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WAC 119 Sales of meals.    
SOURCE DOCUMENT DETER. NO DATE OF ISSUE DESCRIPTION
       
WAC: 458-20-119   03/19/12 WAC 458-20-119 Sales by caterers and food service contractors; and
WAC 458-20-124 Restaurants, cocktail bars, taverns and similar businesses

The Department amended WAC 458-20-119 (Rule 119) and 124 (Rule 124) to recognize chapter 55, Laws of 2011 (SB 5501), which provides a B&O, retail sales, and use tax exemption for meals provided without specific charge to employees of restaurants. Amended Rule 124 incorporates this legislation, and amended Rule 119 refers readers to Rule 124 for guidance on this subject.

Also removed from Rule 119 was other tax-reporting information that is addressed in other documents. For example, Rule 119 provided tax reporting information regarding sales of meals in school, college, and university dining rooms and by hospitals, nursing homes, and other similar institutions. Tax reporting guidance for these sales can be found in WAC 458-20-167 Educational institutions, school district, student organizations, and private schools and WAC 458-20-168 Hospitals, nursing homes, boarding homes, adult family homes and similar health care facilities. The Department has changed the title for Rule 119 from Sales of meals to Sales by caterers and food service contractors to more accurately reflect the information retained in the rule. 
  458-20-119   02/01/10 These rules all refer to resale certificates. Proposed action is to add standard language to recognize reseller permits for sales made on or after January 1, 2010.
  458-20-119   11/08/1993 Sales of meals.Effective 12/9/93.Updated 6/19/99.
         
       
RCW: 82.04.050   1995 "Sale at retail," "retail sale."
  82.04.070   1961 "Gross proceeds of sales."
  82.04.190   1995 Consumer.
  82.04.250   1993 Tax on retailers.
  82.08.010(1)   1985 Selling price"
  82.08.020   1992 Tax imposed--Retail sales--Retail car rental.
         
ETA 3168.2011   08/19/2011 Meal Assembly Kitchens This ETA provides guidance regarding the B&O and retail sales tax reporting responsibilities of businesses that provide menu options, purchase ingredients, and prepare the ingredients for assembly.  It addresses “meal assembly kitchens” that allow customers to assemble their own entrées, and those that assemble entrées selected by the customer.  
  3082.2009   2/2/09 Donations to meal providers
         
       
INDUSTRY GUIDES:   06/01/2010 Restaurants & Retailers of Prepared Food
        Hospital Guide
      2004 Restaurant Guide
         
         
SPECIAL NOTICES:      
Subject Title Reference:      
Spirits Tax 08/30/2012 Claims of Constitutional Impairment of Contract made under Initiative 1183
Food & Food Ingredients 10/31/2012 Taxability of Soft Drinks
Spirits Tax     03/01/2012 Questions and Answers on Spirits Tax for Retailers
Food & Food Ingredients     07/25/2011 King County Food and Beverage Tax Expires
King County     07/25/2011 King County Food and Beverage Tax Expires
Employee Meals   05/24/2011 Restaurants Providing Complimentary Meals to Employees
Carbonated Beverages     11/17/2010 Carbonated Beverage Tax Repealed
Carbonated Beverages     06/11/2010 Bottlers and Distributors Subject to Temporary Carbonated Beverage Tax
Food & Food Ingredients     07/02/2010 Determining Whether Sales Tax Applies to Sealed Beverages
Hotel /Motel     05/22/2008 Tax Exemptions for Temporary Medical Housing Provided by Health or Social Welfare Organizations
Groceries / Florists   06/05/2008 Qualifying Florists Exempt from Destination Sales Tax Sourcing
Food & Food Ingredients     05/29/2007 "Prepared Food" Tax Changes
Food & Food Ingredients/ Personal Chefs     01/31/2006 Personal Chefs
         
       
DIRECTIVE:      
         
