Sales Tax on University of Minnesota Purchases of Catering Services
Most purchases made by the University of Minnesota (the U) are exempt from sales tax in accordance with a broad statutory exemption. However, because prepared food, candy, alcohol, and soft drinks are excluded from the exemption, they are subject to tax when purchased by the U. The U regularly purchases these taxable items, as well as other items and services, from caterers.
At our request, the Minnesota Department of Revenue has provided guidance relating to the taxability of purchases by the U. Our opinion request and the response from the DOR are available here. The following is based on that guidance and applies when the U pays directly for the purchases. Contact the University Tax Management Office with questions.
Taxable Purchases From Caterers
- Food, including meals, buffets, snacks, hors d’oeuvres, appetizers, desserts, and any other item meeting the statutory definition or prepared food
- Alcoholic beverages taxable as of 7/1/09 (pdf)
- Nonalcoholic beverages, including soft drinks or other drinks that meet the statutory definition of prepared food
- Services related to preparing food or soft drinks
- Bar minimum fees
Inform your caterer that charges for exempt items should be listed separately from taxable items on an invoice to minimize the sales tax due. If taxable items are combined as one line item with exempt items, the entire charge is taxable; work with your caterer to ensure that exempt items are billed as separate line items from taxable items. Local taxes in the jurisdiction where the event is held should be imposed on taxable items. Charges for alcoholic beverages are subject to tax as of July 1, 2009, so the Downtown Minneapolis Liquor Tax will also apply to charges for alcoholic beverages in the downtown district.
Additional Catering Links
- Catering Opinion Letter and Response from MN Department of Revenue (pdf)
- Sales Tax on Alcoholic Beverages - updated 7-1-09 (pdf)