Did using a food-service contractor prevent qualifying patient or inmate meals from receiving section 6363.6's exemption?

Plain-English summary

An unidentified request asked about contracted institution meals. Tax Counsel T. P. Putnam answered on September 26, 1968, before Assembly Bill 460's addition of section 6363.6 became operative on October 1.

The use of a food-service contractor did not prevent the new section from exempting qualifying meals served to patients or inmates of an institution described in the bill.

The result was the same whether the contractor directly served the meals or sold them to the institution, which then served them. The letter found no tax on the sale to or use by the qualifying patients or inmates when the meals were served to them.

The live annotation uses “residents or patients” rather than the supporting letter's “patients or inmates.” The source supplies no enacted text, institution definition, transaction record, audit, appeal, or later outcome to resolve or apply that wording difference.

Common questions

Did the institution have to prepare the meal itself?

No. A contractor could prepare or serve it under the letter's analysis.

Did every contractor meal qualify?

No. The source limited its conclusion to meals served to patients or inmates of an institution described in the statute.

Citations and references

• Assembly Bill 460 and California Revenue and Taxation Code section 6363.6 — identified for an institution-meal exemption operative October 1, 1968; bill number only, with no chapter, enrolled text, legislative history, complete statute, institution definition, effective provisions, or later history supplied
• September 19, 1968 unidentified request concerning the institution-meal exemption and a food-service contractor — request, requester identity or role, institution qualification, contract, menus, invoices, meal recipients, service records, and tax records not reproduced in the official PDF
• September 26, 1968 Tax Counsel T. P. Putnam response concluding that the exemption applied whether the contractor served qualifying meals or sold them to the institution for service, and that no tax applied to sale to or use by the patients or inmates when served — no requester reply, contractor or institution transaction, return, audit, assessment, refund claim, appeal, or later outcome supplied
• Official Annotation 300.0040's section 6363.6, residents-or-patients, contractor-service-or-sale, institution, and September 26, 1968 rules — the live annotation says “residents or patients” while the supporting letter says “patients or inmates”; it omits the September 19 request, AB 460 and October 1 operative-date provenance, absent statute and institution definition, missing transaction records, later outcome, and reliance status and supplies no record resolving the wording difference

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/300-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/300-0040.pdf

Original ruling text

300.0040

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

September 26, 1968

Gentlemen:
In reply to your letter of September 19, it is our view that AB 460, which adds Section 6363.6 to the Revenue and Taxation Code and is operative on and after October 1, 1968, will exempt from sales or use tax the sale or use of meals served to patients or inmates of an institution of the kind referred to in the bill, regardless of whether a food service contractor serves the meals or sells the meals to an institution which serves them. No tax will apply to the sale to or use by the patients or inmates if the meals are served to the patients or inmates. Very truly yours,

T. P. Putnam
Tax Counsel

TPP:kc

[1b]