Sales Tax on Meals

Sales Tax on Meals

Many of you received a Member Alert from WHCA regarding sales tax on meals when provided to independent living residents within a licensed assisted living community.  The WHCA Member Alert did not distinguish this matter as it may apply to not-for-profit organizations.  Not-for-profit organizations that provide meals to seniors (independent or dependent on care and other services) should be unaffected by the recent DOR audit activity as they are, otherwise, specifically exempt from meals sales tax under RCW 82.08.0293(3)(b).

WHCA is correct that dating back to the early 1980’s the Department of Revenue took the position that the provision of meals to independent living residents was NOT a sale of prepared food, but merely incidental to the rental of real property to the resident.  According to Lane Powell, DORs position was based on an application of a doctrine referred to as the predominant purpose test; when a taxpayer charged a lump sum price for services, that would otherwise be taxed differently if sold separately, the entire lump sum price was taxed according to its predominate purpose.  Meaning that in this situation, the DOR determined that the predominant purpose for residents, including those living independently in assisted living, was the rental of the apartment and receiving meals, and even housekeeping, was included in the rental cost. 

The Department may have changed that position and has assessed or is in the process of assessing some senior living communities for sales tax on the provision of meals to independent living residents.  WHCA has petitioned the Department to issue a declaratory order on the topic, which petition summarizes the long history of the Department’s treatment of independent living meals as incidental to the rental of real property.   The Department has assigned the petition to a Tax Review Officer and WHCA is encouraging its members to contact the Department to conduct a hearing on the petition.  WHCA hopes that if a hearing is granted, WHCA can then argue against recent and contrary DOR activity and avoid having to separately account for revenue derived from the sale of meals to residents living independently and the associated tax obligation that would follow.

All that being said, if the Department reverses its historic position and treats the provision of meals to independent living residents as a sale of meals to those residents, then under RCW 82.08.0293(3)(b) those sales of meals would be exempt when provided by a Washington non-profit organized under either RCW 24.03 or 24.12 (non-profits formed under another state’s laws would not qualify for the exemption). 

We recognize the burden this recent change in DOR practice may place on for profit assisted living and LPC organizations that provide meals to independent living residents and we are hopeful WHCA will prevail in this challenge.  We will engage if possible and keep members aware of the status of this matter as more is learned.

Should you have questions, please don’t hesitate to reach out.  And if a DOR auditor claims you are required to pay sales tax on meals served, please let me know immediately so we can address this directly with DOR.


Deb Murphy – President & Chief Executive Officer

1102 Broadway, STE 201, Tacoma, WA 98402
p: 253.964.8870 |