August 20, 1979

In your letter of May 29, 1979 you inquired as to the application of the sales tax on meals to a rental charge of a private room which is used for serving meals, food or beverages. The charge for the room rental is separately stated from the food charges; e.g., room rental $50, food $100. Since the details were not given it shall be presumed that the food is furnished by the establishment from which the room is rented and that the parties have a prearranged plan for the provision of food.

Chapter 64H, Section 2 imposes a sales tax upon "tangible personal property" which is defined under Section 1(14) "as personal property of any nature consisting of any produce, goods, wares, merchandise and commodities. . . " Section 6(h) of Chapter 64H indicates that food served at a restaurant is tangible personal property. A "restaurant", defined in part as "any eating establishment where food, food products or beverages are provided", includes a private room.

The issue before us is whether the sales tax is levied on the combined charges for the food and room rental or only on the food charges. `Sales price' which is the amount upon which the tax is imposed is defined in Chapter 64H, Section 1(14) as "the total amount paid by a purchaser to a vendor as consideration for a retail sale, valued in money or otherwise."

Based on the foregoing, it is ruled that where a purchaser rents a private room and arranges that the vendor of the room furnish food for consideration, the rental charge, whether separately stated or not, is part of the sales price of the food within the meaning of Chapter 64H, and is therefore subject to tax.

However, where a room is rented for purposes other than the serving of food with the incidental serving of light refreshments, for an additional charge, the tax is levied only on the price of the food.

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers
Commissioner of Revenue

LJH/RSF/jmp

LR 79-26