Texas Comptroller determined that a caterer could not get a refund on its purchases of audio-visual equipment even if it had filed its refund claim on time.
The caterer bought audio-visual equipment for its clients to use for conferences and events. The caterer argued that it should get a refund of tax paid on the equipment because it sometimes rented the equipment out, not as part of its catering services. It argued that it therefore had bought the equipment in tax-free purchases for resale.
Generally, caterers must pay tax on purchases of tangible personal property that they will use to provide catering services. This includes audio-visual items such as projectors, screens, microphones, sound systems, lighting, props, telephone lines, and internet-related services. However, they may purchase items for resale if they purchase the items for something other than for use in catering services.
The taxpayer argued that the equipment was not always used to provide catering services and was sometimes rented out by itself. The taxpayer did not file its refund claim on time and so could not get a refund. In addition, the taxpayer did not provide invoices or contracts that could prove that it rented out its equipment. As a result, the caterer could not get a refund even if it had filed on time.