Is a company's charge to a day camp for supplying only the labor to cook meals — with the camp buying the groceries, setting the menu, and handling serving and cleanup — subject to New York sales tax?

Plain-English summary

A corporation (the "Client" in this ruling) is hired by a day camp under an oral agreement to prepare hot and cold meals for campers, paid based on the camp's population rather than daily attendance. Critically, the camp — not the Client — determines the menu, buys the groceries directly from a third-party grocer with no connection to the Client, and provides the kitchen equipment and supplies. The camp also handles serving the food and cleaning up the eating area. The Client's role is limited strictly to kitchen operations: it hires, fires, pays, and supervises the cooking staff at the camp's own location. Client doesn't run a restaurant and doesn't prepare food for the general public, nursing homes, airlines, colleges, or any other venue.

New York taxes charges for food and drink sold by restaurants, caterers, and similar establishments, and it separately taxes a specific list of enumerated services (like repair and maintenance). The Department found neither tax applies here: since Client never buys, sells, serves, or delivers any food, drink, or tangible property — the camp does all of that directly with its own grocer — Client isn't selling food or drink and isn't providing a "catering" service in the tax-law sense. And standing alone, a pure cooking-labor service (supplying staff who just cook, with no sale of food or other tangible property attached) isn't among the enumerated services New York's sales tax reaches. So the camp's payments to Client for cooking labor are exempt from sales and use tax entirely.

What this means for you

Food-service staffing companies working with camps, schools, or institutions

If your business supplies only cooking labor — while your client buys its own groceries, sets its own menu, and handles its own serving and cleanup — your labor charges can fall outside New York's sales tax entirely, since you're not selling food, drink, or a taxable enumerated service.

Businesses structuring food-service arrangements to avoid catering classification

The line between a nontaxable labor arrangement and a taxable catering service turns on who actually buys and sells the food. Once your business purchases the groceries and resells prepared meals (rather than just staffing someone else's kitchen with their own supplies), you're likely providing taxable catering or restaurant service instead.

Accountants and tax professionals

This is a useful precedent for facts-driven food-service arrangements: check who buys the groceries, who sets the menu, who serves and cleans up, and whether the vendor's charge is purely for labor. All those facts pointed away from a taxable sale of food or catering service here.

Common questions

Q: Is any arrangement to cook food for a client automatically nontaxable?
A: No — this turned on the specific facts that Client bought no groceries, sold no food, and the camp handled the menu, purchasing, serving, and cleanup. A company that buys ingredients and sells prepared meals is generally providing taxable restaurant or catering services.

Q: Does it matter that Client is paid based on camp population rather than a per-meal price?
A: The Department didn't hinge its answer on the payment method — the controlling facts were that no food or drink was sold by Client and no catering service (as defined by regulation) was provided.

Q: Would the answer change if Client also purchased the groceries?
A: Very likely — buying and reselling food, or providing full catering services (serving, cleanup, etc.), would trigger New York's restaurant/caterer sales tax under Tax Law § 1105(d).

Citations and references

Statutes and regulations:

• Tax Law § 1101(b)(4)-(5) (definitions: retail sale; sale, selling or purchase)
• Tax Law § 1105(d)(i) (restaurant/caterer food and drink tax); § 1105(c) (enumerated services tax)
• Tax Law § 1115(a) (food exemption)
• 20 NYCRR § 527.8(f) (caterer sales)

Prior rulings referenced:

• Jacqueline Holtzman, TSB-A-01(12)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2002.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a02_35s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-02(35)S
Sales Tax
July 25, 2002

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S010626A

On June 26, 2001, the Department of Taxation and Finance received a Petition for Advisory
Opinion from Kaufman & Serota, P.C., 225 Broadway, Suite 1902, New York, New York 10007.
Petitioner, Kaufman & Serota, P.C., provided additional information with respect to the Petition on
September 10, 2001.
The issue raised by Petitioner is whether the amount charged by Petitioner's client for
providing labor to prepare hot meals at a day camp is subject to sales and compensating use tax,
under the circumstances presented.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner's client (Client) is a corporation. Client is engaged by a day camp to provide labor
in the preparation of hot and cold meals. Client does not operate a restaurant and does not prepare
food for the general public or other venues like nursing homes, airlines, colleges, etc. The
arrangement with the day camp is an oral agreement and compensation is based on the camp
population. Fluctuations in daily attendance of the campers do not impact the compensation paid
to Client.
Client prepares the meals at the camp. The camp is responsible for determining the menu,
purchasing the groceries, providing the equipment and supplies to prepare the food and determining
when the meals will be served. Client may suggest typical foods campers will eat and the quantities
of various ingredients needed to complete the menu. The camp is billed by and pays a third party
for the groceries. Client has no affiliation with the third party grocer. The camp is also responsible
for serving the food and any cleanup of the eating area. Client is responsible only for the kitchen
operations. With regard to the staff preparing the meals, Client hires and fires the staff, pays the
wages, and supervises the staff at the camp's location.
Applicable Law and Regulations
Section 1101(b) of the Tax Law provides, in part:
When used in this article for the purposes of the taxes imposed by
subdivisions (a), (b), (c) and (d) of section eleven hundred five and by section
eleven hundred ten, the following terms shall mean:
*

