Rhode Island Code of Regulations › Title 280 - Department of Revenue › Chapter 20 - Division of Taxation › Subchapter 70 - Sales and Use Tax › Part 4 - Local Meals and Beverage Tax (280-RICR-20-70-4) › Section 280-RICR-20-70-4.14 - Additional Tax Applications

Current through June 14, 2024
A. Gratuities and
				 other charges: When a retailer bills a customer for the rental of a public room
				 or for gratuities, service charges, cover charges, or entertainment charges
				 (including charges for bands or orchestras) in connection with the serving of
				 meals or soft/alcoholic drinks, the amount billed or received by the retailer
				 will be considered as part of the gross receipts from the sale of the meal or
				 soft/alcoholic drinks and must be included in the measure of tax. Amounts
				 designated as service charges, added to the price of meals, are a part of the
				 selling price of the meals and, accordingly must be included in the retailer's
				 gross sales subject to tax.
B.
				 Sales by Caterers: The tax applies to the entire charge made by caterers for
				 serving meals, food, and soft/alcoholic drinks, inclusive of charges for food,
				 the use of dishes, silverware, glasses, chairs, tables, etc., used in
				 connection with serving meals, and for the labor of serving the meals. Sales of
				 meals by caterers to social clubs, fraternal organizations, or other persons
				 are sales for resale if a valid resale certificate is issued from the retailer
				 of the meal.
C. Social Clubs and
				 Fraternal Organization: "Social clubs and fraternal organizations" as used
				 herein includes any corporation, partnership, association, group, or
				 combination acting as a unit, such as service clubs, lodge organizations,
				 community, country and athletic clubs. The tax applies to receipts from the
				 furnishing of meals, food, and soft/alcoholic drinks by social clubs, and
				 fraternal organizations.
D. Meals
				 Served to Students and Teachers: The tax does not apply to the sale of meals by
				 public, private, or parochial schools, school districts, colleges,
				 universities, student organizations, and parent-teacher associations to the
				 students or teachers of a school, college, or university whether the meals are
				 served by the said educational institution or by a food service or management
				 entity under contract to said educational institution. This applies even though
				 the school is operated for profit. Items sold through vending machines located
				 in areas designated primarily for students and teachers shall be considered a
				 meal or a portion thereof. Those designated areas include cafeterias, student
				 unions, classroom buildings, teachers' lounges, dormitories and faculty
				 buildings. Food items and soft/alcoholic drinks sold by college/university
				 rathskellers or taverns located on campus are subject to tax.
E. Subsidized Employer Cafeterias and Food
				 Service Operations: An employer who engages a caterer or food service
				 contractor to provide food and soft drinks or service in connection therewith
				 to employees at the employer's expense is the purchaser of food and soft drinks
				 and must pay the sales tax thereon. Any subsidy given by an employer to a
				 caterer or food service contractor (whether termed a management fee, guarantee
				 of profit or other designation) is taxable as a receipt from the sale of food
				 and soft drinks. Where the subsidy is paid by an employer in addition to a
				 specific amount paid by the employee, both amounts are taxed as the receipt
				 from the sale of food and soft drinks.
F. Meals Sold to Employees: The tax does not
				 apply to meals served to employees where the compensation of such employees
				 includes the providing of such meals without charge.
1. Example: a waitress working in a
				 restaurant who, as compensation for services, receives her meals without charge
				 and who, in addition thereto receives a salary. The tax does apply to meals
				 served to employees where a separate charge or deduction is made therefore by
				 the employer.
2. Example: where the
				 contract of employment provides that the employer shall deduct the cost of
				 meals served to the employee from the latter's salary, or where an actual
				 charge is made for meals served to the employees.