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Sales Tax Articles

Sales Tax State Activity Update - April 2003

Taxability of Heated Foods Clarified California

California State Board of Equalization has issued a Tax Information Bulletin clarifying the taxability of Foods by convenience stores. According to the Bulletin and the recently published Publication 24, many food products such as milk, bread, and cold meats, are not subject to tax. However, some foods that are tax-exempt become taxable when they are sold in a heated condition or if they are sold as part of a combination package that include a taxable product.

According to the Bulletin, sales of egg rolls, pizza slices, hot dogs, burritos, soup and other food items that are sold in a heated condition are taxable. These foods are typically displayed in heated units or under heat lamps.Sales of hot food are taxable even though they are sold to go.

The bulletin clarifies that sales of microwaveable prepackaged foods such as frozen burritos, sandwiches, microwave popcorn, soups, and so forth are taxable if these items are heated in a microwave oven that is accessible only to store employees. If the microwave is located in a place that is accessible to customers, the sale of the cold prepackaged food is not taxable. It is presumed that the food will not be sold in a heated condition and that the customer, rather than employees, will use the microwave oven to heat the food. In addition, sales of hot beverages such as coffee, hot chocolate, and hot tea, are not taxable when they are sold to go and for a separate price.

The full text is available at:
http://www.boe.ca.gov/pdf/pub24.pdf
http://www.boe.ca.gov/news/pdf/mar03tib.pdf
(California Publication 24, Tax Information Bulletin, March 2003) 04/03


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