Virginia Administrative Code › Title 23 - TAXATION › Agency 10 - DEPARTMENT OF TAXATION › Chapter 210 - RETAIL SALES AND USE TAX › Section 23VAC10-210-930 - Meals

Current through Register Vol. 40, No. 24, July 15, 2024
A. Generally.
				Retail sales of meals by restaurants, hotels, motels, clubs, caterers, cafes
				and others are taxable. Cover, minimum and room service charges in connection
				with the provision of meals are a part of the sales price and are taxable.
If a boarding house serves meals only to regular boarders,
				  the operator of the boarding house is the consumer of the purchased food items
				  and pays the tax to the supplier.
The tax applies to the sale of meals and other tangible
				  personal property by railroad, Pullman car, steamship, airline, or other
				  transportation companies while operating in Virginia. The tax applies to meals
				  delivered to carriers in this state to be furnished without a specific charge
				  to passengers regardless of where served.
Fraternities, sororities and other student societies, with
				  members residing at a common location and jointly sharing household expenses,
				  including meals, are not considered to be selling at retail, so meals furnished
				  to members are not taxable. Sales of food, beverages and other tangible
				  personal property to these organizations are sales at retail and subject to the
				  tax. Caterers and other persons selling meals to fraternities and sororities
				  are required to collect and pay the tax on the sales price.
B. Meals sold to employees. Any employer who
				sells meals to employees must add the tax to the charge and pay the tax on
				gross sales.
C. Meals furnished to
				employees. Meals and drinks that restaurants and food service operators furnish
				to their employees without charge are not subject to the tax.
D. Tips and service charges. If a customer
				tips a dealer's employee, and the amount is wholly at the discretion or
				judgment of the customer, the tip is not subject to the sales tax. This applies
				whether the customer gives the tip directly to the employee in cash or adds the
				tips to his bill (provided the dealer turns over the full amount of the tip to
				the employee).
If the dealer adds an amount or flat percentage to the meal
				  price, whether the amount is designated as a tip or as a service charge, the
				  addition is a part of the sales price and is subject to the tax even if the
				  amount or flat percentage is paid over in part or in whole by the dealer to
				  employees.
For example, if Restaurant A automatically adds a 15%
				  gratuity or service charge to the charge for the meal, such charge represents
				  an increment to the sales price of the meal. Similarly, if Restaurant B
				  automatically adds a 20% gratuity or service charge unless the customer
				  specifically specifies otherwise, such charge will be subject to the tax unless
				  the customer exercises his option and specifies a different amount.
E. Free meal tickets. A dealer who
				has collected the tax from a customer but subsequently issues a ticket which is
				redeemable for a free meal will not be liable for any additional tax on the
				free meal provided the redeemable ticket was issued to the customer as the
				result of poor quality food. When a redeemable free meal ticket is issued to a
				customer as the result of poor service, for public relations purposes (such as
				for civic groups) or for any reason other than poor quality food, the dealer
				must report use tax on the cost price of all tangible personal property
				furnished in providing the free meal at the time the ticket is
				redeemed.
F. Peanuts, popcorn,
				paper doilies, paper placemats, silverware, bags and similar items. Peanuts,
				popcorn and similar food items served to customers who are waiting for a meal
				or drink are considered a part of the sale of the meal or drink and can be
				purchased exempt under a Resale Certificate of Exemption. Paper doilies, paper
				placemats, plastic silverware, bags and similar items furnished with meals and
				which are disposed of after use by only one customer are also considered a part
				of a meal and can be purchased exempt under a Resale Certificate of Exemption.
				Other items purchased by a restaurant for its own use in preparing and serving
				meals, such as kitchen equipment, plates, glasses, silverware, tablecloths, and
				similar items are taxable and may not be purchased under a Certificate of
				Exemption.
Statutory Authority
§ 58.1-203 of the Code of Virginia.