Was a club's separate $1,000 Sunday opening charge taxable when it covered building access and services for a catered event?

Plain-English summary

A club operated in an office building that was closed on Sundays. For a Sunday catered event, the building charged the club an extra amount to turn on power and air conditioning, open the parking garage, and provide a parking attendant and security guard. The club passed the cost to its customer as a separately stated $1,000 opening charge.

The Board treated the opening charge as rent for the premises used to provide the catered meal. A separately stated facility charge remained part of taxable gross receipts when the taxpayer maintained or used the facility primarily for selling meals or other food. The full opening charge was therefore taxable.

Common questions

Did separately stating the $1,000 charge make it exempt?

No. Its function—not its label or separate statement—made it part of taxable meal service.

What did the charge cover?

Sunday power, air conditioning, parking-garage access, a parking attendant, and building security.

Why was it treated as taxable?

The source characterized it as premises rent incurred to hold the catered event and serve the meals.

Citations and references

• Business Taxes Law Guide Annotation 550.0240 (as cited)

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/550-0155.pdf

Original ruling text

550.0155

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
(916) 322-6083
December 14, 1990
REDACTED TEXT
Re: REDACTED TEXT
Dear REDACTED TEXT,
This is in response to your inquiry of October 17, 1990, requesting an opinion concerning the application of the California Sales and Use Tax Law to an “opening charge” the REDACTED TEXT includes for catered events held at the Club on Sundays. The REDACTED TEXT is located in an office building that is closed on Sundays. When the Club caters an event in the building on a Sunday, the Club is charged an additional amount beyond its normal rent to cover the cost of turning on the power and air conditioning, opening the parking garage and supplying a parking attendant, and supplying a building security guard. The Club, in turn, includes a $1,000 “opening charge” for catered events on Sundays. The Board’s legal staff has determined that a separately stated rental charge for the use of restaurant facilities as part of meal service is includable in taxable gross receipts where the taxpayer maintains the facilities primarily for the sale of meals or other food items. (Business Taxes Law Guide Annotation 550.0240, 12/3/64.) Since the “opening charge” you describe is a charge for rental of the premises on Sunday, it is taxable. Please contact me again if I can be of further assistance. Very truly yours, Janet Vining Tax Counsel JV:wk 2607C