Does a Texas restaurant owe sales tax on a one-dollar fee charged to customers who bring in their own food?

Subject

Restaurant Fee For Customers Who Bring Their Own Food Is Not Taxable

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9306L1247D05

Plain-English Summary

A taxpayer who runs a Chinese restaurant wrote to the Comptroller asking about a policy the restaurant had adopted: charging a one-dollar fee to any customer who brings in their own food. The taxpayer asked whether sales tax should be applied to this one-dollar set-up fee.

The Comptroller's response is short and direct: no sale occurs with regard to this fee, so no Texas sales tax is due on the one-dollar fee.

The letter closes with the standard caveat that the opinion is based on the facts presented, and that additional or different facts could change the outcome.

What This Means For You

A fee isn't automatically a taxable sale. The letter's reasoning turns on the fact that the one-dollar charge isn't tied to a sale of tangible personal property — the restaurant isn't selling the customer anything in exchange for the fee, since the customer brought their own food. Because there's no sale, there's no Texas sales tax due on the charge.

Facts matter. As with most letters of this kind, the Comptroller stresses that its answer is based on the specific facts described — a flat one-dollar fee charged for customers bringing in their own food at a restaurant. A different fee structure, or a fee tied to some good or service the restaurant provides in exchange, could lead to a different result.

Relevant to restaurants and similar food-service businesses. Any restaurant or food-service business considering a similar "bring your own food" or corkage-style fee may find this letter instructive, though it binds the Comptroller only as to the taxpayer who requested it.

Q&A

Q: Does a restaurant owe Texas sales tax on a fee charged to customers who bring their own food?
A: No. The letter states that no sale occurs with regard to this fee, so no Texas sales tax is due on the one-dollar fee.

Q: What kind of restaurant asked this question?
A: A Chinese restaurant that had adopted a policy of charging a one-dollar fee to anyone who brings in their own food.

Q: How much was the fee at issue in this letter?
A: One dollar, described in the letter as a "one dollar set up fee."

Q: Why isn't the fee taxable?
A: Because, according to the letter, no sale occurs with regard to the fee — there's no sale of tangible personal property for the Comptroller to tax.

Q: Does this ruling apply to every restaurant that charges a similar fee?
A: No. The letter states that the opinion is based on the facts presented, and that additional or different facts could change the opinion.

Original ruling text

June 30, 1993

Dear ***:

I have received your letter dated June 23, 1993, requesting sales
tax information.

Situation: You state that you run a Chinese restaurant and have adopted a
policy to charge a one dollar fee to anyone who brings in their own food.

Question: You ask if you should apply a sales tax to this one dollar set
up fee.

Response: No sale occurs with regard to this fee; therefore, no Texas
sales tax is due on the one dollar fee.

This opinion is based on the facts presented. If there areadditional or
different facts, the opinion could change.

If you have any questions, please don't hesitate to write the Tax
Administration Division or call one of our tax specialists toll free at
1-800-252-5555.

Sincerely,

Joan Hale
Tax Administration Division

NOTE: Previous Accession Number 9308021L.2 and/or 9308021L