Did a college have to collect Texas sales tax on meals bundled with tuition and dormitory room in one mandatory charge?

Plain-English summary

The college charged one mandatory fee covering tuition, dormitory room, and meals. Students could not decline the meal portion, and the package did not separately price its components.

The Comptroller said the college did not have to split meals into a separately charged line item. It nevertheless had to collect and report sales tax on the portion of the single charge attributable to meals.

What this means for you

A mandatory, all-in-one dormitory package did not make the included meals nontaxable. The institution still had to identify the portion attributable to meals for sales-tax reporting.

Common questions

Did the college have to separately charge for meals? No.

Was the entire package nontaxable? No. Sales tax applied to the portion attributable to meals.

Did it matter that students could not opt out of meals? No different result was given; the ruling still required tax on the meal portion.

Citations and references

• 34 Tex. Admin. Code Rule 3.293(b)(3) and (4), Food; Food Products; Meals; Food Service

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9203L1166A04

Original ruling text

March 30, 1992

Dear **:

Your letter requesting a ruling regarding the taxability of meals
provided by an institution of higher learning pursuant to a
dormitory plan has been assigned to me for review and response. I
appreciate your patience and apologize for the delay in responding.
Your specific inquiry is as follows:

1. An institution of higher education has a program in which
   tuition, room, and board are grouped together as a single
   package.

2. One fee is charged for the entire package. The individual
   components of the package are not separately charged.

3. Students do not have the option of declining the meal portion
   of the package. The meals are included as a part of the single
   charge whether the student eats in the dormitory or not.

Under the circumstances described above, is the institution
obligated to separate the charge for meals and collect sales tax
on that amount? Or would the entire charge be nontaxable?

RESPONSE: The institution is not required to separate the charge
for meals from the charge for room and tuition; however, sales
tax must be collected and reported on the portion of the charge
attributable for meals. See sections (b)(3) and (4) of the
enclosed Rule 3.293, Food; Food Products; Meals; Food Service.

This opinion is based on the facts presented. Other facts though
similar may provide a different result. If you have other
questions or need more information, you may call 512/463-4600, or
1-800-252-5555 from outside Austin. You may write to Tax
Administration Division.

Sincerely,

Gilbert Zamora
Tax Administration Division