Sales and Use Tax TAA 12A-028 Sale of Bakery Products
QUESTION: Whether the sale of bakery products in retail bakery outlets for consumption
off the seller’s premises are subject to sales tax imposed under
Chapter 212, F.S.
ANSWER: Regardless of quantity, sales of the bakery products for consumption
off the premises are exempt when packaged in a manner consistent with
an intention by the customer to consume the products off the seller’s
premises and the sale is recorded through the POS using a special key
to record the exempt sale. Taxpayer’s sales of coffee beans, ground
coffee, and “kcup portion packs” are exempt as food products.
December 14, 2012
Re: Technical Assistance Advisement – TAA 12A-028
Sale of Bakery Products
Taxpayer Name: XXX
Taxpayer ID Number: XXX
Sales and Use Tax Section 212.08(1), Florida Statutes (F.S.)
Rule 12A-1.011, Florida Administrative Code (F.A.C.)
Dear XXX:
This response is in reply to your letter to the Department, dated XXX,
in which you are requesting the Department's issuance of a Technical
Assistance Advisement ("TAA") pursuant to s. 213.22, F.S., and
Chapter 12-11, F.A.C., regarding whether the sale of bakery products in
retail bakery outlets for consumption off the seller’s premises
are subject to sales tax imposed under Chapter 212, F.S. An examination
of your petition has established that you have complied with the statutory
and regulatory requirements for issuance of a TAA. Therefore, the Department
is hereby granting your request for issuance of a TAA.
As provided in Section 213.22(1), F.S., a technical assistance advisement
may be issued to a taxpayer who requests an advisement relating to the
exemptions in Section 212.08(1) or (2), F.S., at any time. Technical assistance
advisements shall have no precedential value except to the taxpayer who
requests the advisement and then only for the specific transaction addressed
in the technical assistance advisement, unless specifically stated otherwise
in the advisement.
PRELIMINARY FACTS
Taxpayer is a Florida limited liability company and owns and operates
14 retail bakery outlets in southwest Florida. Each outlet is a “XXX”
franchisee and operates a “XXX” outlet. In addition to the
retail outlets, Taxpayer owns XXX, a Florida limited liability company
that operates a central manufacturing location (bakery). The bakery manufactures
fresh bakery products for, and delivers them to, its affiliated retail
outlets. The bakery also provides products to other affiliated retail
outlets as well as to the franchise operations of other XXX franchisees.
As stated in your request, more than XXX percent of the retail business
is made up of baked goods and coffee and all of the retail outlets have
seating. The seating is sparse in all of the shops and almost half of
the business at the retail outlets is derived from drive-thru service.
XXX of the XXX retail outlets are licensed by the Department of Agriculture
as a “Retail Bakery with Food Service or Specialty Food Shops”
and XXX are licensed by the Department of Business and Professional Regulation
as “Seating Food Service.” You assert that these XXX locations
had ice cream service which has been extracted, and Taxpayer expects that
in 2013 these locations will be licensed by the Department of Agriculture
as a Retail Bakery with Food Service or Specialty Food Shop. The bakery
is licensed by the Department of Agriculture as a Wholesale Bakery.
As stated in your request for technical assistance:
. . . the vast majority of the food products sold by these outlets are
bakery products, such as doughnuts, muffins, bagels and croissants, and
related beverages, such as coffee or tea. Although some sandwiches may
be sold, sales tax is charged and collected for sandwiches, even though
sandwiches are made with bakery products. Wait service and full meals
are not offered, and the Division of Hotels and Restaurants does not license
these entities. Therefore, the retail outlets are not restaurants but
are bakeries or pastry shops.
The retail outlets sell bakery products for human consumption on and off
their premises. When customers purchase bakery products in quantities
of five or less, sales tax is charged and collected. When bakery products
are sold in quantities of six or more, the customer is given the product
in special packaging that is secured with tape or a seal/sticker, and
the sale is recorded through the POS using a special key or keys for these
transactions. This procedure permits [Taxpayer] to establish that bakery
products are sold in a manner consistent with the intent by its customers
to consume the product off the premises, and the retail outlets are able
to separately account for non-taxable from taxable sales.
