Did locating a grocery store inside a resort area with an admission charge make the store a place to which admission was charged for food-tax purposes?

Plain-English summary

Grocery stores operated inside a resort area that generally charged admission for recreational facilities. The resort issued limited courtesy passes so people could use its retail facilities without using the recreation, and reported that walk-in shoppers who would not use the facilities were not charged.

A 1975 principal tax auditor concluded that the resort grocery should not be treated as “a place, the entrance to which is subject to an admission charge.” Its food sales could therefore be treated like those of any other grocery store rather than becoming taxable on that ground.

A May 1996 Legal Division memorandum reviewed the earlier non-attorney opinion and expressly agreed with its conclusion.

Common questions

Did the resort's general admission charge control the grocery store's treatment?

No. The source treated access to the retail facilities separately from access to recreation.

What facts supported that result?

Limited courtesy passes and admission-free walk-in access for people shopping without using the recreational facilities.

Why is the page dated 1996 when the facts were analyzed in 1975?

The PDF includes a 1996 legal memorandum expressly confirming the 1975 auditor's conclusion.

Citations and references

• The source states its admission-charge conclusion without citing a specific statute or regulation.

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/550-0110.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

--- --- – Auditing

From:

Principal Tax Auditor

Subject:

L--- B--- Resorts

550.0110

Date:

January 22, 1975

This is in response to your letter of January 17 to me and your earlier letter of December 3 to Legal Counsel (DJH). After reviewing your letter of January 17, we must conclude that the L--- B--- resorts should not be treated as “a place, the entrance to which is subject to an admission charge.” First, I doubt whether the Legislature intended to tax sales from a grocery store located within such a place. This fact alone makes us very reluctant to apply tax to such sales. Further, the fact that “courtesy passes” are issued for a limited time so that the retail facilities can be used by persons not availing themselves of the recreational facilities would provide a basis for not considering this area as being “a place”. Also, the report that “walk-ins” who will not use the facilities are not required to pay adds support to this position. I believe a finding that sales by these grocery stores in the [---] area should be treated in the same manner as sales by any other grocery store is consistent with sound administration and legally supportable. Accordingly, I believe your past treatment of this matter is correct.

R. Nunes
RN:iw
cc:

Mr. D. J. Hennessy
Mr. Glenn L. Rigby

State of California

Board of Equalization
Legal Division (MIC:82)

Memorandum
550.0110

To:

Mr. Glenn Bystrom

From:

Gary Jugum

Subject:

Non-Attorney Opinions

Date:

May 29, 1996

I have reviewed Principal Tax Auditor’s memorandum of January 22, 1975 to --- --- Auditing. We are in agreement with his conclusion, as follows:

Grocery Store Located Inside Area Subject to Admission Charge. A grocery store is located within a resort area, entrance to which is subject to an admission charge. Limited term courtesy passes are issued so that persons can patronize retail facilities, but not utilize the recreational facilities. The grocery store is not regarded as a place to which admission is charged for purposes of applying tax to sales of food. 1/22/75

Gary Jugum