Missouri's Director of Revenue recently issued a letter ruling taxing the sale of cafeteria food by a 501(c)(3) charitable organization. The organization planned to construct and operate a Senior Center with a café on a campus occupied by senior subsidized housing. Separate, related 501(c)(3) organizations operated the senior housing.
Missouri taxes charges for meals and drinks furnished at locations where meals or drinks are regularly served to the public. The term "public" includes a subset of the populace. Missouri also exempts sales made by charitable organizations in their charitable functions and activities.
The Director found that the organization's primary activity at its café will be to serve food and drink to the general public, including the subset of the public comprising of low-income seniors. The Director also found that the charitable function exemption did not apply because operation of the café was not within the primary purposes of the organization. The primary purpose of the organization was to serve seniors from low-income backgrounds in the St. Louis area. As a result, the sale of cafeteria food was taxable.