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Intended audience: Senior living communities.
Beginning July 23, 2023, the value of meals furnished to independent living tenants of senior living communities as part of their rental agreement is not subject to sales or use tax when there is no separate charge for the meals. However, senior living communities must still pay B&O tax on the fair selling price of such food, drink, and meals under the service and other activities B&O tax classification or under the classification which otherwise applies to that community.
Note 1: Senior living communities that separately state their charge for food, drinks, or meals remain subject to B&O tax under the Retailing classification and must collect retail sales tax on such separately stated charges.
Note 2: This change does not affect the taxability of meals provided to residents when the facility provides healthcare services, such as nursing homes, hospitals, and assisted living facilities.
Background
Prior to July 23, 2023, senior living communities that furnished food, drinks, or meals to independent living tenants as part of a rental or residency agreement were required to collect sales tax on the value of the meals, whether a separate charge was made or not. Additionally, such amounts were subject to B&O tax under the Retailing classification.
What qualifies for this exemption?
Senior living communities that furnish food, drinks, or meals to tenants as part of a rental or residency agreement are no longer required to collect retail sales tax from their tenants on the value of the food, drinks, or meals when there is no separate charge.
Additionally, food, drinks, or meals furnished by a senior living community to tenants as part of a rental or residency agreement for which no separate charge is made, are exempt from use tax.
How do I report?
Because this law change is effective in the middle of a reporting period, the department has developed special reporting instructions for the month of July 2023 (monthly filers) and Q3/2023 (quarterly filers). How to calculate tax due on meals provided by senior living communities.
After these reporting periods, senior living communities will report the fair selling price of qualifying food, drink, and meals under the Service and Other Activities B&O tax classification. Qualifying meals are no longer reported under the retailing B&O tax or retail sales tax classifications.
Definitions
Senior living community means any facility or campus operated by a person licensed or registered under Chapter 18.20 or Chapter 18.390 RCW.
More information
For more information, see SHB 1431, Chapter 416, Laws of 2023.
Questions?
For assistance with filing your excise tax returns, please contact us at 360-705-6705.
