Could a social club or fraternal organization issue a resale certificate to its caterer when it served meals less than once a week?

Plain-English summary

Auditing staff had told a club that serving meals less frequently than once a week would allow it to give its caterer a resale certificate. Tax counsel corrected that statement.

Under Ruling 53(D), a social club or fraternal organization furnishing meals less often than weekly was treated as the consumer of the food. It therefore could not issue a resale certificate to the caterer.

That did not by itself state the tax on every caterer charge. The result depended on whether the caterer sold completed meals or only food products that the club itself prepared and served.

Common questions

Did infrequent meal service create resale status?

No. The source reached the opposite conclusion and treated the club as the consumer.

Could the club issue a resale certificate?

No, under the cited historical rule and frequency described.

Was every caterer charge necessarily taxable?

The correspondence did not say that. It distinguished sales of meals from sales of food products the club prepared and served.

Citations and references

• Sales and use tax Ruling 53(D) (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/550-0980.pdf

Original ruling text

STATE BOARD OF EQUALIZATION
OFFICE CORRESPONDENCE

550.0980
Sacramento
November 5, 1952

To:

San Diego – Auditing (JHMcC)

From:

Headquarters – Sales Tax Counsel

Re:

B--- B--- C--XXXX --- --- ----- --- 4

Account No. F-XXXXX

The second paragraph of page 2 of your letter of October 27 to B--- B--- C---, if we clearly understand your meaning, appears to be not entirely correct. You state that if meals are served less frequently than once a week, the club could give to the caterer a resale certificate. If meals are served less frequently than once a week by a social club or fraternal organization, it is our opinion that under Ruling 53(D) the club is regarded as the consumer of the food and could not give a resale certificate. The application of the tax to the caterer’s charges to the club would then depend upon whether the meals were sold or simply food products from which the club and not the caterer prepared and served the meals.

E. H. Stetson
EHS:ph