At a qualifying residence exclusively for people age 62 or older, were snack-bar food, carbonated drinks, and beer covered by the resident-meal exemption?

Plain-English summary

Board staff considered qualifying residences that supplied board and room to people age 62 or older and also operated snack bars for residents. The memorandum agreed that snack-bar food products fell within the new exemption.

Separately sold carbonated beverages and other nonfood products remained taxable. One suggested alternative was having a vending-machine operator sell carbonated drinks, with that operator responsible for the tax.

The memo separately raised carbonated beverages or beer served as part of a meal. Staff agreed that including those drinks “may well” fit the exemption's spirit and avoid an administrative problem. That language was tentative: the source proposed mentioning the approach in a training class, but did not state a definitive statutory holding.

Common questions

Were snack-bar food products exempt?

Yes, for the qualifying residences discussed in the memorandum.

Were separately sold carbonated beverages exempt?

No. The memorandum treated carbonated drinks and other nonfood products sold separately as taxable.

Did it definitively exempt beer or soda included in a meal?

No. It said those items “may well” be within the exemption and that the approach seemed consistent with its spirit.

Citations and references

• California Revenue and Taxation Code section 6363.6 (identified in the memorandum subject and annotation context)

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/550-0527.pdf

Original ruling text

State of California

Board of Equalization

550.0527

Memorandum
To:

Ms. M. C. Armstrong

From:

Donald J. Hennessy

Subject:

1979 Amendment to Section 6363.6

Date:

February 26, 1980

As I discussed with you briefly on February 22, 1980, Walt Shaffer, of the San Diego district, points out an unusual situation arising under the exemption for meals and food products sold to residents or patients under the new amendment. Some of the residences exclusively for persons 62 years of age or older not only supply board and room but have a snack bar where the residents may purchase food products and also nonfood products such as carbonated beverages. Mr. Shaffer suggested, and I agreed, that sales of food products by such snack bars would be within the exemption, but the sales of carbonated beverages or other nonfood products would be subject to tax. Mr. Shaffer suggested that such residences might be better off to have carbonated beverages sold through a vending machine with the machine operator subject to the tax. In our discussion, you raised the point that, if a carbonated beverage or beer were served as part of a meal, it may well be within the exemption although technically not a food product. I agree that this would seem to be in the spirit of the exemption and avoid a real administrative problem. If we are to go this route, it is something that well might be pointed out in your training class to avoid future problems. DJH:po cc:

D. F. Brady
G. J. Jugum
San Diego – Auditing (WS)