Does a personal chef who cooks and freezes meals in a client's home owe New York sales tax, and does the answer change depending on who buys the groceries, or whether the chef splits grocery-buying and cooking into two separate companies?

Plain-English summary

Jacqueline Holtzman runs a personal-chef business, cooking and freezing several days' worth of meals in clients' homes for later use. She asked how sales tax applies in three fact patterns:

• Situation 1: The client buys the groceries ahead of time; Holtzman only cooks, packages, and freezes the meals, charging for the cooking and for the freezer/oven-proof packaging (which becomes the client's property).
• Situation 2: Holtzman buys the groceries herself with her own money, cooks and packages the meals, and bills the client one invoice with separately stated charges for the food/packaging and for her cooking service.
• Situation 3: Holtzman splits her business into two companies she owns — Entity A buys and delivers the groceries, Entity B does the cooking — with the client billed separately by each entity.

Situation 1 is not taxable. Because the client already owns the food, Holtzman isn't selling food at all — she's providing a pure cooking service, which isn't one of New York's specifically taxed services. She shouldn't collect tax from the client for either the cooking or the packaging materials (though she does owe tax herself on buying those packaging materials, since using them to provide a nontaxable service doesn't qualify as a resale).

Situation 2 is fully taxable as catering. Because Holtzman sells the food itself and then cooks/prepares it as part of the same engagement, the whole transaction is a taxable catering service — and separately stating the food charge from the cooking charge on the invoice doesn't change that. The entire bill, food and labor together, is taxed. (Holtzman can, however, buy her packaging materials tax-free using a resale certificate, since those specific materials are being resold as part of the catering service.)

Situation 3 can work, but only if the two companies are genuinely separate. If Entity A (groceries) and Entity B (cooking) really operate as independent businesses, Entity A collects tax on taxable items like packaging (food itself stays exempt under the general food exemption) and Entity B's cooking charges stay untaxed — mirroring the good result in Situation 1. But if the Department later found that one entity is really just a shell or "alter ego" of the other (for example, if their operations, finances, or control are too intertwined), the two would be treated as one business for tax purposes, and the whole arrangement would collapse into the taxable catering result from Situation 2.

What this means for you

Personal chefs and home meal-preparation businesses

Whether you owe sales tax on your service turns almost entirely on who is legally selling the food. If your client supplies the groceries, your cooking-only charge is untaxed (though you'll pay tax on any packaging you supply). If you supply the groceries yourself and bill for both, the whole engagement becomes taxable catering — labeling the food and labor as separate invoice line items doesn't avoid that result.

Business owners considering splitting operations into multiple entities

Using separate legal entities for the grocery-purchasing and cooking sides of a personal-chef business can preserve the better tax result, but only where the entities are run as genuinely independent businesses. If one entity is really just an instrumentality of the other — dominated or controlled to the point of being an alter ego — the Department can disregard the separate-entity structure and tax the combined activity as one taxable catering service.

Accountants and tax professionals

The key statutory hook is Tax Law § 1105(d)(i), which taxes food/drink sold together with cooking, heating, or other post-delivery services as catering, regardless of separately stated pricing. Also worth flagging: the alter-ego risk in multi-entity structuring is a real, fact-intensive question (see Fiur Co. v. Ataka & Co. and the Department's own Harfred Operating Corp and Pasquale & Bowers opinions) — the Department here expressly declined to decide whether Holtzman's proposed two-entity structure would hold up, since it depends on facts not yet in the record.

Common questions

Q: Is a personal chef's cooking service always subject to New York sales tax?
A: No — it depends on who supplies the food. A pure cooking/preparation service using the client's own groceries is untaxed; selling the food and cooking it together is taxable catering.

Q: Can I avoid catering tax just by listing food and cooking charges separately on one invoice?
A: No. If you're selling the food and also cooking/preparing it as part of the same transaction, the entire charge is taxable regardless of how it's itemized on the bill.

Q: Does creating two separate companies (one for groceries, one for cooking) guarantee a better tax result?
A: Not automatically. It can work if the two entities are genuinely independent businesses, but if one is really controlled by or an instrumentality of the other, the Department can treat them as a single taxable catering operation.

