Banquet Room Rental

Banquet Room Rental

Does sales tax apply to banquet room charges?

Restaurants may rent out part of their facilities to others for banquets, parties, meetings, etc. In most cases, if you make a separate charge for the use of a banquet or meeting room, retail sales tax does not apply. Instead, this income is subject to B&O tax under the service and other activities classification. (However, banquet/meeting facilities provided by a lodging business (hotel, motel, etc.) are subject to sales tax.)

Reference: WAC 458-20-124; WAC 458-20-12401 and WAC 458-20-119.

If a single charge is made for both a banquet room and meals/drinks, the total charge is subject to retailing B&O tax and retail sales tax must be collected.

When an independent caterer charges their customer for their cost (and any markup) of renting a banquet room, such charge is considered part of the catering charge (much like charges for tables, chairs, flatware, etc.), and is subject to retailing B&O tax and retail sales tax.

Lodging Facility: In all cases, hotel and motel businesses must collect retail sales tax on banquet room charges whether separately stated or not. Hotel and motel businesses should refer to WAC 458-20-166.

Note: Mandatory gratuities are part of the selling price of the food or drinks even if separately stated. See the Gratuities Section.

Reference: WAC 458-20-118


Rev. 12/14/14


This article is an excerpt from the Handbook for Excellent Restaurant Operations (HERO), published by the Washington Hospitality Association.  Want a hard copy of the whole manual?  It’s one of the many benefits of becoming a member!  Find out more about joining the Washington Hospitality Association here.

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Categories: HERO