Was a voluntary one-dollar charitable donation added to a restaurant guest check part of the taxable meal price?

Plain-English summary

The restaurant proposed placing a box on each guest check so a customer could voluntarily add one dollar for a specified charity helping local homeless people. The restaurant would collect the donations during the month and turn them over in full to the charity.

The Comptroller said the contribution was not part of the taxable consideration for the meal as long as it was separately stated and identified as a donation to a charitable organization. The separately stated donation was therefore not taxable.

The body of the published letter is dated January 9, 1991, while STAR lists the document under an official issued date of January 9, 1992. This page preserves STAR's date in the metadata and the visible letter date in the original text below.

What this means for you

A restaurant using this structure should make the customer's choice voluntary, clearly separate the donation from the meal charge, identify its charitable purpose, and remit the collected amount in full as described in the letter.

Common questions

Was the dollar part of the taxable meal price? No. What facts supported that result? It was voluntary, separately stated, identified as a charitable donation, and passed in full to the specified charity. Did the letter address a mandatory fee? No; the described charge was voluntary.

Citations and references

• The letter does not identify a numbered statute or administrative rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9201L1152B05

Original ruling text

January 9, 1991

Dear **:

Thank you for your letter regarding the taxability of funds collected
by **'s from its customers to be donated to a charitable organization.

You state that your restaurant's guest check will have at the bottom
a designation box for the customer to mark to have an additional dollar
added to the bill as a voluntary donation. You state that the
guest check would also state that this voluntary donation would go to
a specified charity that helps the homeless of that area. The donations
are to be collected through the month and then turned over, in
full, to the specific charity.

As long as this contribution is separately stated and identified as
a donation to a charitable organization, it would not be part of the
taxable consideration given for the meal. This separately stated donation
would therefore not be taxable.

This opinion is based on the facts presented. If there are additional
or different facts, the opinion could change.

If you have any questions, please don't hesitate to write the Tax
Administration Division or call one of our tax specialists toll
free at 1-800-252-5555.

Sincerely,

Joan Hale
Tax Administration Division