Citations and references

Statutes and regulations:

• Tax Law § 1101(b)(4) (definition of "retail sale")
• Tax Law § 1101(b)(5) (definition of "sale, selling or purchase")
• Tax Law § 1105(a) (tax on retail sales of tangible personal property)
• Tax Law § 1105(c) (tax on enumerated services)
• Tax Law § 1105(d)(i) (tax on food and drink sold by restaurants, taverns, and caterers)
• Tax Law § 1115(a)(1) (food exemption)
• 20 NYCRR § 526.6(c) (resale exclusion; property used in a nontaxable service is not for resale)
• 20 NYCRR § 527.8(f) (caterer rules on sales and purchases)

Prior rulings/cases referenced:

• Fiur Co. v. Ataka & Co., 71 A.D.2d 370 (alter ego doctrine)
• Harfred Operating Corporation, Adv Op St Tx Comm, July 18, 1986, TSB-A-86(28)S
• Pasquale & Bowers, Adv Op Comm T&F, Aug. 1, 1996, TSB-A-96(49)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2001.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a01_12s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-01(12)S
Sales Tax
April 17, 2001

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S000712A

On July 12, 2000, the Department of Taxation and Finance received a Petition for Advisory
Opinion from Jacqueline Holtzman, 2478 Edgemere Drive, Rochester, New York, 14612.
The issue raised by Petitioner, Jacqueline Holtzman, is whether sales and compensating use
tax is imposed in connection with the services provided by Petitioner in the following three
situations.
Situation #1
Petitioner goes to the home of a client and cooks and prepares several days worth of meals,
using the client’s food, and then packages and freezes the meals for later use. The client purchases
the groceries ahead of time so that they are available to Petitioner for cooking and preparation of
meals as described above. Packaging materials such as freezer-proof and oven-proof containers for
frozen storage of the meals are provided by Petitioner. The packaging materials become the property
of the client. Petitioner charges the client for cooking and preparing such food and for such
packaging materials.
Situation #2
Petitioner purchases the groceries, and delivers the groceries to the client’s home. Petitioner
cooks several days worth of meals and packages the meals for frozen storage for the client to use at
a later time. Petitioner offers a selection of meals from which the client chooses. The groceries
purchased include the food and packaging materials necessary for the preparation of the meals. The
groceries are purchased using Petitioner’s funds. Petitioner’s invoice to the client lists a total amount
due which includes separately stated charges for the price of the food and packaging materials
purchased by Petitioner and the cooking service provided by Petitioner. All packaging materials,
which include freezer-proof and oven-proof containers, become the property of the client.
Situation #3
Petitioner forms two legal entities. Petitioner would be the owner of both entities and would
actively participate in the operation of both entities. Entity A would purchase groceries, including
packaging materials, for the client and deliver the items to the client’s home. Entity B would
perform the cooking and packaging services as described in Situations #1 and #2. The client would
pay Entity A and Entity B separately.

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Applicable Law and Regulations
Section 1101(b) of the Tax Law provides, in part:
When used in this article for the purposes of the taxes imposed by
subdivisions (a), (b), (c) and (d) of section eleven hundred five and by section eleven
hundred ten, the following terms shall mean:
*

*

*

(4) Retail sale. (i) A sale of tangible personal property to any person for any
purpose, other than (A) for resale as such...or (B) for use by that person in performing
the services subject to tax under paragraphs (1), (2), (3), (5), (7) and (8) of
subdivision (c) of section eleven hundred five where the property so sold becomes
a physical component part of the property upon which the services are performed or
where the property so sold is later actually transferred to the purchaser of the service
in conjunction with the performance of the service subject to tax....
*

*

*

(5) Sale, selling or purchase. Any transfer of title or possession or both,
exchange or barter, rental, lease or license to use or consume (including, with respect
to computer software, merely the right to reproduce), conditional or otherwise, in any
manner or by any means whatsoever for a consideration, or any agreement therefor,
including the rendering of any service, taxable under this article, for a consideration
or any agreement therefor.
Section 1105 of the Tax Law imposes sales tax upon:
(a) The receipts from every retail sale of tangible personal property, except
as otherwise provided in this article.
*