       
RPM: None      
         
       
WTD: 2 WTD 361 87-71   RETAIL SALES TAX -- GRATUITIES.Gratuities paid under circumstances which are not clearly voluntary must be included in the selling price.Charges for gratuities are not voluntary, even though negotiated, when the amount is agreed upon and the contract document states they "will be added."
  2 WTD 385 87-75   EMPLOYEE MEALS -- RETAIL SALES TAX.Retail sales tax is due, based on the cost of food supplied by an employer to its employees, where no specific charge is made for the food.A 1% charge will not be considered a "specific charge" under Rule 119.
  2 WTD 421 87-103   B&O TAX -- RETAIL SALES TAX -- FOOD SERVICES -- EXECUTIVE DINING ROOM.Receipts from management fees and charges for food, labor and related supplies consumed by a food service contractor in providing a food service for a company's executive dining room are subject to retailing B&O and retail sales tax.
  2 WTD 429 87-101   RETAIL SALES TAX -- EMPLOYEE MEALS.An employer who provides meals at no charge to its employees, and who fails to collect retail sales tax, is liable for the tax, based on the cost of the food.
  3 WTD 137 87-158   USE TAX -- PARTNERSHIP -- OWNER/MANAGER MEALS -- BUSINESS PURPOSE -- MEASURE OF TAX -- COST BASIS.Meals provided by restaurant operated as a partnership to owner/manager found subject to use tax where cost of providing meals considered a business expense by the taxpayer. Measure of tax is the cost of the food.
  4 WTD 75 87-297   B&O TAX -- RETAIL SALES TAX -- BIBLE COLLEGE -- RENTAL OF FACILITIES -- CONFERENCES -- LODGING -- MEALS.Income from the rental of conference rooms, lodging, and athletic facilities by Bible college is Service B&O taxable.Cafeteria food sales are subject to Retailing B&O and sales tax when made to non-students.
  5 WTD 41 87-75A   RETAIL SALES TAX -- EMPLOYEE MEALS.Retail sales tax is due upon the selling price of employee meals supplied by an employer measured by the selling price rather than by a minimal charge which does not represent the value of the consideration received.Under Rule 119 the cost of the food in employees' meals is the appropriate tax measure.
  6 WTD 393 88-363   B&O TAX -- SALES TAX -- SERVICE -- RETAILING -- AGENT -- SALES OF MEALS -- SALES BY TAXPAYER IN HOSPITAL CAFETERIA.Sales of meals by taxpayer in a hospital cafeteria are subject to retailing B&O and retail sales tax.Where the taxpayer is running the hospital cafeteria and is responsible for collecting and remitting the retail sales tax, it is making sales of meals and the gross receipts of the cafeteria are subject to retailing B&O tax. However, where taxpayer is acting as agent for hospital and contractually agrees that it is not the seller of the meals, such income is subject to the service and other category of the B&O tax.
  7 WTD 317 89-241   RETAIL SALES -- CATERING -- PREPARATION OF MEALS FOR OTHERS -- FOOD HANDLER'S PERMITS.The preparation of food for others is a retail sale and subject to the retailing category of the business and occupation tax and the retail sales tax. Prior to June 1, 1988, the rule stated that caterers were subject to the retail sales tax; after the statutory and rule change, persons required to have a food handler's permit under RCW 69.06.010 are making retail sales.RCW 69.06.010 requires every person handling unwrapped or unpackaged food to have a food and beverage worker's permit.The fact that a particular county might not require one does not change the rule.
  7 WTD 317 89-241   ENGAGING IN BUSINESS -- EMPLOYEE --DISTINCTION.A person who is in business of preparing food for others as a caterer is engaging in business and not acting as an employee when she prepares food on a regular basis for a specific couple.The fact that the work is paid at a fixed rate and that taxpayer works for the couple on a regular basis does not alter the result.
  8 WTD 11 89-304   B&O TAX -- RETAIL SALES TAX -- SALE OF MEALS BY A CONDOMINIUM ASSOCIATION TO UNIT OWNERS.Where a condominium association includes in its offer of services to owners a stated number of meals for an established price, a retail sale occurs.
  8 WTD 175 89-447   RETAIL SALES TAX -- HOSPITALS -- MEALS FOR PATIENTS PURCHASED FROM CATERER -- PARENT COMPANY'S CHOICE OF ENTITIES.Where hospital chooses to contract with another corporation to prepare and provide meals for its patients, the caterer is engaging in a retail activity and its sales of meals to the hospital are subject to retail sales tax.