*

*

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Sales Tax
July 25, 2002

(4) Retail sale. (i) A sale of tangible personal property to any person for any
purpose, other than (A) for resale as such...or (B) for use by that person in
performing the services subject to tax under paragraphs (1), (2), (3), (5), (7) and (8)
of subdivision (c) of section eleven hundred five where the property so sold becomes
a physical component part of the property upon which the services are performed or
where the property so sold is later actually transferred to the purchaser of the service
in conjunction with the performance of the service subject to tax....
*

*

*

(5) Sale, selling or purchase. Any transfer of title or possession or both,
exchange or barter, rental, lease or license to use or consume (including, with respect
to computer software, merely the right to reproduce), conditional or otherwise, in any
manner or by any means whatsoever for a consideration, or any agreement therefor,
including the rendering of any service, taxable under this article, for a consideration
or any agreement therefor.
Section 1105 of the Tax Law imposes sales tax upon:
(a) The receipts from every retail sale of tangible personal property, except
as otherwise provided in this article.
*

*

*

(d)(i) The receipts from every sale of beer, wine or other alcoholic beverages
or any other drink of any nature, or from every sale of food and drink of any nature
or of food alone, when sold in or by restaurants, taverns or other establishments in
this state, or by caterers, including in the amount of such receipts any cover,
minimum, entertainment or other charge made to patrons or customers (except those
receipts taxed pursuant to subdivision (f) of this section):
(1) in all instances where the sale is for consumption on the premises
where sold;
(2) in those instances where the vendor or any person whose services
are arranged for by the vendor, after the delivery of the food or drink by or
on behalf of the vendor for consumption off the premises of the vendor,
serves or assists in serving, cooks, heats or provides other services with
respect to the food or drink . . . .
Section 1105(c) of the Tax Law imposes the sales tax upon the receipts from the sale of
certain enumerated services.

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Sales Tax
July 25, 2002

Section 1115(a) of the Tax Law provides, in part:
Receipts from the following shall be exempt from the tax on retail sales
imposed under subdivision (a) of section eleven hundred five and the compensating
use tax imposed under section eleven hundred ten:
(1) Food, food products, beverages, dietary foods and health supplements,
sold for human consumption but not including (i) candy and confectionary, (ii) fruit
drinks which contain less than seventy percent of natural fruit juice, (iii) soft drinks,
sodas and beverages such as are ordinarily dispensed at soda fountains or in
connection therewith (other than coffee, tea and cocoa) and (iv) beer, wine or other
alcoholic beverages, all of which shall be subject to the retail sales and compensating
use taxes, whether or not the item is sold in liquid form . . . nothing herein shall be
construed as exempting food or drink from the tax imposed under subdivision (d) of
section eleven hundred five.
Section 527.8(f) of the Sales and Use Tax Regulations provides, in part:
Caterers. (1) Sales by caterers.
(i) All charges by caterers selling food or drink who provide serving or
assistance in serving, cooking, heating or other services after delivery are taxable.
(ii) Sales of food or drink by caterers where the caterers merely deliver the
items purchased and offer no other services after delivery are deemed to be sales for
off-premises consumption and are taxable in accordance with the provisions of
subdivision (a) of this section.
(iii) Sales of food or drink by caterers where the caterers deliver the items
purchased and arrange the food on platters or place the drink in containers so that
food or drink is ready to serve guests are taxable.
Opinion
Client’s services are limited to cooking meals at the day camp. The camp is responsible for
determining the menu and providing the groceries, equipment and supplies. The camp is billed by
and pays a third party for all groceries. Client has no affiliation with the third party grocer. The
camp is responsible for serving the food to its campers as well as the clean-up of the eating area.
Since there is no sale of food, drink or other tangible personal property, or other services, Client is
not selling food or drink or providing a catering service within the meaning and intent of Section
1105(d) of the Tax Law and Section 527.8(f) of the Sales and Use Tax Regulations. Furthermore,
the cooking service provided by Client, taken by itself, is not one of the services enumerated as

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Sales Tax
July 25, 2002

taxable under Section 1105(c) of the Tax Law. See Jacqueline Holtzman, Adv Op Comm T&F,
April 17, 2001, TSB-A-01(12)S. Accordingly, Client’s charges to the day camp for such cooking
service are not subject to sales and use tax.

DATED: July 25, 2002

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.