Did section 6363.5 exempt meals sold by a church-operated cafe that was open to the public on a regular, continuing basis?

Plain-English summary

Accountants asked whether meals sold by their client's church-operated cafe were exempt under section 6363.5.

The letter said no. It described the 1961 provision as exempting meals served by a religious organization at a social or other gathering conducted by it or under its auspices.

A cafe open to the public on a regular, continuing basis was not such a gathering. The letter reasoned that the Legislature would not have limited the exemption to social or other gatherings if it intended to exempt church-operated cafes competing with other cafes serving the general public.

Common questions

Did church ownership alone exempt the cafe's meals?

No. The source focused on the type of event at which the meals were served.

What activity did the cited exemption cover?

Meals served by a religious organization at a social or other gathering it conducted or sponsored.

What made the client's sales taxable?

The cafe was open regularly and continuously to the general public rather than operating as a qualifying gathering.

Citations and references

• California Revenue and Taxation Code section 6363.5 (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/550-1040.pdf

Original ruling text

550.1040

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 445-5550

February 28, 1963

G---, M--- & W--Certified Public Accountants
City National Bank Building
XXX North --- Drive
----, California
Attention:

Account --- - XXXXX
Now: SY -- XX XXXXXX
S--- R--F--- Ch.
DBA: J--- Café

Mr. R--- J. M---

Gentlemen:
This is in reply to your inquiry of February 11 as to whether or not meals sold by your client would be exempt from sales tax under section 6363.5 of the law. This provision was enacted in 1961 by the Legislature in order to exempt from the tax meals served by any religious organization at a social or other gathering conducted by it or under its auspices. However, the operation by your client of a café, open to the public on a regular continuing basis, cannot be regarded as the conduction of a social or other gathering. If the Legislature had intended to exempt meals served by church operated cafes which compete with other cafes serving the general public, it would not have limited the exemption to meals served at “social or other gatherings.” Accordingly, we are of the opinion sales tax will continue to apply to meals served by your client in its cafes which are open to the public on a regular, continuing basis. Very truly yours,

Charles C. Kobayaschi
Attorney

CCK:hef
cc:

Hollywood – Subdistrict Administrator