Sales Tax State Activity Update - February 2009

Vermont Says “Let’s All Go to the Lobby” to See How Movie Treats are Taxed

The Vermont Department of Taxes has issued a court ruling to determine the taxability of popcorn and nachos sold in movie theaters. In a court case of Eurowest Cinemas, LLC v. Vermont Department of Taxes, Eurowest contested that popcorn and nachos are specifically enumerated in the nontaxable item in the Tax Department of Regulation 1.9232.8. Vermont argues that although the listed items are excluded from Sales tax, “popcorn, potato chips… and similar products” refer to packaged candy and confectionary items.

According to The Vermont Department of Taxes, a movie theater sells food such as popcorn and nachos that are prepared and sold as a ready to eat portion. In this case, according to Section 9202(10) (C) (iii) of the Meals and Rooms Tax Act, taxable meals include all heated foods and beverages. Additionally, movie theaters are considered to be an “eating and drinking establishment because of their snack bars. As defined in Reg. 1.9232.8(B), eating and drinking establishments include places such as restaurants, cafés, taverns, counters, stands, fountains, drive-ins, vending devices, or other facilities etc, where food is served for eating on and off the premises are taxable.

The full text state’s guidance can be viewed at the Public Library of Law.

(Eurowest Cinemas, LLC v. Vermont Department of Taxes, Vermont Supreme Court, No. 2008-087, January 13, 2009)

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