September 5, 1984

You inquire about the application of the sales tax on meals to banquets that the * * * ("Hotel") conducts for organizations that are exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code ("exempt organizations"). Sometimes the exempt organization pays the Hotel the entire amount charged for the meals provided at a banquet. At other times the organization pays a portion of the charge, and those in attendance pay the balance to the Hotel. It is assumed from the facts you state that the exempt organizations are not purchasing the meals for resale in the regular course of business.

Retail sales of tangible personal property, including meals, are subject to the sales tax unless either purchased for resale in the regular course of business or specifically exempted.

Massachusetts General Laws Chapter 64H, Section 6(e) provides that the sales tax does not apply to:

Sales to any corporation, foundation, organization or institution, which is exempt from taxation under the provisions of section five hundred and one (c)(3) of the Federal Internal Revenue Code, as amended, and in effect for the applicable period; provided, however, that such sales shall not be exempt unless (1) the tangible personal property which is the subject of such sales is used in the conduct of such religious, charitable, educational or scientific enterprise, (2) such corporation, foundation, organization or institution shall have first obtained a certification from the commissioner stating that it is entitled to such exemption, and (3) the vendor keeps a record of the sales price of each such separate sale, the name of the purchaser, the date of each such separate sale, and the number of such certificate. The certificate of exemption issued by the commissioner under clause (2) shall be effective for a period of five years from the date of its issuance or until January first, nineteen hundred and eighty-four, whichever shall last expire provided that ninety, days prior to said date the commissioner shall notify such corporation, foundation, organization or institution of the expiration date of said certificate. Such corporation, foundation, organization or institution must obtain from the commissioner a renewal of such certificate in order to be entitled to a continuance of such exemption beyond the expiration date of any existing certificate.

Based on the forgoing, it is ruled that the Hotel's charge to an exempt organization for meals is not subject to the sales tax if the organization (1) is not reselling the meals; (2) maintains a current certificate of exemption and keeps the records required under Section 6(e); and (3) uses the meals in the conduct of its exempt enterprise. To illustrate satisfaction of the third test, an exempt university which holds a free banquet for alumni solicitors uses the meals served at the banquet in the conduct of its exempt educational enterprise (see Letter Ruling 81-29).

The exempt organization must present an exempt purchaser certificate (Form ST-5) to the Hotel when making a purchase that is exempt under this ruling.

Where a portion of the charge for meals provided by the Hotel is paid directly to the Hotel by those in attendance at an exempt organization's banquet, that portion is subject to the sales tax on meals.

I enclose copies of Letter Rulings 80-48 and 81-29, which address questions related to those you pose in your ruling request.

Very truly yours,

Commissioner of Revenue

IAJ:JXD:mf

LR 84-73