337 Sales of Unprepared Food.

Effective November 1, 2007, Code Section 12–36–2120(75) exempts from the state sales and use tax the gross proceeds of sales or sales price of ‘‘unprepared food that lawfully may be purchased with United States Department of Agriculture food coupons.’’ This exemption does not apply to local sales and use taxes that are administered and collected by the Department on behalf of the counties and other jurisdictions, unless the local tax law specifically exempts the sales of such unprepared food. The determination as to whether a sale of unprepared food is exempt from the state sales and use tax is based on whether the food is of a type that is eligible to be purchased with USDA food stamps, the type of location selling the food, and whether the food is being sold for immediate consumption, business or institutional consumption, or home consumption. In other words, a food must be of a type eligible to be purchased with USDA food stamps and must also be sold for home consumption (based on the type of food and the type of location selling the food) to qualify for the exemption from the state sales and use tax under Code Section 12–36–2120(75). For example, bottled soft drinks are eligible to be purchased with USDA food stamps, but if bottled soft drinks are sold at a concession stand at a festival, then the bottled soft drinks are sold for immediate consumption and not home consumption and the sale at the festival would be subject to the full state sales tax rate. This regulation will explain which sales of food qualify or do not qualify for the exemption under Code Section 12–36–2120(75). 117–337.1. ‘‘Eligible Food’’ Defined. For purposes of this regulation, the term ‘‘eligible food’’ is food eligible for the exemption under Code Section 12–36–2120(75) that will be defined to include and exclude the following: (A) Foods eligible for the exemption under Code Section 12–36–2120(75) include: (1) Any food intended to be eaten at home by people, including snacks, beverages and seasonings; (2) Seeds and plants intended to grow food (not birdseed or seeds to grow flowers); and (3) Cold items, which may include salads or sandwiches, intended to be eaten at home by people and that are not considered ‘‘prepared meals or food’’ as discussed below. (B) Food and other items which are not eligible for the exemption under Code Section 12–36–2120(75) and are, therefore, subject to the full state sales and use tax rate (unless otherwise exempt) include: (1) Alcoholic beverages, such as beer, wine, or liquor; (2) Hot beverages ready-to-drink such as coffee; (3) Tobacco; (4) Hot foods ready to eat; (5) Foods designed to be heated in the store; (6) Hot and cold food to be eaten at a lunch counter, in a dining area or anywhere else in the store or in a nearby area such as a mall food court; (7) Vitamins and medicines; (8) Pet food; (9) Any non-food items such as tissue, soap or other household goods; (10) Meals or food shipped or delivered to businesses or institutions (hospitals, prisons, jails, nursing homes, etc.); and (11) Prepared meals or food as defined in Regulation 117–337.2. 117–337.2. ‘‘Prepared Meals or Food’’ Defined. (A) ‘‘Prepared meals or food’’ is food for immediate consumption (based on the type of food and the type of location selling the food) and is not eligible for the exemption under Code Section 12–36–2120(75), but is subject to the full state sales and use tax rate. ‘‘Prepared meals or food’’ are meals or food sold by a business, or from an identifiable location within a business, which advertises, holds itself out to the public (e.g., offers hot food or the ability to heat food, provides seating, or provides utensils with the meal or food), or is perceived by the public as being engaged in the sale of ready-to-eat food or beverages to customers for their immediate consumption on or off the premises. Such a business, or identifiable location within a business, may be mobile or immobile and may or may not provide seating accommodations for its customers. For example, ‘‘prepared meals or food’’ includes, but is not limited to (a) meals or food sold by a restaurant, cafeteria, lunch wagon or cart, lunch counter, cafeteria, ice cream stand, tavern, night club, or other similar places or businesses engaged in the business of selling prepared meals or food for immediate consumption, (b) meals prepared and delivered by a meal delivery service; (c) meals sold to or at congregate meal sites; (d) meals or food sold at a grocery store, convenience store or any other similar store for the purpose of eating at or near the store, such as meals or food sold with eating utensils (e.g., plates, knives, forks, spoons, cups, napkins) provided by the seller, (e) meals or food sold at hotels, motels, or other places furnishing accommodations; (f) meals or food sold at newsstands, gift shops, and snacks bars located in offices or other public or commercial buildings; (g) meals or food sold at movies theaters, opera houses, fairs, carnivals, stadiums, auditoriums, amphitheaters, or similar entertainment or sports facilities; and (h) food sold through vending machines. (B) Exception: If a store, or an identifiable location within a store, advertises, holds itself out to the public (e.g., offers hot food or the ability to heat food, provides seating, or provides utensils with the meal or food), or is perceived by the public as being engaged in the sale of ready-to-eat food or beverages to customers for their immediate consumption on or off the premises and also sells food that is prepared for home consumption, sold for home consumption, and is not the type of food intended for immediate consumption, then such ‘‘home consumption’’ food is not considered ‘‘prepared meals or food’’ and would be ‘‘eligible food’’ exempt from the state sales and use tax under Code Section 12–36–2120(75), provided it is not one of the foods listed above in Regulation 117–337.1(B) - Items (1) through (10). The following are examples of this exception: (A) A grocery store has a deli/bakery that provides tables, chairs, benches, booths, counters or an area where customers may consume food in or near the store. In addition to other items, this deli/bakery area sells loaves of baked bread (the bread it is not hot at the time of sale). The sales at retail of the loaves of bread are exempt from the state sales and use tax under Code Section 12–36–2120(75), provided the sale is not for a party or gathering held at the store or delivered to a location other than a private residence. (B) A coffee shop sells individual slices of cake to be eaten with the coffee and other drinks sold at the shop. The shop also sells entire sheet cakes. The sale at retail of the sheet cake is exempt from the state sales and use tax under Code Section 12–36–2120(75), provided the sale is not for a party or gathering held at the shop or delivered to a location other than a private residence. (C) Some sales of meals or food may be exempt from the sales and use tax under other exemption provisions. For example, Code Section 12–36–2120(10) provides exemptions from the sales and use tax for (1) meals or foodstuff used in furnishing meals to school children within school buildings on a nonprofit basis; (2) meals or foodstuff provided to elderly or disabled persons at home by certain nonprofit organizations; (3) prepared or packaged foodstuff sold to nonprofit organizations for the homeless and needy; or (4) meals or prepared or packaged foodstuff sold to public and nonprofit organizations for congregate or in-home service to the homeless, needy, disabled adults over eighteen years of age or persons over sixty years of age (provided the meals or packaged foodstuffs in this item (4) are eligible for purchase with USDA food coupons). Code Section 12–36–2120(41) exempts from the sales and use tax tangible personal property, including meals or food, sold by certain nonprofit organizations.