Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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550.0000 TAXABLE SALES OF FOOD PRODUCTS—Regulation 1603

Annotation 550.0828


550.0828 Food and Drink Aboard Boat Charters. A taxpayer's operation consists of boat charters. Less than five percent of the taxpayer's revenues are derived from boat charters where no food or drinks are provided. With respect to the remaining revenues, the taxpayer enters into two types of contracts. One type provides for charges quoted on a per-guest basis which includes tax and tip. The other type of contract separately states charges for the "yacht and crew," food, drinks, music, tax and tips. The "yacht and crew" charge includes a charge for food and beverages servers.

A significant purpose for a person entering such a charter involving the purchase of taxable food is to obtain the benefits of the yacht charter. That the point of departure and point of return are the same does not affect the analysis since tours around the bay are just as much transportation as a ferry across the bay. Charges attributable to the yacht charters are not includable in the taxpayer's taxable gross receipts. In addition, charges for optional live music are also not part of the taxpayer's gross receipts.

Whether or not they are separately stated, amounts attributable to the sale of food and beverages and for the service of food and beverages are subject to sales tax. 10/23/90.