Were weekly nonprofit concession-stand sales irregular or intermittent under California's youth-organization rule?

Plain-English summary

The representative described two tax-exempt organizations, each running a once-weekly bingo game and concession stand. Their refreshments were bought at retail with sales tax reimbursement paid, but no sales tax was collected when the items were resold. The organizations said their net proceeds supported youth programs and charitable activities.

The Legal Division concluded that sales made once a week, every week, were regularly scheduled. They therefore failed section 6361's irregular-or-intermittent condition. The letter also said the facilities likely required local business licenses, which would independently prevent section 6361 treatment if true, but the published record never decides whether a license was actually required.

The organizations were retailers, not consumers, of the concession items and had to hold seller's permits. Their sales were taxable unless specifically exempt. Under the law described in the letter, the potentially relevant food exemption did not cover carbonated beverages, hot foods, candy, confectionery, or snack foods; otherwise-exempt food could also be taxable at an admission-charge location or when consumed at retailer-provided facilities. The letter said it was possible that all concession sales fell within one of those provisions, but did not decide the actual products or circumstances.

As retailers, the organizations could buy resale inventory ex-tax with timely, valid resale certificates. For inventory already bought with sales tax reimbursement or use tax paid and then resold, the letter allowed the described tax-paid-purchases-resold deduction.

Source and live-annotation limits

The supporting PDF does not include the September 19 request letter or the stated enclosures: Regulations 1597, 1602, 1603, 1668, and 1701. It identifies neither organization, the representative, bingo venue, district location, competition, concession facility, vendor, customer, product, price, quantity, sale, or reporting period. It provides no organizational records, exemption determinations, nondiscrimination records, program or competition materials, bingo schedules, local business licenses, menus, inventory or consumption records, admission terms, receipts, invoices, resale certificates, returns, deduction schedules, tax calculations or payments, audit, assessment, claim, appeal, implementation, or later outcome. The text reports asserted exempt status and described operations; it does not independently document them.

The live annotation preserves one organization's weekly bingo concession, the regularly-scheduled analysis under section 6361, retailer result, date, and conclusion that the sales were not irregular or intermittent. The supporting letter describes two organizations, not one, and additionally addresses their relationship, youth and charitable purposes, tax-exempt classifications, nondiscrimination, net proceeds, possible local-license ground, permit duty, food rules, admission and consumption-facility conditions, resale certificates, and tax-paid purchases resold. The live annotation omits those details, the requester and author, absent request and enclosures, missing records, product uncertainty, and absent implementation or outcome.

What this means for you

Nonprofit organizations, concession operators, and tax professionals

Do not assume that a weekly selling schedule is irregular or intermittent merely because sales occur only one day per week. Preserve organizational and exemption records, event schedules, concession locations and license requirements, menus and product details, admission and consumption arrangements, prices, receipts, invoices, resale certificates, tax-paid inventory support, returns, deductions, tax calculations, and payments. Apply current law to the actual products and facilities; this letter does not supply a current food-taxability list.

Common questions

Did selling only once a week make the sales intermittent?

No. The weekly schedule was regular.

Were the organizations treated as consumers under section 6361?

No. They were retailers of the concession items.

Could they buy concession inventory for resale?

Yes, with timely and valid resale certificates.

Did the letter determine whether a local business license was required?

No. It said that appeared likely and explained the consequence if true, but it rejected section 6361 treatment even without that point because the sales were regularly scheduled.

Did it decide that every concession item was taxable?

No. It said all sales might fall within the described provisions but did not identify the products or decide the underlying facts.

Were the five cited regulations included with the published letter?

No. The letter says copies were enclosed, but the official PDF does not reproduce them.

Citations and references

• California Revenue and Taxation Code §§ 6014, 6066, and 6361
• California Code of Regulations, title 18, §§ 1597, 1602, 1603, 1668, and 1701
• Internal Revenue Code § 501(c)(3) and California Revenue and Taxation Code § 23701(d) — exempt classifications stated in the request
• September 19, 1991 request letter to the San Jose District Office — not included
• Copies of Regulations 1597, 1602, 1603, 1668, and 1701 — identified as enclosures but not included
• Organizational, licensing, event, concession, product, admission, transaction, resale, reporting, tax, and later-proceeding records — implicated but not documented

Verbatim support

From the official Legal Division letter:

We regard activities conducted once a week, every week, to be regularly scheduled events. Since sales come within section 6361 only if they are not conducted on a regularly scheduled basis, the sales from concessions stands about which you inquire do not come within the provisions of section 6361.

Since the REDACTED TEXT will not be regarded as a consumer under section 6361, it will be regarded as the seller of items sold at the concessions stands and will therefore be required to hold a California’s seller’s permit.

However, the REDACTED TEXT may take a tax-paid purchases resold deduction with respect to any sales tax reimbursement or use tax paid when purchasing property that is resold at the concessions stands.

