Ezel / Tax Rulings / TX
TX 8501L0611E13 Sales and/or Use Tax (State,Local,MTA) 1985-01-17

How did Texas tax a lump-sum office coffee service and the supplies used to provide it?

Short answer: The lump-sum charge to the customer was not taxable. The provider had to pay its supplier tax on the machine, cups, napkins, filters, and stir sticks; coffee, cream, and sugar were exempt.

Apply this to your situation

This page answers the general question as of 1985. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1985
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The Texas Comptroller said a coffee-service provider did not collect tax from its customer when the service was sold for one lump-sum charge.

Instead, the provider had to pay tax to its supplier on the coffee machine, cups, napkins, filters, and stir sticks used to provide the service. Coffee, cream, and sugar were exempt.

What this means for you

Office coffee-service companies

Under the facts in this 1985 letter, the provider was the taxable purchaser of the machine and nonfood supplies, while its lump-sum service charge to the customer was not taxable.

Business customers

The ruling did not require tax to be added to the stated lump-sum coffee-service charge.

Accountants and tax professionals

The answer expressly depended on lump-sum billing. The letter did not address separately stated equipment, supply, or food charges.

Common questions

Q: Was the lump-sum coffee-service charge taxable?
A: No, on the facts presented.

Q: Which purchases were taxable to the provider?
A: The machine, cups, napkins, filters, and stir sticks.

Q: Which purchases were exempt?
A: Coffee, cream, and sugar.

Q: Did the ruling address itemized customer invoices?
A: No. It addressed a coffee service provided for a lump-sum charge.

Citations and references

The letter did not cite a specific statute or administrative rule.

Source

Original ruling text

January 17, 1985

Dear ***:

This letter is a reply to the recent inquiry made to *** of
our CITY Southwest Field Service Office.

If the coffee service is provided for a lump-sum charge, tax should be
paid to your supplier for the coffee machine, cups, napkins, filters,
and stir sticks. Coffee, cream and sugar is exempt. The charge to your
customer for the coffee service is not taxable.

This opinion is based upon the facts you presented. If there are
additional or different facts, this opinion may change.

Please feel free to contact us if you have additional questions.

Sincerely,

Tax Policy Section
Tax Administration Division

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