99-005
Response April 26, 1999
REQUEST LETTER
Dear Irene Reese:
I recently (in November) started a Personal Chef
Service. I live in PLACE, but my clients are both PLACE AND PLACE. My business is such that I create a weekly
menu for my clients, go grocery shopping, go to their home, cook two weeks
worth of meals and store them in the freezer. I clean up, then go home.
My question for you is: Do I need to pay the 1%
tourism tax on prepared meals or do I not because they do not consume the meals
all at once?
I spoke with auditing and they were not certain so
they suggested I write to you.
Thank you for your assistance.
Sincerely,
INDIVIDUAL
RESPONSE
LETTER
April 26, 1999
INDIVIDUAL
ADDRESS
RE: Advisory
Opinion - Tourism Tax on Personal Chef Services
Dear NAME,
We have received your request for an advisory opinion
concerning the application of the 1% Atourism
tax@ on the meals you prepare for your clients. You service apparently includes shopping for
groceries, going to the client=s home,
preparing two weeks worth of meals, storing the meals in the freezer, then
cleaning up the food preparation area.
Utah Code Ann. '59-12-603(1)(b)
allows for the imposition of a tourism, recreation, cultural, and convention
tax (Atourism tax@)
not to exceed 1% of all sales of prepared food and beverages that are sold by
restaurants. Utah Admin. Code R865‑12L‑17(A)
defines "restaurant" to include Aany
retail establishment, other than a theater, whose primary business is the sale
of foods and beverages prepared for immediate consumption...@ Accordingly,
to be considered a restaurant that must charge the tourism tax, your business
must meet the following three criteria: (1) be a retail establishment; (2) have
as its primary business the sale of food and beverages; and (3) prepare this
food and beverages for immediate consumption.
Let us address each criteria separately.
1. Retail
Establishment. Rule R865-12L-17(B) defines "retail
establishment" to include Aa single
outlet, whether or not at a fixed location, operated by a retailer or vendor.
Retail establishment includes the preparation facilities of caterers, outlets
that deliver the foods or beverages they prepare, and other similar retailers
and vendors...@ While your
business is located at one single business address, your food preparation takes
place at various locations, i.e., the homes of your clients. However, the definition of Aretail establishment@ anticipates the varying locations of some retail establishments by
including the language Awhether or not at a fixed location@ and specifically mentioning Acaterers,@
whose food services are often provided at the client=s location, not at a single outlet. Accordingly, the definition of Aretail establishment@ includes a business such as your personal chef business.
2. Primary
Business. Rule R865-12L-17(c) defines "primary business" as Athe source of more than 50 percent of the revenues of
the retail establishment. In the case
of a retail establishment with more than two lines of business, primary
business means the line of business which generates the highest revenues when
compared with the other lines of business.@ Your type of business, a
personal chef service, alone suggests that your food
sales constitute the majority or totality of your business, and you have not
indicated otherwise. For these reasons,
we will assume that your primary business is the sale of food and beverages.
3. Immediate
Consumption. Rule R865-12L-17(D) defines "prepared
for immediate consumption" as:
any act of the retailer or vendor in either:
1. preparing,
which includes heating or chilling, serving, or packaging foods or beverages of
a type that are reasonably expected to be consumed immediately, or
2. providing
the purchaser with the resources necessary to prepare, serve, or package foods
or beverages of a type that are reasonably expected to be consumed immediately.
3. D.1. and
D.2. apply even if the retail establishment does not provide facilities for on‑premise
consumption of the foods or beverages or the purchaser chooses not to consume
the foods or beverages at the time of purchase.
You prepare two weeks worth of meals at a time, then
store them in the freezer for the client to use at his or her convenience. From your statements, it appears that the
usual intention of your client is not to consume all the meals immediately, but
to consume them over a period of two weeks.
However, the meals you prepare are Aof
a type that are reasonably expected
to be consumed immediately.@ (Emphasis
added). You freeze these meals only because the client has chosen not to
consume them all at the time of purchase.
Subsection D.3. of the rule specifically states that a meal shall still
be deemed Aprepared for immediate consumption@ even if a purchaser chooses not to consume the meals
immediately. Accordingly, the meals
you provide are considered, for purposes of the rule, prepared for immediate
consumption.
All three criteria necessary to be deemed a restaurant
for purposes of the tourism tax are met by your business. Accordingly, you should charge the 1% tourism
tax on charges for the meals you describe. The Tax Commission has also issued
tax bulletins to clarify that the tourism tax on prepared meals shall be
collected on the sales price of the prepared meals only if the county in which
the prepared meal is served has imposed the tax. However, both Salt Lake County and Summit County impose the
tourism tax, so any clients served in these two counties should be charged the
tourism tax. Please be aware that, in
these two counties, an additional 1% resort communities sales tax applies to
clients served in the city limits of Park City and Alta.
Should you have any questions concerning licensing
your business and receiving tax returns, please contact NAME #####. Should you have any other questions, you may
contact us.
For the Commission,
R. Bruce Johnson
^^ Commissioner