*

*

(d)(i) The receipts from every sale of beer, wine or other alcoholic beverages
or any other drink of any nature, or from every sale of food and drink of any nature
or of food alone, when sold in or by restaurants, taverns or other establishments in
this state, or by caterers, including in the amount of such receipts any cover,
minimum, entertainment or other charge made to patrons or customers (except those
receipts taxed pursuant to subdivision (f) of this section):

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(1) in all instances where the sale is for consumption on the premises where
sold;
(2) in those instances where the vendor or any person whose services are
arranged for by the vendor, after the delivery of the food or drink by or on behalf of
the vendor for consumption off the premises of the vendor, serves or assists in
serving, cooks, heats or provides other services with respect to the food or drink . . . .
Section 1105(c) of the Tax Law imposes the sales tax upon the receipts from the sale of
certain enumerated services.
Section 1115(a) of the Tax Law provides, in part:
Receipts from the following shall be exempt from the tax on retail sales
imposed under subdivision (a) of section eleven hundred five and the compensating
use tax imposed under section eleven hundred ten:
*

*

*

(1) Food, food products, beverages, dietary foods and health supplements,
sold for human consumption but not including (i) candy and confectionary, (ii) fruit
drinks which contain less than seventy percent of natural fruit juice, (iii) soft drinks,
sodas and beverages such as are ordinarily dispensed at soda fountains or in
connection therewith (other than coffee, tea and cocoa) and (iv) beer, wine or other
alcoholic beverages, all of which shall be subject to the retail sales and compensating
use taxes, whether or not the item is sold in liquid form . . . nothing herein shall be
construed as exempting food or drink from the tax imposed under subdivision (d) of
section eleven hundred five.
Section 526.6(c) of the Sales and Use Tax Regulations provides, in part:
Resale exclusion. (1) Where a person, in the course of his business
operations, purchases tangible personal property or services which he intends to sell,
either in the form in which purchased, or as a component part of other property or
services, the property or services which he has purchased will be considered as
purchased for resale, and therefore not subject to tax until he has transferred the
property to his customer.
(2) A sale for resale will be recognized only if the vendor receives a properly
completed resale certificate. See sections 532.4 and 532.6 of this Title.

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(3) Receipts from the sale of property purchased under a resale certificate are
not subject to tax at the time of purchase by the person who will resell the property.
The receipts are subject to tax at the time of the retail sale.
*

*

*

(7) Tangible personal property purchased for use in performing a service not
subject to tax is not purchased for resale.
Section 527.8(f) of the Sales and Use Tax Regulations provides, in part:
Caterers. (1) Sales by caterers.
(i) All charges by caterers selling food or drink who provide serving or
assistance in serving, cooking, heating or other services after delivery are taxable.
(ii) Sales of food or drink by caterers where the caterers merely deliver the
items purchased and offer no other services after delivery are deemed to be sales for
off-premises consumption and are taxable in accordance with the provisions of
subdivision (a) of this section.
(iii) Sales of food or drink by caterers where the caterers deliver the items
purchased and arrange the food on platters or place the drink in containers so that
food or drink is ready to serve guests are taxable.
*

*

*

*

*

(2) Purchases by caterers.
*

(ii) Food and beverages for resale. Food, such as meat, vegetables, fruit etc.,
may be purchased exempt from tax by a caterer in accordance with section 528.2 of
this Title. Food, such as candy and confections, which is taxable in accordance with
section 527.1 of this Part and does not qualify for exemption from tax under section
528.2 of this Title, may be purchased for resale, and thus not subject to tax, provided
it is sold to the customer as part of the catering service.
Beverages, such as fruit drinks, soft drinks, soda, cocktail mixers, bottled
water, beer, wine and other alcoholic beverages which are taxable in accordance with
section 527.1 of this Part and not exempt under section 528.2(b) of this Title may be

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purchased for resale by caterers provided that such beverages are sold to the customer
as part of the catering service. (Ice served in drinks may also be purchased for
resale.)
*

