Did plastic cup holders, crockery mugs, and a market counter count as retailer-provided eating facilities, and what happened to true takeout food?

Plain-English summary

The source taxed fruit juice served in paper cups placed in plastic holders and coffee or tea served in crockery mugs. It also taxed sandwiches, doughnuts, and other food when customers used the retailer's counter or other furnished facilities; a district report said about 90 percent of customers ate standing at or near the counter.

Plastic cup holders and crockery mugs fell within the section 6359 list of trays, glasses, dishes, or other retailer-provided tableware. The analysis did not depend on calling the food a meal because the furnished facilities independently controlled the stated result.

By contrast, sandwiches or doughnuts handed to customers for takeaway, or consumed without the counter, tableware, or other seller facilities, were not taxable under the concluding paragraph.

The PDF itself has two dates: February 13, 1951 on page one and May 25, 1970 on page two. The later page continues the letter and contains the takeaway conclusion, so this page treats it as an incorporated later continuation rather than ignoring the date conflict.

Common questions

Did a disposable paper cup prevent tax?

No, when the paper cup sat in a reusable plastic holder supplied by the retailer.

Did standing at the counter matter?

Yes. Food consumed using the retailer's counter was taxable under the source's facilities test.

Were sandwiches and doughnuts taken away taxable?

Not when customers used no counter, tableware, or other seller-provided facilities.

Citations and references

• California Revenue and Taxation Code section 6359 (as cited)
• Treasure Island Catering Company v. State Board of Equalization, 19 Cal. 2d 181 (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/550-0180.pdf

Original ruling text

550.0180

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

February 13, 1951

H--- R--- Market
XXXX --- --- Street
---, California
Attention:

Mr. N--- G--Re:

-- XXXXXX

Gentlemen:
Following receipt of your letter of August 22, 1950, we requested our Los Angeles District Office for a report concerning the nature of the facilities furnished to customers. This report has been received and upon the basis of the facts set forth in your letter of August 22, which are confirmed by the report which gives certain additional information, it is our opinion that: (1) the tax applies with respect to sales of fruit juices which are served in paper cups contained, however, in plastic holders; (2) the tax applies to receipts from sales of coffee or tea in crokery mugs; (3) the tax applies to sales of sandwiches, doughnuts, or other food product for the consumption of which the customer uses the counter or any other facilities furnished by you. The report from our Los Angeles District Office states that approximately 90 percent of the customers consume food standing at or near the counter. We believe that the plastic cup holders and crokery mugs are properly included within the facilities enumerated in section 6359 of the Revenue and Taxation Code which excludes from the definition of “food products”, for purposes of the exemption, drinks or foods furnished, prepared, or served for consumption at “tables, chairs, or counters, or from trays, glasses, or dishes, or other tableware provided by the retailer”. Even if it be assumed that none of your sales constitute sales of “meals”, it does not follow that the tax does not apply because, as we have indicated above, our information is that facilities such as were enumerated in section 6359 are furnished. In Treasure Island Catering Company v. State Board of Equalization, 19 Cal. 2d. 181, mentioned in your letter, the sales held exempt were those sales where the food was wrapped in a paper napkin and handed to the purchaser over a ledge or shelf. The sale of frankfurter and hamburger sandwiches were the only sales involved, tax having been paid in connection with the sale of the beverages. It was also held that the ledge did not constitute a “counter”, under the meaning of section 6359, since the ledges were not intended to be used as counters due to the fact that a continued or general utilization of the ledges for such purposes would have interfered with the accessability to plaintiff’s foods by prospective customers.

Mr. N--- G---

-2-

May 25, 1970
550.0180

The tax does not, in our opinion, apply with respect to your sales of sandwiches or doughnuts which are handed to customers and taken away for consumption or consumed without the use of your “counter”, no tableware or other facilities being furnished. Very truly yours,

E. H. Stetson
Tax Counsel

EHS:ph

cc:

Wm. R. Thomson