Did a New Hampshire food franchise owe meals and rooms tax on prepared food products delivered for parties, even without customer seating?

Plain-English summary

The New Hampshire Department of Revenue Administration ruled that ABC, LLC's prepared food products were taxable meals. ABC prepared food for special occasions and delivered most orders, even though its storefront had no place for customers to eat. The Department treated ABC as a caterer and required it to collect and remit meals and rooms tax on sales of its products.

The ruling focused on what ABC sold and how it served customers. The products were food prepared for human consumption and displayed for events. The Department cited the rule expressly including party platters among meals. It also cited the statutory definition of restaurant, which includes catering businesses, and the Department's rules defining a caterer and a catered meal. The absence of seating, plates, napkins, and eating utensils at ABC's storefront did not change its conclusion.

What this means for you

If you prepare food for events and deliver it to customers, this ruling shows why the Department may treat your sales as taxable meals even when customers do not eat at your premises. It is a 2005 decision about ABC's particular products and delivery business. Check the current Meals and Rooms Tax law and rules for your own operations.

The ruling mentions sauce and Mylar balloons that customers could request, but it gives no separate tax treatment for either add-on. It decides the taxability of ABC's described product sales.

Common questions

Q: Was ABC exempt because its storefront had no dining area? A: No. The Department found that ABC prepared and delivered food for special occasions and fit the rule's definition of a caterer. The ruling quotes the meal definition as covering takeout and delivered meals.

Q: Did decorative presentation make the food products nontaxable? A: No. The Department said the products were food prepared for consumption and were comparable to party platters listed in its meal rule.

Q: Does this ruling decide the tax on the optional balloons or sauce separately? A: No. Those items appear in the facts, but the ruling does not separately allocate a price or decide their individual tax treatment.

Q: Can another food seller rely on this ruling? A: No. The ruling says its application elsewhere is not binding on the Department, and the official archive says other taxpayers may not rely on declaratory rulings issued for particular petitioners and facts.

Citations and source limits

The ruling applies RSA 78-A:3, X(a)-(b), RSA 78-A:6, II-III, and N.H. Code Admin. R. Rev 701.03, 701.04, and 701.13 as they were discussed in the 2005 document. Its signature line reads "6-15-05." This page does not assert that those provisions remain unchanged today.

Source

• Official archive: New Hampshire declaratory rulings
• Official PDF: Document # 8373

Original ruling text

IN THE MATTER OF THE PETITION OF ABC, LLC FOR A DECLARATORY RULING
Document # 8373

_________
_

Pursuant to RSA 541-A:1, V; 541-A:9, I(f) and Rev 209.01 et seq., ABC, petitioned the Department of Revenue Administration with respect to the applicability of the New Hampshire Meals and Rooms Tax to the products sold by its business.

DETERMINATION REQUESTED BY THE PETITIONER

ABC operates a franchise and is in the business of preparing and selling food products. ABC has requested a determination that its business is not subject to the Meals and Rooms Tax.

FACTS PRESENTED BY THE PETITIONERS

The petitioners made the following representations of relevant facts:

ABC is a franchise that produces and sells food products. One pre-designed product includes a large jar of sauce. Sauce and Mylar balloons can be included upon the customer's request. A significant part of the cost is in the labor of preparing the food product for display and creating the decorative display.

The bulk of ABC business is via delivery. It operates a storefront where products are produced and from which they are delivered. Customers can contact ABC via telephone, internet or at the storefront to order delivery. ABCs' facility does not include any tables, chairs or other place at which a customer could eat. It also does not provide napkins, plates or eating utensils.

REVISED STATUTES ANNOTATED [RSA] AT ISSUE

1. RSA 78-A:3, X(a);
2. RSA 78-A:3, X(b);
3. RSA 78-A:3, X(c);
4. RSA 78-A:6, II; and,
5. RSA 78-A:6, III.

RULES AT ISSUE

1. N.H. Code Admin. Rev 701.03;
2. N.H. Code Admin. Rev 701.04; and,
3. N.H. Code Admin. Rev 701.13.

PETITIONER'S REPRESENTATIONS

To the best of petitioner's knowledge, the issues that are the subject of this petition:

1. 1) Are not under examination by the department;

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2. 2) Have not been examined by the department;
3. 3) Are not under consideration by the department in connection with a return
   of a prior period; and
4. 4) Are not pending in litigation.

