Were a location caterer's charges for a driver waiting after the first meal taxable when the charge arose only if the customer did not order a second meal?

Plain-English summary

A caterer served motion-picture personnel from a portable kitchen while they filmed on location. Sometimes the customer asked the caterer's driver to wait in case a second meal was needed.

The stand-by charge arose only if the second meal was not ordered, after the first meal had already been served. Tax counsel concluded that it did not form part of the caterer's gross receipts from selling meals.

The letter reasoned that the charge related to the driver's waiting time, not physical work preparing or serving food. It analogized the charge to previously excluded stand-by charges for ready-mix concrete and recommended deleting it from the audit.

Common questions

Why was the waiting charge separated from the first meal?

It arose after that meal was served and only if the customer did not order another meal.

Did the driver prepare or serve food during the charged time?

No. The source characterized the time as waiting rather than physical activity involving food.

Was the recommendation the Board's final action?

The letter says it would be submitted for Board approval and does not include the later action.

Citations and references

• The complete supporting letter cites no numbered statute, regulation, or case.

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/550-0880.pdf

Original ruling text

550.0880

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

September 1, 1966

M---, H--- & Company
Certified Public Accountants
XXXX --- Boulevard
--- ---, CA XXXXX
Attention:

Mr. A--- H---

dba:

SR -- XX XXXXXX
E--- M. M--M--Company

Gentlemen:
This is to inform you of the position we have taken with respect to the above named taxpayer’s petition for Redetermination of sales tax. We are recommending that the stand-by time charges be eliminated from the audit and tax redetermined accordingly. It is our opinion that the stand-by time charges do not form a part of the gross receipts of the taxpayer from the sale of meals. The charges are analogous to stand-by charges for ready-mix concrete which we have previously ruled are not subject to sales tax. They do not relate to the sale of any meal as they are only charged when the second meal is not ordered. This, of course, occurs after the first meal is served. Finally, they relate to the driver’s time spent in waiting and not to any physical activity expended in preparing or serving the food. Our recommendation will be presented to the board for its approval. You will receive official notice of its action in due course. Memo For computation of adjustments see page A-8 of pet. file HK

Very truly yours,

John. H. Knowles
Associate Tax Counsel

JHK:mm
cc:
Van Nuys – Subdistrict Administrator
Attached are two copies of hearing officer’s report dated August 31, 1966, which has been approved. This hearing was held in Van Nuys on June 22, 1966. Los Angeles District – District Headquarters.