/7127J
Rulings of the Tax Commissioner