Texas Letter Ruling 9210L1200F09: Caterer — Definition — Treated As Restaurant

Subject

Caterer — Definition — Treated As Restaurant

Plain-English summary

The Texas Comptroller's office sent this letter to a caterer's representative following an audit, explaining that the caterer owes sales tax on the tangible personal property it rents in order to put on catered events — items such as tables, chairs, dance floors, sound and lighting equipment, tents, staging, uniforms, and similar rental items. The letter attaches an appendix (derived from the client's prior audits) listing specific rented items and vendors on which tax is owed, effective December 1, 1992, and notes the lists are examples, not exhaustive.

The core reasoning is that a caterer is treated the same as a restaurant for Texas sales tax purposes. Just as a restaurant must collect tax on its total charge to a customer and must pay tax when it rents things like employee uniforms, a margarita machine, or a stage and audio system, a caterer must do the same. Because the caterer is the one actually using (consuming) these rented items to put on the event, it cannot rent them tax-free under a resale exemption — the caterer, not its customer, is legally the consumer of the rented property. The letter cites an enclosed prior hearing decision, Hearing No. 26,488, as support for this position.

The letter also notes that an auditor would separately contact the client to make sure the caterer had a clear understanding of the ruling, as the recipient had requested.

What this means for you

Caterers and catering businesses

If you rent equipment, furniture, decor, staging, sound systems, uniforms, or similar items to put on catered events, Texas treats you as the consumer of those rented items — not as a reseller passing them through tax-free to your customer. That means you owe sales tax when you rent them, the same way a restaurant owes tax on items like employee uniforms or a rented sound system. You cannot claim a resale exemption on this kind of rental just because the rented item will be used at a customer's event.

Restaurant owners

This ruling confirms that the Comptroller applies the same tax treatment to caterers as it does to restaurants. If your restaurant also caters events, the same rule applies to any equipment or property you rent to service those events — you owe tax on the rental just as you would on equipment rented for use in the restaurant itself.

Accountants and tax professionals

This is a taxpayer-specific enforcement letter following an audit, not a generally published policy ruling with statutory citations. The letter's core authority is Comptroller Hearing No. 26,488 (not quoted or otherwise cited here) and the general principle that a caterer is the consumer, not a reseller, of tangible personal property it rents to service events. When advising catering clients, treat rented event equipment as a taxable input cost rather than an item eligible for a sale-for-resale exemption certificate.

Common questions

Q: Why does a caterer owe tax on items it only rents temporarily for one event?
A: Because the Comptroller treats the caterer as the consumer of the rented property, not a reseller. The caterer uses the rented tables, chairs, sound equipment, etc. to perform its catering service — it doesn't resell those items to the customer, so no resale exemption applies.

Q: Does this only apply to rentals from the specific vendors listed in the letter?
A: No. The letter states the attached lists of rental items and vendors are "by no means exhaustive." The underlying rule is that the caterer owes tax on tangible personal property rented to cater an event generally, regardless of the specific vendor.

Q: How is a caterer different from a restaurant for tax purposes here?
A: According to this letter, it isn't — caterers and restaurants "are treated the same way, for tax purposes." A restaurant must collect tax on its total charge and pay tax on rented items like uniforms or a sound system; a caterer must do the same.

Q: When did this requirement take effect for this taxpayer?
A: The letter states the client was required to pay tax on the listed items and similar items rented from other vendors effective December 1, 1992.

Citations and references

No statutes or administrative rules are cited in the body of this letter. It references an enclosed prior Comptroller hearing decision, Hearing No. 26,488, as the basis for the position, but does not cite it in further detail.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9210L1200F09

Original ruling text

October 29, 1992

Dear **:

I am writing in reply to the July 10, 1992, letter we received from your
client, **, regarding items it rents to provide catered events.
Thank you for meeting with me and John Christian on this issue.

As we discussed, I have attached an appendix listing rental items and vendors
derived from past audits of your client. Effective December 1, 1992, your
client is required to pay tax on these items and similar items rented from
these other vendors. These are by no means exhaustive lists of items taxable to
your client. Basically, your client and all caterers owe tax on tangible
personal property rented to cater an event. Such items may not be rented tax
free for resale because a caterer is the consumer of these items. See enclosed
Hearing No. 26,488.

