Prepared food

(a)(1) Prepared food is meant to encompass items intended for, and which are generally ready for, immediate consumption at the time of sale either on or off the premises of the seller.

(2) An item will be considered prepared food and taxed at the full state sales and use tax rate if it meets any of the criteria discussed below in subsections (b) – (d) of this section and 26 CAR § 31-106(b), even if the item is not for immediate consumption.
(b)(1)(A) Prepared food is food sold in a heated state or heated by the seller.

(B) Food is sold in a heated state if it is sold at a temperature higher than the air of the room or place where the item is sold.

(C) Food that is heated by the seller at any time prior to sale, even if the item is not warm at the time of sale, is prepared food.

(D) Heating includes, but is not limited to:

(i) Baking;

(ii) Boiling;

(iii) Smoking;

(iv) Microwaving;

(v) Cooking; and

(vi) The use of such items as heat lamps or chafing dishes.

(E) The heating may occur at premises other than the location at which the sale is made.
(2)(A) Prepared food includes food that is served hot even if the food was not otherwise prepared by the seller, as well as food that was heated by the seller at any time before the sale and is ready to eat at the time of sale.

(B) Prepared food also includes heated food regardless of:

(i) Form;

(ii) Condition;

(iii) Quantities; and

(iv) Packaging.
Example: Rotisserie chicken, ready-to-eat pizza, fried potatoes, and ready-to-eat soup are foods that are sold in a heated state or heated by the seller and are taxed at the full state sales and use tax rate as prepared food.

(3) Food heated by the customer on the seller's premises is not prepared food.
Example: A convenience store sells frozen burritos. The convenience store also provides a self-service microwave for use by its customers. The customer selects a frozen burrito and heats it in the microwave. In this scenario, the burrito is not prepared food sold in a heated state because the food item is not heated by the seller. The burrito is food and taxed at the reduced state sales and use tax rate.
(c)(1) Prepared food is two (2) or more food ingredients mixed or combined by the seller for sale as a single item.

(2) Prepared food is anything made or combined by the seller and is taxable at the full state sales and use tax rate.
(3)(A) The item does not have to be prepared and sold at the same location.

(B) However, see 26 CAR § 31-104(c).
Example: Salads, birthday cakes, meat and cheese trays, popcorn seasoned with salt and butter, take and bake pizza, candy, and mixed fruit are prepared food and taxable at the full state sales and use tax rate if the item is made by the seller.
(d)(1)(A) Prepared food is food sold with an eating utensil provided by the seller.

(B) Food is considered to be sold with an eating utensil provided by the seller when the food is intended for consumption with the utensil provided.

(2) Food is sold with an eating utensil provided by the seller in the following scenarios:

(A) The seller physically gives the utensil to the customer; or
Example 1: The seller serves fried chicken and potato salad on a plate. The seller provided a utensil and a plate, and the sale is taxable at the full state sales and use tax rate as prepared food.
Example 2: The seller includes napkins or plastic forks in a to-go bag. The transaction is taxable at the full state sales and use tax rate as prepared food because the food is sold with an eating utensil provided by the seller.
Example 3: A food manufacturer sells a product containing crackers, tuna, a mayonnaise packet, and a spreader to supermarkets. The seller, the supermarket, did not provide the utensil to the customer, and the product is taxable at the reduced state sales and use tax rate as food. If a manufacturer, and not the seller, provides a utensil in a package, then the food is not sold with eating utensils provided by the seller.
(B)(i) The seller provides a utensil that is generally necessary for the customer to receive or consume the item.

(ii) A customer's choice not to use a provided utensil does not affect whether an item is prepared food.
Example 1: A cup for a dispensed beverage is a utensil generally necessary for the customer to receive the beverage. The dispensed beverage is prepared food and taxable at the full state sales and use tax rate.
Example 2: Plastic forks, spoons, and knives available at a salad bar are utensils that are generally necessary for the customer to consume the salad. A salad purchased from a salad bar is prepared food and taxable at the full state sales and use tax rate.
Example 3: A customer purchases a fountain drink at a convenience store. Instead of using the cups provided by the seller, the customer uses their own plastic cup. The fountain drink is still a dispensed beverage which is prepared food and taxable at the full state sales and use tax rate even though the customer did not use the cups provided by the seller.
(3)(A) If a seller makes utensils available to its customers by way of a self-service station or other central location, then all of the food items sold by the seller may be:

(i) Considered prepared food; and

(ii) Taxable at the full state sales and use tax rate.

(B) Providing utensils to customers by way of a self-service station or other central location will result in all food sales being considered prepared food if the seller's prepared-food sales percentage exceeds seventy-five percent (75%) as outlined in 26 CAR § 31-106.