Texas Comptroller of Public Accounts STAR System
March 1, 2007
RE: Sales tax responsibilities of a catering company/event manager.
Dear Texas Taxpayer:
Thank you for your recent letter concerning Texas sales and use tax
responsibilities for catering companies and event planners.
A caterer is defined in Texas Administrative Rule 3.293(a)(4) as anyone who
prepares and serves meals, drinks, or other food products at a location
designated by the customer. A caterer is considered to be a food service
operator, that is, someone who sells food ready for immediate consumption.
Food prepared, sold, or served by caterers is taxable.
A caterer must collect tax from the customer on the total price for preparing
and serving the catered meal, including all separately stated expenses (for
example, a charge for delivery or providing servers) billed in connection with
the meal. The taxable price includes any separately stated charge for the room
or facility, and for the customer’s use of such things as tables, chairs,
tableware, and tablecloths. A separately stated charge for the use of these
items is not considered a rental but an expense connected with the sale of the
food and beverages.
A hotel or motel that acts as a caterer does not collect sales tax on a
separately stated charge for a room or facility if that charge is subject to
hotel tax. However, if a caterer bills a client a separately stated charge for
a room or facility, the entire charge is subject to sales tax, including any
separately stated charge for hotel taxes paid by the caterer.
The caterer must pay tax on purchases of equipment and replacement parts used
in the catering service. Taxable items used in catering include such reusable
things as tables, chairs, place mats, tablecloths, cloth napkins, silverware,
dishes, cooking utensils, dispensers, garbage can liners, mop holders, lime
squeezers, grill bricks, aprons, glass creamers, appliances, menus, and
inserts. In other words, any item that a caterer uses to prepare, serve,
present, clean up, or dispose of food in its catering service is taxable. Gas
and electricity used by a caterer in the preparation or storage of the catered
food are also taxable.
A caterer does not owe tax when buying certain wrapping and packaging
materials. To qualify for tax exemption, the materials cannot be reusable and
must be given to the customer with the food and beverages. These tax exempt
items can be made of paper, wood, plastic, or aluminum, and include cake boxes,
lunch boxes, cups, containers, bottle wraps, butter chip trays, dishes, knives,
forks, spoons, napkins, soda straws, toothpicks, french fry bags, stir sticks,
ice cream sticks, souffle cups, hot dog trays, and other types of non-reusable
trays. When buying these items, the caterer can give the supplier a resale or
exemption certificate in lieu of paying tax. See Rule 3.293, “Food; Food
Products; Meals; Food Service” for more information.
Event planners typically provide a variety of services and goods to clients.
Some of those services are taxable, while others are not. The taxability of
charges for event planning services depends on factors such as whether the
services are provided by a caterer in connection with the sale of food, whether
the services are provided by a facility or venue providing taxable amusement
services in connection with an event, whether the event is held at a venue
owned or operated by the event planner and the type of contract between the
event planner and the client.
Event Held at Venue Owned or Operated by the Event Planner, or that is the
Employer of the Event Planner: A venue owned or operated by an event planner,
or that is the employer of the event planner, may include amusement parks,
theme parks, athletic facilities, restaurants, banquet halls, party rooms and
other such locations.
If food is prepared and served or otherwise provided by the venue hosting the
event, tax is due on the total amount charged to the customer, including the
event planner’s fee and charges for such items as entertainment, parking,
security, or transportation, even if separately stated in the invoice provided
to the customer. The venue is considered a food service operator and the
provisions concerning caterers found in Rule 3.293(k) and outlined above apply.
If food is not provided by the venue where the event is held, the taxability of
the event planner’s charges will be determined by the type of event and the
type of contract with the client. For example, event planning services
provided by a venue selling taxable amusement services, such as an amusement or
theme park, are taxable in total because the fee charged to clients is
connected to the fee paid in order to secure the admission privilege for an
individual or a group of individuals to the amusement park. See Comptroller
Rule 3.298, “Amusement Services”.
However, a fee charged by a venue for event planning services provided for
arranging a conference or meeting when food or admission to an amusement
service is not included is not subject to sales tax.