REQUESTED RULING
You are requesting a ruling concerning whether the retail bakery outlets
are required to collect sales tax on bakery items sold in quantities of
six or more as follows: half dozen bagels; dozen bagels; half dozen donuts;
dozen donuts; two dozen donuts; 25 XXX; 50 XXX when the customer is given
the product in special packaging that is secured with tape or a seal/sticker,
and the sale is recorded through the POS using a special key to establish
the products are sold for consumption off the premises. You also seek
guidance concerning whether Taxpayer is required to collect sales tax
on the sale of coffee beans, ground coffee and “k-cup portion packs,”
which are not sold for immediate consumption.
LAW
Pursuant to Section 212.08(1), F.S., there are exempted from tax imposed
by this Chapter, 212, F.S., food products for human consumption. The term
"food products," as defined in Section 212.08(1)(b), F.S., means
edible commodities, whether processed, cooked, raw, canned, or in any
other form, which are generally regarded as food. Food products include
coffee and coffee substitutes, meat and meat products, baked goods, fish
and seafood products, vegetables and vegetable products, fruit and fruit products.
Section 212.08(1), F.S., exempts the sale of bakery products when they
are sold by bakeries, pastry shops, or like establishments for consumption
off the seller’s premises. As provided in Rule 12A-1.011(3)(c)2., F.A.C.:
For the purpose of this paragraph, there shall be a rebuttable presumption
that the sale of bakery products by bakeries, pastry shops, or like establishments
that have eating facilities are taxable when:
a. Such bakery products are sold in quantities of five (5) or fewer items; or
b. The bakery products sold, regardless of the quantity, are not packaged
in a manner consistent with an intention by the customer to consume the
products off the seller’s premises.
As stated in Rule 12A-1.011(3)(c)3., F.A.C., bakery products that are
sold, regardless of the quantity, in packaging that is glued, stapled,
wrapped, or sealed are examples of packaging consistent with an intention
by the customer to consume products off the seller’s premises. As
provided in Rule 12A-1.011(3)(c)4., F.A.C.:
4. Bakeries, pastry shops, or like establishments that have eating facilities
and make tax-exempt sales of bakery products that are for consumption
off the premises are required to separately account for the tax-exempt
sales of bakery products for consumption off the premises.
a. Examples of methods to separately account for tax-exempt sales of bakery
products for consumption off the premises are: using sales invoices which
contain documentation that the sale of the bakery product is for consumption
off the premises; using a separate key on a cash register to record tax-exempt
sales of bakery products; or using a separate cash register to record
taxexempt sales of bakery products.
b. Example. A bakery operates an establishment with eating facilities.
The bakery sells donuts, toasted bagels, and other pastries, as well as
coffee and other drinks. The bakery sells bakery products to patrons who
take the products home for consumption in sealed containers. Products
sold for consumption on the premises are served to the customers on trays.
The bakery uses separate keys on its cash registers to account for the
sales of tax-exempt bakery products to patrons who purchase the products
for consumption off the premises in sealed containers separately from
the accounting for taxable sales of toasted bagels, coffee, other drinks,
and bakery products for consumption on the premises. The bakery products
sold for consumption off the premises are exempt, because the bakery’s
packaging and accounting methods overcome the rebuttable presumption that
the products are sold for consumption on the premises.
DETERMINATION
Regardless of quantity, sales of the bakery products for consumption off
the premises are exempt when packaged in a manner consistent with an intention
by the customer to consume the products off the seller’s premises
and the sale is recorded through the POS using a special key to record
the exempt sale. Taxpayer’s sales of coffee beans, ground coffee,
and “k-cup portion packs” are exempt as food products.
This response constitutes a Technical Assistance Advisement under s. 213.22,
F.S. which is binding on the department only under facts and circumstances
described in the request for this advice, as specified in s. 213.22, F.S.
Our response is predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory or administrative rule
changes or judicial interpretations of the statutes or rules upon which
this advice is based may subject similar future transactions to a different
treatment than expressed in this response.
You are further advised that this response, your request and related backup
documents are public records under Chapter 119, F.S., and are subject
to disclosure to the public under the conditions of s. 213.22, F.S. Confidential
information must be deleted before public disclosure. In an effort to
protect confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement, the backup
material and this response, deleting names, addresses and any other details
which might lead to identification of the taxpayer. Your response should
be received by the Department within 15 days of the date of this letter.
If you have any further questions with regard to this matter and wish
to discuss them, you may contact me directly at (850) 717-7202.
Sincerely,
Richard R. Parsons
Tax Law Specialist
Technical Assistance & Dispute Resolution
(850) 717-7202
Record ID: 132445