Was a country club's charge to cut and serve a customer-furnished wedding cake subject to California sales tax?

Plain-English summary

A country club asked whether it owed sales tax on a separate charge for cutting and serving a wedding cake supplied by an outside bakery. The Board said yes.

California's cited definition of a sale included furnishing, preparing, or serving food, meals, or drinks for consideration. Because the country-club personnel served the cake, the transaction was a sale for sales-tax purposes even though the club had not supplied the cake. The entire cake-cutting and serving charge was therefore taxable.

The letter compared the result to an earlier annotation treating the opening and serving of customer-furnished champagne as a taxable sale.

Common questions

Did it matter that an outside bakery supplied the cake?

No. The source focused on the country club's paid service of the cake, which itself fit the cited definition of a sale.

Was only part of the cake-cutting fee taxable?

The letter did not make an allocation. It said the amount charged for cutting and serving the cake was subject to sales tax.

Did the letter address a bakery's sale of the cake?

No. It addressed only the country club's charge for cutting and serving a cake provided by an outside bakery.

Citations and references

• California Revenue and Taxation Code sections 6006(d) and 6051 (as cited)
• California Civil Code section 1656.1 (as cited)
• California Sales and Use Tax Annotation 295.0120 (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/550-0809.pdf

Original ruling text

550.0809

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

MEMBER
First District

LEGAL DIVISION (MIC:82)
450 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 322-2976

BRAD SHERMAN
Second District, Los Angeles
ERNEST J. DRONENBURG, JR.
Third District, San Diego

September 14, 1993
REDACTED TEXT

MATTHEW K. FONG
Fourth District, Los Angeles
GRAY DAVIS
Controller, Sacramento

BURTON W. OLIVER
Executive Director

Dear Mr. REDACTED TEXT:
Re: Application of Sales Tax to Cake Cutting
This letter is in response to your letter of August 16, 1993 in which you request advice regarding the application of tax to cake cutting services performed at wedding receptions and banquets by restaurant personnel. I am assuming that the cake is provided by an outside bakery and that the personnel at the country club merely cut and serve the cake. Revenue and Taxation Code section 6051 imposes a sales tax on all retailers measured by their gross receipts from retail sales of tangible personal property. Although the sales tax is imposed upon the retailer, the retailer may collect sales tax reimbursement (usually itemized on the invoice as "sales tax") from the purchaser if the contract of sale so provides. (Civ. Code § 1656.1). In your case, the application of tax depends upon whether there has been a "sale" of tangible personal property. Under Revenue and Taxation Code section 6006, a "sale" includes "{t}he furnishing, preparing, or serving for a consideration of food, meals, or drinks". (Rev. & Tax Code
§ 6006(d).) (emphasis added.)
As you mentioned in your letter, a similar issue was decided in Annotation 295.0120. This annotation states that the opening and serving of customer-furnished champagne is a sale and as such charges for this are includible in taxable gross receipts. Since you are serving the cake, there is a "sale" for sales tax purposes. The amount charged for the cutting and serving of cake is subject to sales tax. If you have any further questions, please do not hesitate to write again. Sincerely, Sukhwinder K. Dhanda Staff Counsel SKD:plh