  9 WTD 1 88-378   USE TAX -- MEASURE OF TAX -- CONSUMER -- PROMOTIONAL MEALS.A hotel which gives away meals to promote its business is the consumer of such meals; use tax applies on the value of the meals which is the retail selling price.
  10 WTD 41 90-252   FURNISHING MEALS -- RETAIL SALES TAX.Residential care facility which provides food service to residents falls within Rule 119 exemption for sanitariums, rest homes and "similar institutions," and therefore, is not engaged in the business of making retail sales of meals.THIS DETERMINATION HAS BEEN OVERRULED OR MODIFIED IN WHOLE OR PART BY DET.NO. 04-0022E, 23 WTD 198 (2004) AND DET.NO. 04-0023E, 23 WTD 206 (2004).
  10 WTD 296 89-453   RETAIL SALES TAX -- NURSING HOMES -- MEALS FOR PATIENTS PURCHASED FROM CATERER.Where nursing home chooses to purchase prepared meals for its patients, the caterer is engaging in a retail activity and its sales of meals to the nursing home are subject to retail sales tax.
  10 WTD 302 89-453A   RETAIL SALES/USE TAX -- HOSPITALS -- MEALS FOR PATIENTS PURCHASED FROM CATERER.Where a hospital chooses to purchase prepared meals for its patients, the caterer is engaging in a retail activity and its sales of meals to the hospital are subject to retail sales tax.
  10 WTD 302 89-453A   Det No. 91-280, 11 WTD 463 (1992), and Det. No. 89-453A, 10 WTD 302 (1990) are hereby overruled to the extent they are inconsistent with the decision herein.25 WTD 116 Dec 20, 2006
  11 WTD 463 91-280   SALES AND USE TAXES -- EXEMPTION -- HOSPITALS -- PATIENT MEALS.A hospital contracts with a food management company for the company to procure unprepared food products which are resold as such to the hospital.The company then supervises the hospital's food service staff on site in preparing patient meals from the unprepared food products.The food service company is not selling prepared foods or meals to the hospital. Instead, it is providing food service management.No sales or use tax is owing on patient meals.
  11 WTD 463 91-280   Det No. 91-280, 11 WTD 463 (1992), and Det. No. 89-453A, 10 WTD 302 (1990) are hereby overruled to the extent they are inconsistent with the decision herein.25 WTD 116 Dec 20, 2006
  14 WTD 29 93-259   SALE AT RETAIL -- LEASE -- INTERVENING USE.A person who purchases or leases an article of tangible personal property for resale or lease in the regular course of business without intervening use need not pay sales or use tax.
  14 WTD 29 93-259   LEASE, RENTAL, OR BAILMENT -- DOMINION AND CONTROL -- CATERERS.In order to find a true lease, rental, or bailment, there must be a change in actual or potential dominion and control over the property.When a caterer supplies linens, tableware, and glassware to its customers as part of its services, there is no change in actual or potential dominion and control over such items.
  14 WTD 29 93-259   INTERVENING USE -- DEFERRED SALES OR USE TAX -- CATERERS.When a caterer supplies linens, tableware, and glassware as part of its services, it is using such items in its business and deferred sales or use tax is due. Invoices showing a "rental" of such items only demonstrate a method of calculating the cost of catering a unique event and not a true lease, rental, or bailment of such items.
  14 WTD 29 93-259   PURCHASED FOR RESALE -- DISPOSABLE PRODUCTS -- FLOWERS -- ICE SCULPTURES -- CATERERS.Disposable items, the first use of which renders such articles unfit for further use, purchased by a caterer solely for use by its customers, are considered as having been purchased for resale.Such items include flower arrangements, ice sculptures, and the like ordered by the caterer's customers.
  15 WTD 19 94-115   B&0 TAX -- RETAIL SALES TAX -- SERVICE -- DEMONSTRATION -- CATER -- TRUE OBJECT.The classification of receipts from manufacturers to demonstrate their products and provide samples to potential customers is the transaction.If the true object is a marketing activity, the receipts are taxable under the catch-all "service and other" business and occupation tax classification.
  15 WTD 123 95-038E   INTERVENING USE -- DEFERRED SALES OR USE TAX -- CATERERS.When a caterer supplies plates, silverware, glasses, cooking equipment, linens and tents as part of his services, he is using such items in his business and deferred sales or use tax is due.Invoices showing a "rental" of such items only demonstrate a method of calculating the cost of catering a unique event and not a true lease, rental, or bailment of such items.
  15 WTD 123 95-038E   TIPS -- GRATUITIES -- CATERER.A caterer who agrees with a customer on gratuity amount prior to performing service, and then invoices the customer for that amount must include the amount received in its tax measure.
