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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
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550.0000 Taxable Sales of Food Products—Regulation 1603
Annotation 550.0529
(b) Restaurants, Hotels and Boarding Houses
550.0529 Sales of Meals and Food Products. An individual is the sole proprietor of a boarding house facility with 284 rooms and board for a flat monthly rate to permanent residents 62 years of age or older. The individual intends to form a corporation to lease approximately 25 rooms to operate a hotel for transients on the premises. The corporation would rent the rooms to the general public.
In this case, it is highly probable that persons under the age of 62 would reside on the premises, albeit on a transient or temporary basis. Section 6363.6 provides that the house or institution claiming a tax exemption for the sales of meals to its residents must serve exclusively as a principal residence for persons 62 years or older. Clearly, the requirement for exclusive residency by persons 62 years of age or older is not met when the hotel corporation subleases rooms for occupancy by persons under the age of 62 years. Consequently, the exemption from tax available under section 6363.6 would not apply to the sales of meals by the boarding house facility following the proposed transaction between the individual and the hotel corporation. 9/1/83.