| (ii) contains less than 2.5 ounces.
(B) Snack items do not include items sold in prepackaged
units containing more than one package. For example, a box containing
6 prepacked, single-serving bags of nuts is not a snack item.
(d) Vending machine sales. Except as provided in subsection
(e) of this section, food, candy, and soft drinks sold through vending
machines are taxable. The sales tax is determined as follows:
(1) Soft drink and candy vending machine sales. The
vending machine operator must remit sales tax on the total gross receipts
from sales of soft drinks and candy without any deduction for spoilage,
waste, or other losses.
(2) Food product vending machine sales. The vending
machine operator must remit sales tax on 50% of the total gross receipts
from sales of food products without any deduction for spoilage, waste,
or other losses. Examples of food products include snack items, milk,
tea, coffee, and juice if more than 50% vegetable or fruit juice by
volume.
(3) Water, including bottled water, spring water, sparkling
water, or mineral water, is exempt from sales tax. A vending machine
operator is not required to remit sales tax on the receipts from sales
of water. Flavored water (carbonated or non-carbonated) is a soft
drink and a vending machine operator must remit tax on the total gross
receipts for vending machines sales of flavored water.
(4) A vending machine operator must place a sign on
the vending machine stating that the vended price includes sales tax.
If sales tax is included in the price of the taxable item, the vending
machine operator may back out the amount of the tax before reporting
the taxable sales on the sales tax return. See §3.328 of this
title (relating to Optional Reporting Methods for Grocers and Other
Vendors).
(e) Exempt vending machine sales.
(1) Bulk vending machine sales. Food, gum, candy, and
toys sold for $0.50 or less from a bulk vending machine, as defined
in subsection (a)(3) of this section, are exempt from sales tax. A
bulk vending machine operator that has only exempt bulk vending machine
sales may choose to obtain a sales tax permit and file sales tax returns
so that the operator is able to purchase the gum, candy, or toys tax
free for resale by giving the supplier a properly completed resale
certificate. If a vending machine operator has both taxable vending
machine receipts as explained in subsection (d) of this section, and
exempt bulk vending machine sales as explained in this subsection,
the operator must keep detailed records showing which items are dispensed
from the bulk vending machines.
(2) Sales through vending machines operated by certain
non-profit organizations.
(A) The sale of tangible personal property through
a vending machine is exempt from the taxes imposed by this chapter
if:
(i) the sale is made by a nonprofit organization that
is exempt from federal income taxation under Section 501(a), Internal
Revenue Code of 1986, by being listed as an exempt organization in
Section 501(c)(3) of that code;
(ii) the machine is owned by the nonprofit organization;
and
(iii) the machine is stocked and maintained by individuals
with special needs as part of an independent life skills and education
program operated by the nonprofit organization.
(B) A nonprofit organization that makes a sale exempt
from taxation under this section must maintain records demonstrating
that the sale is eligible for the exemption.
(f) Supplemental Nutrition Assistance Program (SNAP).
Food, candy, snack items, and soft drinks are exempt if purchased
with SNAP benefits (including a Texas Lone Star debit card) under
SNAP (7 U.S.C. Chapter 51) if the item can legally be purchased with
SNAP benefits. A seller should apply the amount of SNAP benefits against
the purchase of qualifying taxable items first so that the individual
receives the best possible benefit from SNAP.
(g) Food sale exemptions. Certain organizations may
sell prepared food, candy, snack items, and soft drinks tax-free.
These tax-free sales are not counted against the two one-day, tax-free
sales allowed to certain exempt nonprofit organizations under §3.322
of this title (relating to Exempt Organizations). Tax is due on sales
of alcoholic beverages by exempt nonprofit organizations.
(1) Sales of food, prepared food, soft drinks, snack
items, or candy by a church or at a function of the church are exempt.
(2) Sales of food, prepared food, soft drinks, snack
items, or candy sold or served by public or private elementary or
secondary schools, school districts, bona fide student organizations,
booster club or other school support organization, or parent-teacher
organizations and associations are exempt if the items are sold or
served during a regular school day pursuant to an agreement with the
proper school authorities. This exemption includes food, soft drinks,
snack items, and candy sold through vending machines.
(3) Sales of food, prepared food, soft drinks, snack
items, or candy by a parent-teacher organization or association during
a fund-raising sale are exempt if the proceeds do not go to the benefit
of an individual.
(4) Sales of food, prepared food, soft drinks, snack
items, or candy by a group associated with a private or public elementary
or secondary school are exempt if the sale is part of a fund-raising
drive sponsored by the organization for its exclusive use.
(5) Sales of food, prepared food, soft drinks, snack
items, or candy during an event sponsored or sanctioned by an elementary
or secondary school or school district at a concession stand operated
by a booster club or other school support organization formed to support
the school or school district are exempt, but only if the proceeds
from the sales benefit the school or school district.
(6) Sales of food, prepared food, soft drinks, snack
items, or candy by a member or volunteer for a nonprofit organization
devoted to the exclusive purpose of education or religious or physical
training of persons under 19 years of age are exempt if the sale is
part of a fund-raising drive sponsored by the organization for its
exclusive use.
(7) Sales of food, prepared food, soft drinks, snack
items, or candy served by hospitals, day care centers, summer camps,
or other institutions licensed by the state for the care of humans
are exempt if sold or served to the patients, children, students,
or residents of the facility. Sales of prepared food, soft drinks,
snack items sold in individual-sized portions, and candy to visitors
or employees of the facility are taxable. Persons confined in correctional
facilities operated under the authority, jurisdiction, or under a
contract with the State of Texas or its political subdivisions are
not exempt and must pay sales tax when they purchase taxable items
such as prepared food, candy, snack items in individual-sized portions,
soft drinks, and taxable items sold from vending machines. Meals and
beverages served without charge to inmates confined in correctional
facilities are not taxable.
(8) Food, prepared food, soft drinks, snack items,
or candy sold or served by a retirement facility to its permanent
residents are exempt. Sales of taxable items to visitors or employees
of the facility are taxable.
(h) Responsibilities of sellers of taxable food and
beverages.
(1) A seller must collect sales tax on all taxable
sales. The seller is required to obtain a sales tax permit, file sales
tax returns and remit the tax to the comptroller. See §3.286
of this title (relating to Seller's and Purchaser's Responsibilities,
including Nexus, Permits, Returns and Reporting Periods, and Collection
and Exemption Rules).
(2) A seller must collect sales tax on the total sales
price of taxable items, including separately stated charges for preparing,
serving, or delivering taxable items, charges for the room or facility
in which the meals and beverages are served, and charges for the cost
or expense of items such as reusable tables, chairs, tableware, and
tablecloths used by the seller in providing the food service. Reusable
items that are used by the food service provider (not rented to the
customer) may not be purchased tax free for resale.
(A) A cash discount (including a discount coupon) allowed
by a seller reduces the sales price of a taxable item, and the seller
should collect sales tax on the actual amount paid by the customer
for the discounted meals or beverages. For example, a seller should
charge sales tax on the price of the single meal when accepting a
discount coupon that allows the customer to purchase two meals for
the price of one.
(B) Separately stated charges for mandatory tips or
gratuities may be excluded from the sales price if the charges meet
the criteria for exclusion as explained in §3.337 of this title
(relating to Gratuities). Voluntary tips or gratuities left by customers
for food service employees are not subject to sales tax.
Cont'd... |