Caterers and restaurants are treated the same way, for tax purposes. Just as a
restaurant must collect tax on its total charge to a customer, so must a
caterer. Just as a restaurant must pay tax when it rents employee uniforms, a
margarita machine, or a stage and audio system, so must a caterer.

I hope this resolves any confusion your client may have. However, as you
requested, an auditor will contact your client to make sure they have a clear
understanding. If you have any questions or problems regarding this matter,
please feel free to write or call me at 463-4004.

Sincerely,

Wade Anderson
Tax Administration

cc: Felix Madla, Manager, ** Audit
Cynthia Turknett, ** Audit

From the last audit of your client, I derived the following list of rented
items on which your client must pay tax:

Vendor Name/Description:

**/BBQ Pit Rental
**/Forks, Bleachers, Dance Floor, Chrome Stanchion, Heat Lamp
**/Saws
**/Cactus
**/Piano Rental, Piano, Studio piano
**/Tables, chairs, plates, cups, saucers, chairs, tables, cake
plate
**/Projector, screen, VHS recorder, walkie talkie, easels,
lecturnette, color monitor, monitor, microphone, podium, sound package, sound
system, RVP 460, spotlight, Paso Podium, speaker, amplifier, cart
**/Podium
**/Carpet
**/Juke Box
**/Drape, tile, red carpet
**/Piano rental
**/Flag rental, pole rental, flags
**/Freezer rental
**/Ice cream box, freezer, vats, vat with caster, Dean fryer
rental, refrigerator, 2 masters SS, cart rental
**/Sewing machine rental
**/Tables, racks
**/Tractor rental
**/Red carpet, bases, rental, installation, high drape, uprights,
gazebo, benches, stage skirt, flag rental, flags, rental banner, post rental,
flag pole rental, tents, signs, easels
**/Tux rental, bow ties, costume rental, softshoe costume,
confederate hat, santa costume
**/Tux rental
**/Table throws
**/Canopies, trellis section, platforms, hurricane stick, dance
floor, fans, box fans, tents, astroturf, wall, lights, hurricane lamps, wall,
trellis with poles, garment racks, heater with fuel, heater, canopy with wall,
marquees, marquee with wall, podium, tenting, gazebo, copper urn, white
trellis, gazebo bar, tiki torches, patio cover, enclosure, tables, chairs,
poles, bases, platform section, coat racks, barrels, stage, aisle stands,
archway, candles, work tents, pedestal fans, podium with speakers, epergnes,
chandelier, brass pew, 20 X 20 with wall, risers, umbrellas, aisle standards,
stage platforms, dividers
**/Broiler rental
**/Equipment rental
**/Equipment rental, popcorn machine
**/Plant rental
**/Plant rental
**/Plant rental
**/Margarita machine rental
**/Machine rental
**/Machine rental
**/Machine rental
**/6 Doz blk band
**/Ties
**/PA System
**/Equipment rental
**/Plant rental
**/Mannequin
**/Risers, spotlights, tables, chairs
**/Electric truck, electric flatbed
**/Clips
**/Golf cart rental
**/Portable toilet
**/Costume rental, pistol belts, cowboy hats

From a previous audit, I derived the following list of rented items on which
your client must pay tax:

Vendor Name:/Description:

**/Tables, chairs, cloths, tents, delivered, set-up, dismantled by
rental co., walls, screens, platforms, dance floors, trellis, canopies, garment
racks, sound systems, astroturf, umbrellas, spotlights, carpet, marquees,
portable bars
**/Misc. rental
**/Fireworks consumed at party
**/Rentals: Cassette player, loud speakers, amp, spotlights, audio
equipment, delivered, set-up and dismantled by rental co., microphone rental
**/Cut flowers, consumed at party
**/Rental of stage equipment and decorations, delivered, set-up and
dismantled by rental co.
**/Special dress, costumes, uniforms required by customer's party
motif
**/Tuxedo rental
**/Tables, chairs, cloths, tents, delivered, set-up, dismantled by
rental co., walls, screens, platforms, dance floors, trellis, canopies, garment
racks, sound systems, astroturf, umbrellas, spotlights, carpet, marquees,
portable bars
**/Rental: Decorative lights
**/Costumes
**/Popcorn machine
**/Rentals: Plants and flowers for customer decor
**/Special items rented
**/Rentals: Plants and flowers for customer decor
**/Piano rental
**/Rentals: Portable toilets
**/Rentals: Stage curtains