Ezel / Tax Rulings / TX
TX 8907L0966G13 Sales and/or Use Tax (State,Local,MTA) 1989-07-26

Was a restaurant-delivery service's separate delivery charge taxable when it did not sell the food?

Short answer: No, under the stated facts. The service acted as a third-party carrier, collected only exact reimbursement for the meal, and did not sell the food.

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This page answers the general question as of 1989. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1989
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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 service took telephone orders, sent a driver to the restaurant to place and pay for each order, delivered the meal, and collected the exact food cost plus a delivery charge from the customer.

Because the service was not selling the food, the Comptroller treated it as a third-party carrier. Its delivery charge was not taxable under the stated facts and Rule 3.303.

Common questions

Was the delivery business treated as the food seller? No, under the facts presented.

Could it charge for delivery without collecting tax on that charge? Yes.

Why was exact reimbursement relevant? It supported the stated fact that the service was not marking up or selling the meal itself.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

July 26, 1989

Dear **:

I received your letter of July 20, 1989 regarding the taxability
of delivery services. As I understand your business, you take
phone orders for local restaurants. YOU then dispatch a driver to
that restaurant who places and Pays for the order. The food is
then delivered to the customer; from whom you collect the amount
for the food plus your delivery charge. I understand that the
amount Collected for the food is an exact reimbursement for the
cost of the meal. You wish to know if your delivery charge is
taxable.

Charges by third party carriers are not taxable. As long as you
are not selling the food; you would not be required to charge tax
for your delivery service. I have enclosed for your reference, a
copy of Sales Tax Rule 3.303 on Transportation and Delivery
Charges.

The above opinion is based on the facts presented. Any changes to
these facts may cause this response to change. If you have any
further questions, please contact Tax Correspondence. You may
call toll free 1-800-252-5555. My extension is 34608.

Sincerely,
Brad Gabbart
Tax Correspondence

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