Venues hosting parties, conferences, or other events must pay sales tax to
suppliers at the time of purchase on the purchase of all consumables, all
equipment, and replacement parts for equipment used to provide the service and
operate the facility. Texas use tax is due on items purchased, leased, or
rented from an out of state supplier and used in Texas and the venue is
responsible for accruing and remitting tax on such items if the tax is not
collected by the seller. Examples of items that are taxable to the venue
include audio video equipment, margarita machines, tables, chairs, tablecloths,
kitchen equipment, ice sculptors, moonwalks, piñatas, and decorations.
The venue may purchase tax-free any items that are given to the client or the
guests as part of a taxable event by issuing a resale certificate to
suppliers. Examples of qualifying items include cellophane bags and prizes for
“goodie” bags, souvenir matchbooks, notepads and pens and floral arrangements
or decorations that the client or guests may take home with them. Tax is due,
however, on the same type of items if given to guests or clients as an
incidental part of a nontaxable event, such as pens or notepads provided to
attendees at a meeting.
Type of Contract:
The type of contract between the planner and client is also a factor for
determining the taxability of event planning services.
An event planner may act as the agent of a client. This means that the event
planner is authorized by the client to make purchases of items and services on
behalf of the client.
When acting as an agent, the event planner cannot mark up the price of the
items purchased and billings to the client for the purchases must reflect the
actual amount paid to suppliers for the item, including sales and use tax if
applicable. If the event planner purchases items on behalf of a client, the
event planner must pay tax to the seller for taxable items. Subsequent
billings to the client must reflect the actual price paid and any tax must be
clearly shown as a “tax reimbursement.” Tax is not due on charges for planning
services that are separately stated and not calculated on a percentage of the
items billed to the client.
An event planner will be considered an agent of a client if the event planner
discloses to suppliers that it is acting as agent for the client designated on
a purchase order or in some other written documentation and maintains
accounting records and invoices which evidence that the billing to its clients,
except for service charges, is identical to that paid to suppliers.
When an event planner acts as an agent for a customer in acquiring taxable
items, the event planner may not issue a resale certificate to a supplier in
lieu of tax. The event planner should pay or accrue tax at the time of the
purchase and then bill the client for the exact amount of the purchase,
including the tax. Payment received from the client is considered
reimbursement for the purchases and no additional tax is due provided that the
invoices or receipts issued by the event planner to the customer are clearly
marked with a statement indicating that tax was paid on all taxable items
purchased. A handling or service fee charged by the event planner to the
client for a reimbursable purchase is not taxable as long as the fee is
separately stated and is not based or calculated on the charge for the item.
Under an agency agreement, if an event planner makes arrangements with a
third-party restaurant or caterer (as an agent of the client) to provide meals
or food for an event, the restaurant or caterer must collect sales tax on its
charges to the customer or the customer's agent for the taxable meals it
provides. The event planner may not give a resale certificate for the purchase
of meals or food.
Under a “turn-key” or lump sum contract, an event planner charges a client one
total amount for all goods and services provided, including such items as
consultation, set up, delivery and administrative services.
A lump sum charge for event planning services provided in connection with an
event where food is served, such as a banquet, party, wedding reception or
where a taxable amusement is provided is taxable.
Event planner as a caterer (turn-key contracts)
If an event planner prepares and serves food at an event, the event planner is
considered a caterer and is required to collect tax on the total amount charged
to the client, including charges for consultation, the event facility and any
items used by the client, such as tables, chairs and tablecloths. See
Comptroller Rule 3.293(k) and the information about catering above.
Under a turn-key contract, the event planner is the consumer of all services
and items purchased, leased or rented for the event. The event planner must
pay tax to suppliers when purchasing taxable items such as decorations,
equipment and consumable supplies, parking services, security services and
cleaning services. An event planner operating under a turn-key contract may
not issue a resale certificate when making these purchases. The event planner
may issue a resale certificate when purchasing items that will be transferred
to the customer. For example, an event planner may purchase catering services
tax-free for resale when billing their client under a turn-key or lump sum
contract. The event planner must then collect tax on the entire amount charged
to the client.
