When did a Kansas school district have to collect sales tax on cafeteria meals, seminar lunches, and meals sold to a civic group?

Plain-English summary

A school district had to collect Kansas sales tax on meals sold to outsiders and civic groups unless the buyer itself qualified for and properly documented an exemption.

The ruling addressed three situations.

Parents and other outsiders eating at the school cafeteria

The cafeteria primarily served students and staff but also sold a small number of meals to outsiders, especially parents. The Department said all outsider meals were taxable. The fact that outsider sales were only 10% or less did not create a tolerance or exemption.

Seminar meals for other school districts

The district served an off-campus lunch to superintendents, business officials, and outside auditors attending a school-business seminar. A direct purchase by an exempt educational entity, such as another school district, was exempt when paid by the entity's check or voucher and used for educational purposes. Meals sold to anyone else were taxable.

Lunch for a civic group

Meals sold to a civic group were taxable unless the group had its own sales-tax exemption. To claim it, the group had to present a properly completed exemption certificate at the time of purchase and pay directly with the exempt organization's check or voucher.

What this means for you

School cafeterias

Separate student and staff programs from sales to outside customers. A small percentage of outsider sales is still taxable.

School districts hosting meetings

Document which exempt educational entity bought the meals, require direct payment by its check or voucher, and retain support for the educational purpose.

Civic and nonprofit groups

Do not assume the school district's status makes your meal purchase exempt. The purchasing group needs its own exemption, certificate, and direct organizational payment.

Common questions

Q: Is there a de minimis exception for outsider cafeteria meals?
A: No. The ruling required tax on all meals sold to outsiders, even at 10% or less of cafeteria sales.

Q: When was a seminar meal exempt?
A: When an exempt educational entity directly purchased it by check or voucher for educational purposes.

Q: Were meals for a civic group automatically exempt?
A: No. The group needed its own exemption and proper documentation and payment.

Q: What records should the district keep?
A: Exemption certificates, buyer identity, check or voucher evidence, and the educational purpose supporting an exempt purchase.

Citations and references

• K.A.R. 92-19-59 — Kansas Private Letter Ruling procedure

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2004-052

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

September 28, 2004

XXXX
XXXX
XXXX

Re: Your Correspondence XXXX

Dear XXXX:

This responds to your request for private letter ruling regarding the following fact patterns:

1. A Kansas school district operates its cafeteria primarily for the benefit of its students and staff and does not encourage outsiders to eat there. However, on a daily basis a certain minimal number of outsiders, in particular parents, eat at the cafeteria. Would a minimal amount of sales (say 10% or less of total sales) to outsiders without charging sales tax on any of the meals sold be allowed?

Response: The cafeteria should be charging sales tax on all meals sold to outsiders (such as parents) at the school.

2. A Kansas school district serves lunch off campus to a group of school superintendents, district business officials and the districts’ outside auditors from other Kansas school districts attending a seminar covering school district business topics. The district does not charge sales tax on the food sold. Would that be allowed on the theory that over 90% of the meals purchased were being purchased by other Kansas school districts from the Kansas school district selling the food?

Response: Direct purchases of meals made by an exempt educational entity (such as a school district) by check or voucher and used for educational purposes, would be exempt from sales tax. Sales tax should be charged on any meals sold to others.

3. A Kansas school district serves lunch off campus to a civic group and does not charge sales tax on the food sold. Would this be allowed?

Response: Unless the civic organization has been granted its own sales tax exemption (in which case they should present a properly completed sales tax exemption certificate at the time of purchase, and the meal purchase should be by check or voucher from the exempt civic organization itself), sales tax should be charged on the any meals sold.

This is a private letter ruling pursuant to K.A.R. 92-19-59. It is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to an accurate determination by the department, this ruling is null and void. This ruling will be revoked in the future by the operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or published revenue ruling, that materially affects this private letter ruling.

Please let me know if you have additional questions.

Very truly yours,

Richard L. Cram

Date Composed: 09/30/2004 Date Modified: 09/30/2004

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