Personal chefs are independent persons (not employees) that prepare and serve food in private homes for consumption by household members and their guest. Occasionally, personal chefs prepare meals for social events, such as dinner parties, cocktail parties, engagement parties, weddings, and receptions. Some personal chefs also shop for groceries, purchase beverages, hire service people, rent equipment, and order flowers for events.
This information explains a change in the taxability of food items when sold by businesses that make eating utensils available to customers. A business must collect retail sales tax on all food item sales if its sales of “prepared foods” make up more than 75 percent of its annual sales of food and food ingredients.
Sellers may elect to collect sales tax on all sales, whether or not sales of prepared foods make up more than 75 percent of the seller’s annual sales of food and food ingredients.
Sellers of prepared food that make utensils available must calculate their percentage of prepared food sales.
Formula
Percentage of prepared food equals n/d
Numerator (n) represents prepared food
Denominator (d) represents all food sales
Numerator
The numerator includes sales of the following prepared foods:
Tiny Town Theater operates a concession stand at their theater. The concession stand has utensils on the counter for the customers to use (i.e. napkins, lids, plastic ware, straws, etc.).
In 2017, Tiny Town Theater made the following sales:
Jan and Joe’s deli is a quick food and deli café. The deli has utensils on the counter for the customers to use (i.e. napkins, cup, lids, etc.) The deli sells the following combination meals:
Mega Burgers Inc. is a large fast food corporation with six locations in the state of Washington. They also have several locations outside of Washington. Previously, Mega Burgers had segregated their sales and did not charge retail sales tax on exempt food items (food and food ingredients) as previously allowed under the rule (WAC 458–20–244). Mega Burgers has utensils (i.e. napkins, lids, plastic ware, straws, etc.) on the counters for customer use.
Giant Food Store, Inc. is a large grocery store. In addition Giant Food Store also has a deli and bakery and a “you–make–it” salad bar onsite. The deli has utensils (i.e. napkins, lids, plastic ware, straws, etc.) on their counters for customer use. Previously, Giant Food Store had segregated their sales and not charged retail sales tax on exempt food items. Deli items could be purchased at the deli counter or paid for at the checkout stand. Bakery items and other food items can only be paid for at the checkout stand.
Listed below are several other types of income that can be received by restaurants and other similar businesses. The tax consequences of these types of income are discussed under each item.
Selling meals on a “two for one” or similar basis is not giving away a free meal, but rather selling meals at a discounted price. Retail sales tax and retailing B&O tax apply to the amount that is actually received by the seller.
Complimentary meals that a restaurant provides to the employees of the restaurant are not subject to sales tax, B&O tax, or use tax.
This exemption from sales tax, use tax and business and occupation (B&O) tax is only for meals provided without a specific charge to restaurant employees and does not apply to meals provided to other employees that work outside of the restaurant.
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