Were meals sold to retirement-community residents exempt while the residents were evacuated to a hotel?

Plain-English summary

A business bought meals and resold them to retirement-community residents who had been evacuated to a hotel. The Comptroller concluded that the meal sales were taxable.

Rule 3.293(c)(2)(F) exempted food served to permanent residents of a retirement facility at the retirement facility. The temporary hotel was not a retirement facility, so the location requirement was not satisfied even though the diners were permanent retirement-community residents.

What this means for you

Retirement communities and emergency planners

Under this letter, the exemption followed both the resident and the qualifying location. Moving residents to a hotel during an evacuation did not extend the retirement-facility meal exemption to that hotel.

Accountants and tax professionals

The ruling applied the quoted rule strictly. It did not create an emergency or evacuation exception to the requirement that meals be served at the retirement facility.

Common questions

Were the residents' meals exempt because the diners remained permanent retirement-facility residents? No. The rule also required the meals to be served at the retirement facility.

Did the hotel count as a retirement facility during the evacuation? No. The letter expressly said it was not a retirement facility.

What did Rule 3.293 say about visitors and employees? The quoted provision said meals served to visitors or employees of the retirement facility were taxable.

Citations and references

• 34 Tex. Admin. Code Rule 3.293(c)(2)(F) (food served to permanent retirement-facility residents)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9203L1158B14

Original ruling text

March 2, 1992

Dear **:

Thank you for your recent letter regarding the tax status of
meals purchased by your firm and resold to retirement community
residents who have been evacuated to the ** .

Rule 3.293 (c) deals with exempt sales of food. Subsection
(2)(F) is on point.

(2) Food sales by schools, school-associated groups, and state
institutions. For the purposes of this paragraph, food includes
soft drinks and candy but does not include alcoholic beverages.
Tax is not due on the sale of food when:

(F) served to permanent residents of a retirement facility at the
retirement facility. Meals served to visitors or employees of the
facility are taxable. (emphasis added)

As you can see, the rule requires that the meals be served at the
retirement facility if their sale is to be exempt. And, since the
** is not a retirement facility, the exemption does not
apply.

This opinion is based on the facts you presented. Other facts,
though similar, may yield different results.

If you have questions or need more information, please call or
write. You may reach me by calling toll free, (800) 531-5441.
My direct line number is (512) 474-4680. The number for FAX
transmissions is (512) 475-0900. You may write to me in care of
Tax Administration Division.

Sincerely,

Al Van Allen
Tax Administration Division