FINDINGS

RSA 78-A, imposes a tax upon meals that are served by a restaurant for which a charge is made. In order for ABC to be subject to the tax it must first be determined if it sells meals as defined by RSA 78-A. RSA 78-A:3, X(a) defines a meal as follows:

"Meal" means any food or beverage, or both, prepared for human consumption and served by a restaurant, whether the food or beverage is served for consumption on or off the restaurant premises. The term "meal" includes food or beverages sold on a "take out" or "to go" basis, whether or not they are packaged or wrapped and whether or not they are taken from the premises of the restaurant. The term "meal" excludes any food or beverage wholly packaged off the premises except: (1) sandwiches of all kinds; (2) beverages in unsealed containers; and (3) catered meals or meals which are delivered to the location where the meal is consumed. Beverage includes an alcoholic beverage, served with or without food.

According to this definition, in order for sales by the Petitioner to be taxable, the food must be served for human consumption and it must be prepared by a restaurant. With respect to the issue of whether the products are prepared for human consumption, it is clear that the contents are prepared for human consumption. The very aspect of the product that distinguishes them is that the product can be consumed.

The DRA has also promulgated a rule relating to the definition of a meal. Rev Rule 701.13 defines a meal as follows:

"Meal", as defined under RSA 78-A:3, X(a):

(a) Includes any food or food products, such as but not limited to:

1. (1) Sandwiches of any kind whether prepared or packaged on or off the
   premises;
2. (2) Beverages in unsealed containers including any alcoholic, malt, or vinous
   beverage;
3. (3) Salads from salad bars;
4. (4) Heated foods including meats, soups, stews or chowders;
5. (5) Party platters such as vegetable, meat, dessert, bakery, fruit, hors
   d'oeuvres; or
6. (6) Prepared, ready to eat products whether or not such products have been
   warmed or cooled to a preferred temperature.
7. The rule specifically includes party platters as a meal in section Rev. 701.13
   (5). The products are types of food that are creatively displayed. They are
   designed to be sold for special events and parties and to be consumed at such
   events. Therefore, the products sold by the Petitioners fit the definition of a
   meal.

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Secondly, in order for ABC to be subject to the tax it must be determined if it is a restaurant as defined by RSA 78-A. RSA 78-A:3, X(b) defines a restaurant as follows:

(b) "Restaurant" means an eating establishment where food, food products, or beverages including alcoholic beverages are served and for which a charge is made. The term includes, but is not limited to, a cafe, lunch counter, private or social clubs, cocktail lounges, hotel dining rooms, catering business, tavern, diner, snack bar, dining room, food vending machine, and any other eating place or establishment where meals are served, even if the serving of a meal is not the primary function of the establishment such as but not limited to convenience stores, gas stations, or supermarkets, but only as to the portion of such establishment that serves a "meal" as defined in this chapter. The term includes eating establishments whether stationary or mobile, temporary or permanent.

The definition of “Restaurant” specifically includes catering businesses. The DRA has defined "Caterer" to mean “a person or persons engaged in providing a catered meal or meals including, but not limited to, a personal chef.” N.H. Code Admin. Rule Rev 701.03. The DRA has also defined “catered meal” to mean “a meal prepared or served by a person or persons engaged, as part of the regular course of business, in providing meals at various locations, including but not limited to special events, banquets, receptions…and private homes.” N.H. Code Admin. Rule Rev 701.04. The rule also provides that the meal may either be prepared or served by the caterer. In this case, the Petitioner prepares the meals and they are served by the customer. Because the Petitioner prepares the meals and delivers meals to its customers for special occasions in the regular course of business, the Petitioner fits the definition of a caterer.

RULINGS

Based on the facts as represented by the petitioner and the statutory and administrative rule provisions discussed above, the department rules that the Petitioner serves taxable meals and is a caterer, and therefore, is required to collect and remit meals and rooms tax on the sale of its products. This ruling is specific to ABC as it described its business in the petition. Application of this ruling to any other situation is not binding on the Department.

6-15-05
G. Philip Blatsos, Commissioner of Revenue