Could an Illinois caterer exclude separately stated service, linen, equipment, setup, or delivery charges from taxable meal-sale receipts?

Plain-English summary

A caterer's taxable gross receipts included the charges associated with selling catered food, even when those charges appeared separately on the customer's bill. The GIL listed linens, tables, chairs, dishes, glasses, flowers, labor, setup, delivery, and corkage as part of the caterer's cost of doing business and therefore part of the tax base.

The requester asked whether equipment and linen rentals escaped Illinois sales tax because Chicago lease tax had been paid. The Department declined to address Chicago's lease tax because it did not administer that tax. For Illinois Retailers' Occupation Tax, it applied the state catering rule instead.

Separately stated items not associated with the food sale were different. The GIL gave entertainment, valet, and coat-check charges as examples that were not taxable when separately listed on the invoice.

What this means for you

Separately stating a food-related catering cost does not remove it from Illinois taxable gross receipts. First determine whether the charge supports the food sale or is a genuinely separate non-food item.

Common questions

Q: Were separately billed linen and equipment charges excluded?
A: No. The GIL treated listed food-related rental and service costs as part of taxable catering receipts.

Q: Did paying Chicago lease tax settle the Illinois state-tax question?
A: The Department did not decide that local-tax issue; it said it did not administer Chicago's lease tax.

Citations and references

• 35 ILCS 120/1
• 86 Ill. Adm. Code 130.2145 and 130.2145(h)
• 86 Ill. Adm. Code 130.410
• 2 Ill. Adm. Code 1200.110(a)(3)(D) and (a)(4)

Subject

Gross Receipts

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2010.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2010/st-10-0034.pdf

Original ruling text

ST 10-0034-GIL 04/16/2010 GROSS RECEIPTS
Illinois Retailers' Occupation Tax is imposed upon gross receipts from the sale meals by
caterers. See 86 Ill. Adm. Code 130.2145. (This is a GIL.)

April 16, 2010

Dear Xxxxx:
This letter is in response to your letter dated July 17, 2009, in which you request information.
The Department issues two types of letter rulings. Private Letter Rulings (“PLRs”) are issued by the
Department in response to specific taxpayer inquiries concerning the application of a tax statute or
rule to a particular fact situation. A PLR is binding on the Department, but only as to the taxpayer
who is the subject of the request for ruling and only to the extent the facts recited in the PLR are
correct and complete. Persons seeking PLRs must comply with the procedures for PLRs found in the
Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General Information Letter
(“GIL”) is to direct taxpayers to Department regulations or other sources of information regarding the
topic about which they have inquired. A GIL is not a statement of Department policy and is not
binding on the Department. See 2 Ill. Adm. Code 1200.120. You may access our website at
www.tax.illinois.gov to review regulations, letter rulings and other types of information relevant to your
inquiry.
The nature of your inquiry and the information you have provided require that we respond with
a GIL. In your letter you have stated and made inquiry as follows:
This is a request for a private letter of ruling on behalf of COMPANY. An example of our
standard billing is as follows:
Food
Beverage
Service
Equipment Rental
Linen Rental
Subtotal
11.25% Sales Tax
Total

$1,000.00
$1,000.00
$1,000.00
$1,000.00
$1,000.00
$5,000.00
$ 562.50
$5,562.50

It is our understanding that as a retailer of tangible personal property, we are required to
charge sales tax on the total sale. However both equipment and linen rentals are
subcontracted items on which are paid the lease tax required in the city of Chicago.
We request a private letter of ruling to state the following:
You are advised that any subcontracted rented tangible personal property on which the
city of Chicago lease tax has already been paid is exempt from sales tax. Further, any

tangible personal property provided by you COMPANY to your customer that is not
subcontracted is subject only to the city of Chicago lease tax and is exempt from sales
tax.
Thank you for your assistance with this matter. We look forward to your reply.

DEPARTMENT’S RESPONSE:
The Department’s regulation “Public Information, Rulemaking and Organization” provides that
“[w]hether to issue a private letter ruling in response to a letter ruling request is within the discretion of
the Department. The Department will respond to all requests for private letter rulings either by
issuance of a ruling or by a letter explaining that the request for ruling will not be honored.” 2 Ill. Adm.
Code 1200.110(a)(4). Further, the Department’s regulations regarding Private Letter Rulings provide
that “[i]f there is case law or there are regulations dispositive of the subject to the request, the
Department will decline to issue a letter ruling on the subject." 86 Ill. Adm. Code 1200.110(a)(3)(D).
The Department declines to issue a Private Letter Ruling since its regulations are dispositive of the
subject of your request. Although we are not providing you with a Private Letter Ruling, we hope the
following general information will be of assistance. For your information, the Department does not
administer the City of Chicago’s lease tax. As a result, the Department cannot speak to the taxability
of items under that tax.
For general information purposes, the Retailers' Occupation Tax is imposed upon persons
engaged in this State in the business of selling tangible personal property for use or consumption.
Persons that are engaged in the business of selling meals to purchasers for use or consumption incur
Retailers' Occupation Tax liability on their gross receipts from such sales. Such persons specifically
include caterers. See 86 Ill. Adm. Code 130.2145, entitled “Vendors of Meals,” which can be found on
the Department’s website.
Retailers' Occupation Tax is based upon the “selling price” of the tangible personal property
sold. The term “selling price” is defined under the Retailers' Occupation Tax Act as the “consideration
for a sale valued in money . . . and shall be determined without any deduction on account of the cost
of the property sold, the cost of materials used, labor or service cost or any other expense
whatsoever . . . .” See 35 ILCS 120/1. As indicated by this definition, a retailer’s cost of doing
business is not deductible from his gross receipts. This principle is also articulated in 86 Ill. Adm.
Code 130.410. The regulation specifically states that in calculating Retailers' Occupation Tax liability,
“freight or transportation costs . . . or any other expenses whatsoever” are not deductible from gross
receipts.
As a result, tax is imposed upon a caterer’s entire gross receipts from sale, without any
deduction on account of service costs or other overhead costs. A caterer’s gross receipts would
include all receipts associated with his or her sale of food. Such costs would include charges for
linens, tables, chairs, dishes, glasses, flowers, labor, set-up and delivery, and corkage fees. See 86
Ill. Adm. Code 130.2145(h). Each of these items is a part of the cost of doing business as a caterer.
It is immaterial that the customer is separately billed for the price of these items. See 86 Ill. Adm.
Code 130.410. They are simply the costs of doing business as a caterer, just as they would be part of
the overhead expenses incurred by a restaurant owner.
When a caterer makes separate charges to customers for items which are not associated with
the sale of food, such items are not taxable, provided that they are separately listed on the invoice to
the customer. This would be the case, for instance, with charges for entertainment (singers, bands,
and the like), valet, and coat check, etc. See 86 Ill. Adm. Code 130.2145(h).

Based on the information you provided, it appears that the charges are covered by the
Department’s regulation at 86 Ill. Adm. Code 130.2145, referred to herein.
I hope this information is helpful. If you require additional information, please visit our website
at www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at (217) 782-3336.
Very truly yours,

Debra M. Boggess
Associate Counsel
DMB:msk