  15 WTD 123 95-038E   SALE AT RETAIL -- LEASE -- INTERVENING USE.A person who purchases or leases an article of tangible personal property for resale or lease in the regular course of business and also puts it to intervening use, must pay sales or use tax.
  17 WTD 243 98-011   RETAIL SALES TAX -- RETAILING B&O TAX -- GROSS PROCEEDS OF SALE.Where the operator of an employee cafeteria is paid a subsidy by the employer to guarantee a profitable operation, and the subsidy is not traceable to any particular sale of tangible personal property, the subsidy is not part of the selling price of the meals and not subject to retail sales tax.
  17 WTD 359 98-065   RETAILING B&O TAX -- RETAIL SALES TAX -- GROSS PROCEEDS OF SALES -- EMPLOYEE THEFT OF INVENTORY -- EMPLOYEE MEALS.Where liquor was stolen by the taxpayer's employees, such liquor cannot be used to impute income to the taxpayer.Liquor stolen by employees does not constitute "employee meals" because the taxpayer did not voluntarily give the liquor to the employees in exchange for their services.
  19 WTD 398 99-109   MEALS PROVIDED TO EMPLOYEES VS. MEALS PROVIDED TO MANAGERS.Taxpayers failed to distinguish meals consumed by managers from those consumed by employees.Taxpayers failed to prove that there was no "exchange of services" involved with the managers' meals.
  20 WTD 47 00-092   RETAIL SALES TAX - EMPLOYEE MEALS. Meals furnished as fringe benefits are part of compensation to employees for services rendered and are taxable as retail sales and subject to sales tax.
  20 WTD 47 00-092   RETAIL SALES TAX - EMPLOYEE MEALS - FOOD COST.Where no specific charge is made, the measure of the tax will be the average cost per meal served to each employee, based upon the actual cost of the food, and does not include labor.
  23 WTD 233 02-0062   B&O TAX - SALES TAX - USE TAX -- COLLEGE CAFETERIA - GUEST MEALS -- MEAL TICKETS.Where a college purchases meal tickets that entitle students, faculty, and guests to free meals in its cafeteria, the college is the consumer of the meals and liable for deferred sales or use tax.Concomitantly, a food service contractor, selling those meals to the college, is required to collect that tax.
  24 WTD 254 04-0132   RETAIL SALES TAX - FOOD PREPARATION.A person who prepared and served food in private homes for consumption by household members and their guests was not required to have a food and beverage service worker's permit under RCW 69.09.010, and was therefore not required to collect retail sales tax under the food products exemption in effect prior to January 1, 2004.
  25 WTD 116 05-0131   RETAIL SALES TAX -- EXEMPTION -PURCHASE OF MEALS - NONPROFIT HOSPITAL.A nonprofit hospital's purchase of meals from third party vendors, which the hospital provided to its senior citizen, disabled, or low-income patients, qualifies for the RCW 82.08.0293(3)(b) exemption from retail sales tax.
  26 WTD 50 06-0030   RETAIL SALES TAX - B&O TAX - GRATUITIES.If a caterer discusses gratuities before service is rendered, and the customer agrees that a gratuity of a certain amount will be added to the price, payment of the gratuity is not clearly voluntary, and the caterer must include the amount received in the measure of the tax.On the other hand, if a caterer discusses gratuities before service is rendered, and it is agreed that the customer will only pay an amount based upon the actual quality of service rendered, the gratuity is considered voluntary.
  26 WTD 50 06-0030   RETAIL SALES TAX - B&O TAX - GRATUITIES.When a caterer includes on its invoices a separate line item of a stated amount labeled "suggested" or "recommended" gratuity, inclusion of the stated amount does not require a finding that the gratuity was mandatory.Nor does the label, by itself, establish that the gratuity was voluntary.The caterer must come forward with other evidence that the amount was not an agreed-upon addition to the contract price and the gratuity was optional.
  26 WTD 50 06-0030   RETAIL SALES TAX - B&O TAX - RENTAL OF ROOM FOR EVENT - CATERERS.When a caterer rents space for an event incidental to catering the event, the contract should not be bifurcated, and the entire charge for the catering and space should be taxed under the retailing and retail sales tax classifications.When a caterer rents an event room not in conjunction with catering the event, the rental income should be reported under the service and other business activities classification.
         
       
OTHER: