Were coffee and pastries taxable when a mobile service sold them during a plant break for employees to consume at their desks and workbenches?

Plain-English summary

A mobile service sold coffee and pastries throughout a plant during coffee breaks. Employees consumed them at the desks and workbenches where they ordinarily worked rather than in the cafeteria or another dining area.

The letter treated those sales as exempt food-product sales when the items came only in nonreturnable paper cups and paper plates. Returnable cups, dishes, trays, or tableware would make the sales taxable under the stated rule.

The result also depended on what was sold. Any item that was not a food product under sections A and B of Ruling 52 remained taxable regardless of how it was served.

Common questions

Did eating at a workbench make the sale taxable?

No, on the facts described. The employees remained at their ordinary work locations rather than using a dining area.

Did the container type matter?

Yes. The exemption depended on nonreturnable paper cups and plates rather than returnable tableware.

Were non-food products exempt too?

No. The letter said those sales were taxable regardless of serving method.

Citations and references

• Sales and use tax Ruling 52, sections A and B (enclosed and 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/550-1640.pdf

Original ruling text

550.1640

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

April 5, 1960

P--- Corporation
W--- D--- L--XXXX --- Way
--- ---, California
Attention:

OS-X-XXXXX

Mr. B--- M--Plant Facilities

Gentlemen:
As we understand the facts stated in your letter of March 22, 1960, mobile coffee and pastry service is now provided throughout your plant during the coffee break. Such items are not served in the cafeteria during this period but are actually consumed at the desks and workbenches where the purchasers engage in their ordinary employment activities. If our understanding of the facts is correct, the sales of such items as coffee and pastry would not be subject to the sales tax unless they are provided with cups, dishes, trays, or tableware of a returnable nature. In other words, if the coffee and pastry are supplied only in nonreturnable paper cups and paper plates, and not consumed in a dining area, the sales would constitute exempt sales of food products. However, in the event that any items are served which are not food products as defined in Sections A and B of Sales and Use Tax Ruling 52, copy enclosed, sales tax would apply to gross receipts derived from their sales irrespective of the manner of serving them. Very truly yours,

Warren W. Mangels
Associate Tax Counsel

WWM:fb
Enclosure
Cc:

San Jose - Administrator