Can a caterer/event planner buy specialty equipment (like tables, chairs, or a margarita machine) tax-free with a resale certificate if it plans to charge clients a separately stated rental fee for using that equipment?

Plain-English summary

An event planner/caterer (the "Firm") offers several separate lines of business that clients can buy individually or bundled: invitations, location planning, theme planning, flowers, catering (food, beverages, and labor), rental of third-party equipment, and rental of specialty equipment/serving items the Firm itself owns. Each service is separately stated on invoices. The Firm already collects and remits sales tax on its charge to clients for renting out its own specialty equipment (tables, chairs, a margarita machine, lights, etc.) — but asked whether it must also pay sales/use tax when it purchases that equipment in the first place, since it's exclusively rented back out to clients.

The Comptroller's answer: yes, the Firm must pay tax on its own purchases of this equipment — it cannot use a resale certificate to buy the equipment tax-free just because it charges clients separately for using it. Two rules explain why:

• Rule 3.293(f)(3): operators of eating establishments, caterers, wedding/bridal consultants, and other food service operators must pay tax on the purchase of all equipment and replacement parts used to provide their food service — the rule lists tables, chairs, place mats, tablecloths, cloth napkins, silverware, dishes, cooking utensils, dispensers, and similar items as examples of equipment taxable to the operator.
• Rule 3.293(f)(5): a separately stated charge to a customer for using items like tables, chairs, tableware, and tablecloths is not treated as a genuine rental of those items — it's folded into the sales price of the meal or food products as an expense connected with that sale.

So even though the Firm bills clients a distinct line item for "renting" its serving equipment, that charge doesn't convert the transaction into a real equipment rental for tax purposes — the Firm remains the taxable purchaser/consumer of the equipment it uses to render its catering/event services.

What this means for you

Caterers, event planners, and food service operators

You owe sales tax when you buy tables, chairs, serving items, dispensers, and similar equipment used to provide your catering or food service — even if you separately bill clients a rental-style fee for using that equipment. You cannot use a resale certificate on these purchases; a "rental" line item on your invoice to the client doesn't change the equipment's taxable status at the point you bought it.

Wedding/bridal consultants and similar service providers

The same rule applies broadly to anyone providing food service under Rule 3.293(f): pay tax up front on your operating equipment, regardless of how you itemize charges to your clients.

Accountants and tax professionals

This is a clean, two-rule illustration: Rule 3.293(f)(3) makes the equipment itself taxable to the food service operator at purchase, and Rule 3.293(f)(5) independently forecloses treating a separately stated customer-facing "rental" charge as converting the arrangement into a genuine TPP rental. Both rules point the same direction — no resale/exemption certificate route for this equipment.

Common questions

Q: I'm a caterer and I separately bill clients for renting my tables, chairs, and serving equipment. Can I buy that equipment tax-free with a resale certificate?
A: No. Under Rule 3.293(f)(3), you must pay sales tax on equipment used to provide your food service, and under Rule 3.293(f)(5), your separately stated rental-style charge to the client doesn't count as a genuine equipment rental for tax purposes.

Q: Does it matter that I already collect and remit tax on the charge I bill my clients for this equipment?
A: No — that doesn't offset or substitute for the tax you owe on your own purchase of the equipment. Both taxes can apply.

Q: What about equipment I rent from third-party vendors and pass through to clients?
A: This letter addresses equipment the Firm itself owns and rents out; third-party rented equipment may be treated differently depending on how that arrangement is structured — not addressed in this particular letter.

Q: Can I rely on this letter for my own catering business?
A: No. This opinion is based on the facts submitted, and other facts, though similar, may result in different answers.

Citations and references

Rules:

• 34 Tex. Admin. Code Rule 3.293(f)(3) (equipment taxable to food service operators/caterers)
• 34 Tex. Admin. Code Rule 3.293(f)(5) (separately stated table/chair/tableware charges are part of the meal's sales price, not a rental)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200004218L

Original ruling text

April 21, 2000

Dear **:

Thank you for your recent letter concerning the taxability of services provided
by a client. Your client, (the Firm) is an Event Planner/Caterer and provides
the following list of services to its clientele:

1. Invitations
2. Location planning
3. Theme Planning
4. Flowers
5. Catering including food, beverages and labor
6. Rental of equipment provided by third party vendors
7. Rental of specialty equipment and serving items owned by the Firm

Each of these services is a separate line of business - a client can engage the
Firm for any one or all of these services. Additionally, the charge for each
service is separately stated on the client's invoice.

Your question revolves around item No. 7 - Rental of specialty equipment and
serving items owned by the Firm. The Firm recognizes its responsibility to
charge its clientele and remit sales tax on this service.

You ask if the Firm is required to pay sales/use tax on items it purchases that
will be exclusively rented out to its clients.

Response: A caterer should pay sales tax on the purchase or rental of tangible
personal property used to provide their services.

Rule 3.293(f)(3) states "Operators of eating establishments, caterers, wedding
or bridal consultants, and other food service operators must pay the tax on the
purchase of all equipment and replacement parts for equipment used to provide
the food service. Examples of supply items and equipment taxable to the
operator include, but are not limited to, tables, chairs, place mats,
tablecloths, cloth napkins, silverware, dishes, cooking utensils, dispensers,
garbage can liners, mop holders, lime squeezers, grill bricks, aprons, glass
creamers, appliances, menus, and inserts."

Rule 3.293(f)(5) states that "The sales price of meals and food includes any
separately stated charge for the use by a customer of items such as tables,
chairs, tableware, and tablecloths. The separately stated charge for the use of
these items is not considered a rental of the items to a customer but an
expense connected with the sale of the meals or food products."

The State Tax Automated Research (STAR) system, which provides viewing and
downloading of our rules, the Tax code, edited letter rulings, hearings,
Attorney General Opinions, etc., may be accessed on the Internet at:
http://www.window.state.tx.us/

This opinion is based on the facts you submitted and current law. Other facts
though similar, may result in different answers.

If you have any questions or need more information, I'll be glad to help you.
Please call me toll free at 1.800.531.5441, extension 5.0330. My direct line is
512.475.0330. My email address is .

Sincerely,

Bettie Peterson
Tax Policy Division

cc: Adina Christian