Could cafes buy single-use paper tablecloth rolls for resale in the same way restaurants bought paper napkins?

Plain-English summary

A supplier sold rolls of paper tablecloth material to cafes, especially cafes catering banquets. The paper replaced cloth table covers and was discarded after one use.

The letter distinguished the tablecloths from paper napkins. A diner received personal, individual use of a napkin, supporting resale treatment under Ruling 53. A tablecloth's use was substantially different and was attributed to the cafe.

Because the cafe used rather than resold the paper tablecloths, the supplier's sales to cafes were taxable.

Common questions

Did disposal after one use make the tablecloth a resale item?

No. The source focused on who used the item, not only whether it was reusable.

Why were paper napkins treated differently?

The letter said a diner personally and individually used the napkin as part of the meal.

Who was treated as using the tablecloth?

The cafe.

Citations and references

• Sales and use tax Ruling 53, section A (enclosed and 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/550-0460.pdf

Original ruling text

550.0460

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

April 13, 1954

C--- P--- Co., Inc.
P.O. Box XXX
---, California

Attention: Mr. W--- A. C--Gentlemen:
Your letter of February 25 addressed to our Visalia office has been referred to this office for reply. You inquire concerning the application of sales tax to the sale of paper tablecloths in rolls to cafes. They are used in place of cloth table covers and are used principally by cafes who cater to banquets. After one use they are discarded. As indicated in the last paragraph of Section A of Ruling 53 (copy enclosed), the sale of paper napkins to a restaurant is a sale for resale and not subject to tax. The theory is that the restaurant resells the napkin as part of the meal. However, the napkin receives personal individual use by the diner. We think that the type of the use of the tablecloth by a diner is substantially different from the use of a paper napkin and that the tablecloth is used by the cafe rather than resold. It is our opinion, therefore, that your sales of paper tablecloths to cafes are subject to the tax. Very truly yours,

Bill Holden
Assistant Counsel
BH:ja
cc:

Fresno – Tax Administrator