*

*

(iii) Other property sold to customers.
(a) Tangible personal property which is necessary to contain an item of food
or drink for delivery to the customer and which is transferred to the customer with
the sale of the food or drink may be purchased for resale by caterers. Such property
includes disposable containers, wrappers, cups, dinner plates, trays, platters and the
accompanying lids.
(b) Tangible personal property which is not necessary to contain an item of
food or drink for delivery to the customer may not be purchased for resale and is
taxable when purchased by caterers, regardless of the fact that the item is transferred
to the customer with the sale of food or drink. This includes napkins, stirrers, straws,
plastic utensils, and other similar items.
Opinion
In Situation #1, Petitioner’s services are limited to cooking meals in her client’s home. The
client provides the food. Since there is no sale of food or drink involved in situation #1, Petitioner
is not selling food or providing a catering service within the meaning and intent of Section 1105(d)
of the Tax Law and Section 527.8(f) of the Sales and Use Tax Regulations. Furthermore, the
cooking service provided by Petitioner, taken by itself, is not one of the services enumerated as
taxable under Section 1105(c) of the Tax Law. The purchase of the packaging materials by
Petitioner for use in providing the non-taxable cooking service is considered to be incidental to the
cooking service and is not considered to be a purchase for resale. Section 526.6(c)(7) of the Sales
and Use Tax Regulations. Therefore, Petitioner should not collect tax from its client for cooking or
providing the packaging materials. Petitioner must pay tax on its purchase of such packaging
materials.
In Situation #2, Petitioner purchases the food and packaging materials using her own funds.
Petitioner cooks several days worth of meals and packages the meals for frozen storage. When the
client is billed for this service, a separate amount is stated for the price of the food and packaging
materials purchased and a separate amount is stated for Petitioner’s service of cooking the meals.
The sale of food or drink in conjunction with cooking, heating or other services after delivery
constitutes a taxable catering service within the meaning and intent of Section 1105(d)(i) of the Tax
Law and Section 526.8(f) of the Sales and Use Tax Regulations, regardless of whether the amounts

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attributable to the different elements of the service are stated separately. Therefore, the service
provided by Petitioner as described in Situation #2 constitutes a catering service subject to tax under
Section 1105(d)(i) of the Tax Law. Petitioner must collect tax from its clients on its charges for such
service, including charges for food and packaging materials. In Situation #2, the packaging materials
purchased by Petitioner may be purchased for resale in accordance with Section 527.8(f)(2)(iii)(a)
of the Sales and Use Tax Regulations, provided that a properly completed resale certificate is
presented by Petitioner to the vendor within 90 days of purchase. See Section 1132(c) of the Tax
Law and Section 532.4 of the Sales and Use Tax Regulations.
In Situation #3, Petitioner is the owner of two separate legal entities, Entity A and Entity B.
Entity A would purchase and deliver the groceries to the client. The client would be billed separately
by Entity A for such groceries. The cooking services would be performed by Entity B. The client
would be billed separately for such services by Entity B. In this case, Entity A would be required
to collect sales tax on all taxable items, such as packaging, sold to the client. Separately stated
charges for food exempt under section 1115(a)(1) of the Tax Law would not be subject to tax. Entity
B’s charges for cooking services would not be subject to tax.
We note that under certain circumstances, the existence of separate legal entities will not be
recognized for sales tax purposes. If the affairs of one entity are so dominated or controlled by its
affiliate that such entity is the instrumentality of the affiliate, the separate legal entities may be
treated as alter egos of one another. See Fiur Co. v Ataka & Co., 71 A.D.2d 370; Harfred Operating
Corporation, Adv Op St Tx Comm, July 18, 1986, TSB-A-86(28)S and Pasquale & Bowers, Adv
OP Comm T&F, August 1, 1996, TSB-A-96(49)S. It cannot be determined from Petitioner’s
submission of facts whether Entity A is an alter ego of Entity B. If an examination of the
relationship between the two entities showed that their status as separate entities should be
disregarded for purposes of the sales tax, then the totality of the services performed by Entity A and
Entity B would constitute a catering service subject to tax under Section 1105(d)(i) of the Tax Law,
as in Situation #2. Petitioner would be required in that case to collect tax on such service.

DATED: April 17, 2001

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist III
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.