Were club meals furnished to invited guests treated as sales to the guests or to the members who invited and paid for them?

Plain-English summary

A club limited the number of guests, expressly or by implication, and the meals were not available to the general public. Guests did not pay for their own meals.

Tax counsel treated meals furnished to those guests as meals furnished to the members who invited and paid for them. The same memorandum also found the meals taxable because the club met on a regular weekly schedule.

This exact January 5, 1970 memorandum also supports Annotation 550.0960, which focuses on meeting frequency.

Common questions

Did the invited guest count as the meal purchaser?

No. Under the stated limited-access and payment facts, the meal was treated as furnished to the member.

Did the source address guests who paid directly?

No. It expressly assumed guests never paid for their own meals.

Citations and references

• The complete supporting memorandum 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/550-1000.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Eval & Planning (JAN)

From:

Tax Counsel (LAA)

550.1000

Date:

January 5, 1970

In response to your memo of December 18, 1969, I have reviewed your letter of December 11, 1969 to “G”. I concur in your conclusion that the meals are subject to tax, though not for both reasons which you cite. In my opinion, where the number of guests is limited specifically or impliedly, the meals are not available to the general public, and the guests never pay for their own meals, furnishing meals to guests of members should be considered furnishing the meals to members. Where the club regularly meets on a weekly schedule, the fact that meetings are occasionally not held does not change the fact that they sell meals on a once a week basis. In all such cases, it is a factual issue, but here the number of meetings and their regularity subjects them to tax. Apparently the reason we allow the exemption at all, since it is not provided for in the code, is that where the club or organization sells only to its members on a less than once a week basis they are not engaged in the business of selling meals. This is analogous to our rule in regard to boarding houses serving fewer than five paying guests. The soundness of the rule must be based in the avoidance of the practical problems which would arise were we to require such persons to register and file returns.

LAA:ph

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