Meetings (turn-key contracts)
A charge to a customer for a turn-key contract for event planning services
provided for a nontaxable event such as a meeting or convention is not taxable.
Snacks or beverages provided at a meeting or convention will not render the
event taxable if the charge attributable to the food or beverage service does
not exceed 5 percent of the total charge for the event. The event planner is
responsible for paying tax to the supplier of the incidental food or beverage
service and is not required to collect tax from the customer.
For example, assume an event planner is hired to coordinate a meeting by
arranging for the facility, tables, chairs, audio video equipment and a
beverage service. The total amount charged to the client for the service is
$1000.00. The event planner’s normal selling price for a beverage service is
$50.00. Since the amount attributable to the beverage service is 5 percent or
less of the total contract amount, the entire charge to the client is not
taxable. The event planner is considered the consumer of the beverage service
and is responsible for paying the tax to the supplier.
Under a separated contract, an event planner separately states all charges to
the client. The event planner is considered the seller of the items and
services provided and must collect tax from the customer on the total amount
charged for each taxable item. The tax rate must be applied to the agreed
contract price of the items, or to the price of the items to the event planner,
whichever is greater, including any associated charges such as transportation
However, a separately stated charge for event planning services such as
consultation or administration is not taxable if the fee is not directly
connected to, or calculated on, the sale of a taxable item.
All charges related to providing or serving food or beverages, or providing
other taxable services or items, are taxable to the client. These include
charges for the facility, servers, tables and chairs, table cloths and audio
visual equipment. Charges for parking, security services, decorations,
invitations and clean up are also taxable items. The event planner must
collect tax from the customer on the total amount charged for such services
even if separately stated from the charge for food or beverages.
An event planner operating under a separated contract may issue a resale
certificate when purchasing taxable items that will be transferred to the
client or the guests at the event. Examples include such items as souvenir
matchbooks, paper napkins, food provided by a third party caterer and floral
arrangements or other decorations that the client or guests may take with them.
An event planner operating under a separated contract may also issue a resale
certificate when purchasing non-reusable, consumable items such as crepe paper,
candles, and balloons. In addition, event planners operating under a separated
contract may issue a resale certificate when purchasing taxable services such
as security, parking and cleaning provided at an event. Sales tax should be
collected on the entire amount charged to the customer for such items.
However, the event planner is responsible for paying or accruing tax on all
equipment purchased, leased or rented for use during or in preparation for an
event and on any taxable services that are directly used by the event planner.
Examples include such items as computers, printers, graphic arts, margarita
machines, audio visual equipment, moonwalks and data processing services. The
event planner may not issue a resale certificate when purchasing such items,
even if the planner separately states a charge for the equipment to the
The event planner must also pay or accrue tax at the time of purchase on
decorations, floral arrangements and similar items used during an event that
remain the property of the event planner after the event. Examples include
candle holders, arches and trellises, carpet runners and portable dance floors.
Separately stated charges for entertainment such as a disc jockey, band or
singer are not taxable unless included as part of a contract with a venue
hosting an event. For example, a charge for a clown to appear at a birthday
party is not taxable. However, if an entertainment venue such as a party room
hires a clown to appear at a party, the party room must collect tax on the
entire charge to the customer, including the portion attributable to the clown
performance. The charge made by the clown to the event planner or venue
The entire text of the Tax Code, a complete set of rules, and a wealth of other
information are available on the Window on State Government web site at
www.window.state.tx.us. You may find the sales tax rules by first clicking on
"Sales Tax" under the Quick Links and then by clicking on "Rules" at the top of
the web page.
This opinion is based on the facts you submitted. Other facts, though similar,
may yield different results.
I hope this information helps. If you have further questions, please e-mail me
at firstname.lastname@example.org., or you may reach me by phone at
1-800-531-5441, ext. 3-1810.
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Tax Policy Division
ACCESSION NUMBER: 200703903L
DOCUMENT TYPE: L
TAX TYPE: SALES