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23VAC10-210-930. Meals.

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.

Historical Notes

Derived from VR630-10-64; revised January 1, 1979; August 1, 1982; amended, eff. January 1, 1985.


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