TSB-A-95 (39)S Sales Tax - Advisory Opinion

Sep 19, 2026

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Advisory opinion issued by the New York State Department of Taxation and Finance addresses sales tax treatment for a petitioner’s meal sales to a client operating a medical treatment facility. The opinion considers whether the transactions qualify as exempt sales for resale and, if not, whether amounts attributable to food preparation, transportation, management services, and nutritional analysis qualify as professional fees. The analysis applies New York Tax Law section 1105(d)(i) and Sales and Use Tax Regulations section 527.8(k) to meal and service arrangements where meals are prepared, transported, and served under subsidized or service-contractor-like structures.

LanguageEnglish

CategoryLetters

FormatPDF

Pages4

Reading Time2 min

AccessFree to download

Advisory Opinion

Petition and Issues Raised

Factual Background of Meal Provision

Applicable Tax Law Framework

Regulatory Examples (Employee Cafeterias and Subsidies)

New York State Department of Taxation and Finance Taxpayer Services Division Technical Services Bureau TSB-A-95 (39)S Sales Tax October 10, 1995 STATE OF NEW YORK COMMISSIONER OF TAXATION AND FINANCE ADVISORY OPINION PETITION NO. S950323B On March 23, 1995, a Petition for Advisory Opinion was received from Ambassador Food Services Corporation, 3269 Roanoke Road, Kansas City, Missouri 64111. The issues raised by Petitioner, Ambassador Food Services Corporation, are: 1. Whether its sales of meals to its client are exempt as sales for resale. 2. Whether, if such sales are not exempt sales for resale, the portion of the charge which relates to food preparation, transportation, management services and nutritional analysis is exempt from tax as a professional fee, so that only the portion relating to supplies and raw materials is subject to tax. Petitioner provides food products to its client which operates a facility to provide medical treatment to patients with substance abuse problems. Petitioner's client is a for profit corporation which houses patients during treatment, provides meals including special diets, and bills patients a daily rate for its services. There is no written contract between Petitioner and its client. Patients of Petitioner's client receive three meals each day at the facility. Two of the daily meals are prepared at Petitioner's commissary and transported to the client's facility. The other meal is prepared and served at the client's facility by Petitioner's employees. Petitioner provides, and bills its client for, cold meals, hot meals, bulk food, on-site labor, supplies, nutritional analysis and management services. Petitioner's client in turn charges daily fees for patients (which include the cost of meals) to insurance carriers, including Medicaid. Section 1105(d)(i) of the Tax Law imposes a tax upon: The receipts from every sale of beer, wine or other alcoholic beverages or anyother 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): (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 -2 TSB-A-95 (39)S Sales Tax October 10, 1995 of the vendor, serves or assists in serving, cooks, heats or provides other services with respect to the food or drink; and (3) in those instances where the sale is for consumption off the premises of the vendor, except where food (other than sandwiches) or drink or both are (A) sold in an unheated state and,(B) are of a type commonly sold for consumption off the premises and in the same form and condition, quantities and packaging, in establishments which are food stores other than those principally engaged in selling foods prepared and ready to be eaten. In an analogous situation relating to meals provided to employees. Section 527.8(k) of the Sales and Use Tax Regulations provides: (k) Subsidized employee cafeterias and food service operations. (1) An employer who by contract or otherwise engages a caterer or food service contractor to provide food and drink or service to employees atthe employer's expense is the purchaser of food and drink subject to the sales tax. Example 1: Employer Eprovides food and drink to his employees without charge. E contracts with a food service contractor F to prepare and serve the food and drink for a fee to be paid by E. The fee paid by E is subject to tax as a receipt from the sale of food and drink. (2) Sales of food, drink or service to employee

FAQs

What transaction is the petitioner seeking guidance on?

The petitioner seeks guidance on sales of meals to its client that operates a facility for substance abuse treatment patients, including how those charges should be treated for sales tax purposes.

Are the petitioner's sales exempt as sales for resale?

The advisory opinion analyzes whether the petitioner’s meal sales to the client qualify for the exemption as sales for resale under New York sales tax rules.

If the sales are not exempt, how does the opinion treat charges for services versus supplies?

The opinion evaluates whether portions of the charge related to food preparation, transportation, management services, and nutritional analysis are exempt as professional fees, while amounts related to supplies and raw materials remain taxable.

How do the employee cafeteria regulations relate to this petition?

The opinion uses Sales and Use Tax Regulations section 527.8(k) concerning subsidized employee cafeterias and food service operations as an analogous framework for understanding when the provider is treated as the purchaser and when subsidies are taxed as receipts from food and drink sales.

Sep 19, 2026

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