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/390-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/390-0600.pdf

Original ruling text

390.0600

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
(916) 445-5550
December 11, 1991

REDACTED TEXT

Re: REDACTED TEXT
Dear REDACTED TEXT:
Your letter dated September 19, 1991 to our San Jose District Office has been referred to the Legal Division for response. You represent the REDACTED TEXT. You inquire whether the activities of the REDACTED TEXT come within the provisions of Revenue and Taxation Code section 6361 or whether the REDACTED TEXT are required to obtain a seller’s permit and pay sales tax on its sales. You explain: “The REDACTED TEXT exists to promote the REDACTED TEXT, a sister corporation which provides programs for youths which include training for and participation in various local, state and national drum and bugle drill team competitions. Both the REDACTED TEXT and the REDACTED TEXT attempt to instill values of good sportsmanship, social responsibility, competitiveness, personal esteem and respect for others in the youth activities that they sponsor. “Both the REDACTED TEXT and the REDACTED TEXT are tax exempt under Section 501(c)(3) of the Internal Revenue Code and Section 23701(d) of the California Revenue and Taxation Code. Both organizations do not discriminate on the basis of race, sex, nationality or religion. “Each organization runs a once-weekly bingo game at which they also operate a concessions stand where refreshments are sold to participants at the bingo games. All net proceeds are used by the organizations in furtherance of their youth programs and charitable activities. “The items which are sold at the bingo games are purchased by the REDACTED TEXT and REDACTED TEXT at retail rates and sales tax is paid on all purchases. No sales tax is collected by the REDACTED TEXT upon resale to the bingo participants.”

REDACTED TEXT

-2-

December 11, 1991

Revenue and Taxation Code section 6361 provides that certain organizations are consumers and not retailers of specified kinds of tangible personal property under certain conditions including that the sales are made on an irregular or intermittent basis. Subdivision (d)(1)(C) of Regulation 1597 defines “irregular or intermittent” for purposes of this provision: “’Irregular or intermittent’ is defined to mean sales made at particular events, such as fairs, galas, parades, scout-a-ramas, games, and similar activities, which are not conducted on a regularly scheduled basis. Sales made at refreshment stands or booths at scheduled events of organized youth sports leagues are considered made on an ‘irregular or intermittent’ basis; however, sales made in storefront or mobile retail outlets which ordinarily require local business licenses do not qualify.” It appears likely that the sales about which you inquire are made from facilities requiring local business licenses. If so, the activities do not come within section 6361 on this basis. However, even if the activities do not require a local business license, they do not qualify under section 6361. As explained in the provision quoted above, “irregular or intermittent” excludes activities which are conducted on a regularly scheduled basis. The activities about which you inquire are sales from concessions stands operated at bingo games which are conducted every week. We regard activities conducted once a week, every week, to be regularly scheduled events. Since sales come within section 6361 only if they are not conducted on a regularly scheduled basis, the sales from concessions stands about which you inquire do not come within the provisions of section 6361. Since the REDACTED TEXT will not be regarded as a consumer under section 6361, it will be regarded as the seller of items sold at the concessions stands and will therefore be required to hold a California’s seller’s permit. (Rev. & Tax. Code §§ 6014, 6066.) The REDACTED TEXT may apply for a permit at the local district office of the Board. Its sales from the concessions stands are subject to sales tax unless specifically exempt by statute. The relevant exemption is for food products for human consumption. Regulations 1602 and 1603, copies of which are enclosed, explain which sales are regarded as taxable sales and which are regarded as exempt sales of food products. As relevant to the sales in question, please note that there is no exemption for sales of carbonated beverages, hot foods, candy, confectionary, and snack foods. Furthermore, tax applies to sales of otherwise exempt food products when the sales are within, and for consumption within, a place the entrance to which is subject to an admission charge or if the food is for consumption at facilities provided by the retailer. (Reg. 1603(d) and (f).) It is possible that all of the sales at the concessions stands come within one of these provisions and, if so, are all subject to tax. Since REDACTED TEXT will be regarded as a retailer of property sold at the concessions stands, it may purchase that property extax for resale by issuing the vendors timely and valid resale certificates as discussed in Regulation 1668, a copy of which is enclosed. You indicate that the REDACTED TEXT are currently paying sales tax (reimbursement) when purchasing the property to be resold at the concessions stands. As

REDACTED TEXT

-3-

December 11, 1991

indicated above, some or all of those sales are subject to sales tax. However, the REDACTED TEXT may take a tax-paid purchases resold deduction with respect to any sales tax reimbursement or use tax paid when purchasing property that is resold at the concessions stands. This is explained in Regulation 1701, a copy of which is enclosed. If you have any further questions, feel free to write again. Sincerely,

David H. Levine
Senior Tax Counsel
DHLS:cl
Enclosures