Were separately stated charges for temporary or hourly workers hired by a caterer excluded from taxable catering receipts?

Plain-English summary

A caterer had no regular weekly payroll and hired people as needed for individual jobs. An adviser believed that separately stating those labor charges might make them nontaxable.

The Board disagreed. The cited regulation's statement that a caterer did not include employees hired by the hour or day referred to employees hired directly by the customer—not workers hired by the caterer.

When the caterer hired people to serve food or perform other event duties, its entire customer charge, including labor, was taxable. The result did not change based on whether the caterer engaged the workers temporarily or full-time or listed labor separately.

Common questions

Did separate labor billing make the charge exempt?

No. The source included caterer-hired labor in the taxable catering charge.

Did it matter that the caterer hired workers only as needed?

No. Temporary and full-time caterer employees received the same treatment.

Who were the hourly employees excluded by the regulation?

Workers hired directly by the customer rather than by the caterer.

Citations and references

• California Sales and Use Tax Regulation 1603(h) (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/550-0838.pdf

Original ruling text

550.0838

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 324-5589

August 17, 1990
REDACTED TEXT
Re:

REDACTED TEXT

Dear Ms. REDACTED TEXT:
Your letter of May 14, 1990 to Ms. REDACTED TEXT of the Return Review staff has been referred to the legal staff for reply. You have requested a clarification of the correct application of tax to your client’s catering charges. As we understand it, REDACTED TEXT does not have employees on a weekly payroll. They employ people to come in “as-needed” for a certain job. Your understanding, based on a recent conversation with a Board representative from the Hayward District office, is that if a person is hired for a particular job and the amount charged for labor is broken out separately that amount is not subject to tax. Sales and Use Tax Regulation 1603(h) (copy enclosed) provide, in pertinent part, that: “The term ‘caterer’ as used in this regulation means a person engaged in the business of serving meals, food and drinks on the premises of his customers but does not include employees hired by the hour or day.” The phrase “does not include employees hired by the hour or day” found in regulation 1603(h) does not refer to employees hired by the caterer. Rather, the reference to employees is to employees hired by the customer. Thus, if a caterer hires employees to perform serving or other duties the entire charge made by the caterer, including labor is subject to tax. This is true whether or not the caterer hires the employees on a full-time or temporary basis. We trust this answers your questions concerning the correct application of tax to catering charges. If you have further questions concerning this matter, please write this office again. Very truly yours,

MCA:wak
2378C
Enclosure

Mary C. Armstrong
Senior Tax Counsel