When did delivering multiple servings of cold food on returnable trays make the sale taxable under Regulation 1603(f)?

Plain-English summary

Counsel considered four ways multiple servings of cold food could arrive on returnable equipment.

Three large-tray arrangements were nontaxable: one bulk quantity such as a whole wedding cake, food already divided into portions such as a sliced cake, and separate servings such as a tray of sandwiches.

The transaction became taxable when each individual serving was placed in its own returnable container and intended to be eaten from that container. The distinction was between a large delivery or presentation tray and retailer-provided tableware for each customer.

Common questions

Did slicing a wedding cake before delivery make the large tray taxable?

No. The memorandum placed both whole and pre-portioned cake on a large returnable tray in the nontaxable group.

What about a large returnable tray of sandwiches?

That was also nontaxable under the memorandum.

Which arrangement was taxable?

Each serving in its own returnable container, intended to be eaten from that container.

Citations and references

• California Sales and Use Tax Regulation 1603(f) (quoted and interpreted)

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/550-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/550-0103.pdf

Original ruling text

State of California

Board of Equalization

550.0103
Memorandum
To:

From:

Subject:

Mr. Glenn A. Bystrom, Deputy Director
Sales and Use Tax Department (MIC:43)

Date:

February 25, 1994

Gary J. Jugum
Assistant Chief Counsel
Regulation 1603
There has been some uncertainty as to the interpretation to be made of that part of Regulation 1603(f), which provides that "tax applies to sales of sandwiches ... and other foods sold in a form for consumption ... from trays ... or other tableware provided by the retailer." [Emphasis added.] The problem arises when multiple servings of food are delivered on a returnable tray. Analytically, there are four situations which might arise: (1) The food is on a large returnable tray and is in a single bulk quantity. For example, a wedding cake may be delivered on a tray. (2) The food is on a large returnable tray, but the food has been prepared to be served in individual portions, as, for example, a wedding cake sliced into individual portions. (3) The food is on a large returnable tray but has been prepared to be eaten as individual servings as, for example, a tray of sandwiches. (4) Each individual serving is in its own returnable container and is intended to be eaten from the container. We discussed this matter on February 23, 1994. We are in agreement that (1), (2) and (3) are nontaxable but that (4) is a taxable transaction. GJJ:sr cc:

Mr. William Dunn (MIC:49)
Mr. Dennis Fox (MIC:40)
Mr. Gordon Adelman (MIC:82)
Mr. David Levine (MIC:82)
Mr. John Waid (MIC:82)
Ms. Joan Armenta Roberts (MIC:40) – Please annotate this memo