Mobile Food Vendors as Caterers

If you sell taxable food products, you must register with us for a seller's permit.

Mobile food vendors are subject to similar tax reporting requirements as brick-and-mortar restaurants but should pay sales or use taxes at the rate in effect at the location where the sale is made. Since you may be on the move, you are responsible to collect the district tax, if any, at each location where your sales are made throughout the day. For this example, a fictitious location and sales tax rate will be used. The sales tax rate for City A (County A) is 7.75% and for City B (County B) is 9.25%. If you make sales in City A (County A) in the morning, you will report those sales at the City A rate of 7.75%. Later in the day, if you make sales in City B (County B), you will report those sales at the City B rate of 9.25%. To report district tax, select the District Tax button where it says click to enter District Tax when filing your sales and use tax returns online. For a comprehensive listing of current tax rates, please see our webpage, City and County Sales and Use Tax Rates.

Notes

1. See Regulation 1603, Taxable sales of food products.
2. See Regulation 1699, Permits.

All Your Sales May be Taxable

The "80/80 rule" applies when 80 percent of your sales are food and 80 percent of the food you sell is taxable. If the 80/80 rule applies to your business and you do not separately track sales of cold food products sold for take-out, you are liable for tax on 100 percent of your sales.

If the 80/80 rule applies to your business, you may elect to separately account for sales of to go orders of cold food products. You must report and pay tax on all food and beverages sold, unless:

• The sale is nontaxable, or
• You make a special election not to report tax on to go sales even though your sales may meet both criteria of the 80-80 rule. Such sales include:
  • Cold food products, and
  • Hot bakery goods and hot beverages that are sold for a separate price.

Sales of those products must be separately accounted for and supported by documents. Without adequate documentation, 100 percent of your sales are subject to tax.

Hot Prepared Food

Hot prepared food that you serve to your customers is taxable.

A food product is hot when it is heated to above room temperature, and is still considered hot even after it has cooled, because it is intended to be sold in a heated condition.

If you sell a combination package –; two or more items sold for a single price – that includes a hot prepared food, the entire combination package is taxable.

Notable Exception: Hot Bakery Goods

The sale of hot bakery goods (for example: donuts, muffins) to go are exempt from sales tax. If sold in a combination package with hot prepared foods or with a hot beverage, however, the entire combination package is taxable.

Cold Food

Unless you qualify for the 80/80 rule and do not separately track sales of cold food, your sales of cold food products sold individually are not taxable.

Cold food products include cold sandwiches, milkshakes, smoothies, ice cream, and cold salads, among others.

Cold food that is sold as part of a combination package, depending on the other contents of the package, may be taxable.

Combination Packages

A combination package is two or more items sold together for a single price – may be taxable if it is sold for take-out, depending on the contents of the package.

If you sell a hot prepared food with cold food in a combination package, the entire package is taxable. If you include a soda with a combination package of cold food, the portion of the sales price that represents the soda is taxable.

Keeping Adequate Books and Records

Businesses that are required to hold a seller's permit because they make taxable sales in California should keep books and records that are necessary to accurately determine their tax liability. In most cases, that means normal "books of account" and the bills, invoices, and other documents that support them. In addition, owners and operators should keep the schedules and working papers used to prepare tax returns.

Sales Made on State-Designated Fairgrounds

Effective July 1, 2018, if you are a retailer who makes sales of tangible personal property that take place on the real property of a California state-designated fair ("state-designated fairground"), you must separately state the amount of those sales on your Sales and Use Tax return. Sales that take place on state-designated fairgrounds include over-the-counter sales on the fairgrounds and also may include sales in which the property is shipped or delivered to or from the fairground.

The separately reported amount will be used for funding allocation purposes only. There is no additional tax or fee due on these sales. For more information on the new reporting requirement, please see Tax Guide for Reporting Requirements on State-Designated Fairgrounds.

Sales Suppression Software Programs and Devices

Beginning January 1, 2014, it will be a crime for anyone to knowingly, sell, purchase, install, transfer or possess software programs or devices that are used to hide or remove sales and to falsify records. Using these devices gives an unfair competitive advantage over business owners who comply with the law and pay their fair share of taxes and fees. Violators could face up to three years in county jail, fines of up to $10,000, and will be required to pay all illegally withheld taxes, including penalties and interest.

Pricing Menu Items

You may price your menu items as tax-included or add tax to the menu price of taxable items. Until July 1, 2014, if your menu items include tax, you must post a notice for customers that reads, "All prices of taxable items include sales tax." However, when the mobile food truck vendor is making sales as a caterer (hired by a private party to provide food and/or drink on the customer’s premises) the presumption below that the sale is made on a tax-included basis would not apply.

Beginning July 1, 2014, this signage requirement will no longer apply. If a mobile food truck vendor does not add a separate sales tax amount to the menu price, any taxable menu items sold are presumed to have the tax included in the sales price. Even though your taxable menu items may include sales tax, when reporting your taxable sales, you need to use the proper rate for the location where your sales took place to calculate your sales tax included. For example, if your sales of taxable menu items in City A (7.75% tax rate) totaled $600 and your sales of taxable menu items in City B (9.25% tax rate) totaled $400, you would calculate your sales tax included as follows:

For more information, see publication 22, Dining and Beverage Industry.

Note

1. See our webpage, California City & County Sales & Use Tax Rates, for the current tax rates you should use for your location. You can also look up the current sales and use tax rate by address.