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In general, a caterer's charges for food, beverages, and any services provided for a customer's event are subject to sales tax.
This bulletin will explain:
how sales tax applies to purchases by a caterer.
A caterer provides prepared food, beverages, and various other services for events. Catering events may take place at:
Party planners and event coordinators who plan weddings and similar functions are also caterers when they arrange for and bill for food, beverages, and other services at an event. Churches, temples, synagogues, American Legion or VFW posts, fraternal organizations, community centers, and other organizations are also caterers when they make sales of food, beverages, and various other services for events.
In general, all charges by caterers related to a customer's event are taxable. Any expenses incurred by the caterer for an event that are included in the overall charge to the customer are also taxable. This is true even if the charges are separately listed on the customer's bill or invoice.
The sale of food and beverages (both alcoholic and nonalcoholic beverages) that have been prepared or are served by caterers is taxable. This includes everything from butler‑served hors d'oeuvres and sit-down dinners to breakfast buffets.
Prepared food also includes food items typically found at the deli or supermarket, such as cold cut platters, vegetable platters, cheese platters, fruit platters, dessert trays, subs, and sandwiches.
Sales of food or beverages by caterers where the caterer merely delivers the items purchased, without any other services after delivery, are considered to be sales of food or beverages for off-premises consumption and are taxed accordingly. See Tax Bulletin Sales by Restaurants, Taverns, and Similar Establishments (TB-ST-806).
Hotels and banquet facilities may charge a separate fee for the use of a room to hold a banquet or other catered event. When the catering service is sold by a hotel or a caterer hired by the hotel, the charge for rental of the room is part of the charge for the event and is taxable. It doesn't matter if the room charge is separately stated on the bill to the customer or included in the charge for catering.
When a customer rents a room from a banquet facility but hires a separate caterer to conduct the event, the room rental charge is not taxable.
Gratuities and tips that a customer leaves voluntarily for the wait staff are not taxable.
Mandatory gratuities are different because they are automatically added onto the bill given to the customer. However, a mandatory gratuity is not taxable if all of these conditions are met:
If any of these conditions is not met, the mandatory gratuity is taxable along with the rest of the catering bill.
Many caterers bill a service charge on banquets or on parties of more than eight or ten people. Since these charges are not specifically listed as gratuities on the bill or invoice, the service charge is always subject to sales tax.
For more details, see TSB-M-09(13)S, Sales Tax on Gratuities and Service Charges.
In order to provide its services, a caterer may need to purchase or rent items for an event. Although many purchases or rentals may be based on a specific customer request, the caterer is using the items to provide its catering services and is not reselling the items to its customers. Therefore, a caterer must pay sales tax to its supplier on the purchase or rental of items such as:
A caterer's entire charge to its customer is taxable, even if charges for items like those listed above are separately listed on the bill or invoice. A caterer cannot claim a credit on its sales tax return for the tax paid on these purchases.
Purchases of prepared food (such as meat platters) or beverages (such as hot coffee) cannot be made without the payment of sales tax. As a result, a caterer must pay sales tax on its purchase of any taxable prepared food or beverage, even though it will also be charging sales tax to its customer on the same items. However, the caterer is eligible to take a credit on its sales tax return for the tax paid to its supplier. See Tax Bulletin Sales Tax Credits (TB-ST-810).
Example: A caterer has several parties booked for the same day and is unable to prepare all the food. The caterer purchases a meat platter and a fruit platter from a local supermarket. The caterer must pay sales tax at the time of purchase and cannot issue a resale certificate to the store. The caterer will charge sales tax to the customer on the entire bill for the event and can then take a credit on its sales tax return for the sales tax paid to the store.
See Tax Bulletin Food and Food Products Sold by Food Stores and Similar Establishments (TB-ST-283) for a discussion of what food products are taxable.
Certain food and beverage items, such as produce, seafood, meat, canned goods, and similar food items, are not taxable. No exemption certificate is needed to make these purchases without paying sales tax. Other nontaxable food and beverages include:
See Tax Bulletin Food and Food Products Sold by Food Stores and Similar Establishments (TB-ST-283) for a discussion of what food products are exempt from sales tax.
A caterer does not have to pay sales tax on its purchases of beverages (except for hot beverages such as hot coffee) that will be resold to customers as part of a catering event. A caterer can issue Form ST-120, Resale Certificate, to its suppliers for purchases of:
Other taxable food items, such as candy and confectionery, can also be purchased without paying sales tax by using Form ST-120, Resale Certificate.
When a caterer purchases flowers for an event, it can use Form ST-120, Resale Certificate, to purchase the flowers without paying sales tax and later collect the sales tax from its customer, as long as all of the following conditions are met:
the caterer must collect sales tax from the customer on its entire charge.
Kitchen equipment and supplies that are used to prepare, cook, and serve food and beverages are taxable when purchased, leased, or rented by a caterer. Equipment and supplies include:
Often caterers are responsible for extra services in addition to the provision of food and beverages. A caterer's employees may provide these services or it may hire a third-party vendor.
When a caterer purchases a taxable service, it must pay tax to the service provider. Taxable services include:
The caterer must charge and collect sales tax from its customer when including expenses for taxable services in its bill, even if charges for these expenses are separately stated. A caterer cannot claim a credit on its sales tax return for the tax paid on these purchases.
A caterer may also purchase nontaxable services for an event. Nontaxable services include the hiring of:
Again, the caterer must charge and collect sales tax from its customer when including expenses for nontaxable services in its bill.
1Valet parking service is the service of having staff available to park guests' cars. It does not include any separate charge that may be made for parking. (back)
Tax Law: Section 1105(d)
Regulations: Section 527.8
TSB-M-09(13)S, Sales Tax on Gratuities and Service Charges
TSB-M-10(3)S, Sales Tax Information Related to Audio/Visual Equipment Used by Hotels, Restaurants, Taverns, Banquet Houses, Caterers, and Similar Establishments