Wholesale Exemption Applies to Meals Purchased by University in Colorado

Jun 3rd, 2019

The Colorado Supreme Court recently ruled that a food service vendor made exempt wholesale sales of food and food services to a university under the City of Golden's municipal code.

The taxpayer was a company that provided food services to a university. The services provided included food preparation, food sales, catering, concessions, and retail sales of meals. The taxpayer collected tax on meals paid for in cash, but did not collect tax on meals paid for with meal plan cards. Meal plans were paid for as part of student tuition at the beginning of the semester. When a student paid for a meal using their meal plan card, neither the university who sold the meal plans nor the taxpayer was collecting tax on the sale.

Under the City of Golden's municipal code, wholesale sales are exempt. Here, the taxpayer contracted to provide food and services to a university that billed students for a meal plan. The court held that the university purchased the taxpayer's products and services and ultimately resold those products and services to students as a meal plan. As a result, the taxpayer was exempt from collecting tax on the wholesale sale of meals to the university.