Retail Sale of Groceries Exclusion

# (1)

(1) *Definitions.* For purposes of this rule, the following definitions apply:

(a) "Store" means the location from which a taxpayer sells goods at retail to the final consumer for home consumption. "Store" includes both physical locations and online storefronts.

(b) "Consignment" refers to a model whereby groceries sold at retail are owned by one person, but the sale of such products is effected by a separate person which receives a commission or fee from the product owner for their role in effecting the sale.

# (2)

(2) *Excludable receipts from retail sales.* Receipts from retail sales of groceries, including groceries sold by consignment, are excludable from a taxpayer's commercial activity under ORS 317A.100(1)(b)(EE). The exclusion applies only to receipts from the sale of groceries as that term is defined in ORS 317A.100(8), which are sold at retail to the final consumer for home consumption. The determination as to whether an item is sold to a consumer for home consumption is based on the type of item sold and the circumstances of the sale. The determination is based on whether the seller typically expects that the sale of food from a specific store is purchased for home consumption.

# (3)

(3) *Factors indicating home consumption*. The determination as to whether a store typically sells groceries for home consumption rests on specific facts and circumstances. When determining whether a store typically makes grocery sales for home consumption, the department will consider factors such as (but not limited to):

(a) Whether the store's average gross receipts from the sale of hot food is greater than the average gross receipts from the sale of groceries.

(b) Whether the store offers on-site dining facilities, and if so, whether the percentage of total floor space allotted to dining facilities for customers is greater than the percentage of floor space dedicated to shelves displaying groceries available to customers for retail sale.

(c) Whether the store advertises itself as being engaged in the sale of hot food or ready-to-eat food.

# (4)

(4) The list of factors in section (3) is nonexclusive, and the factors will be considered only to the extent that they are relevant. The department may consider any other relevant facts and circumstances.

# (5)

(5) *Examples.*

# (6)

(6) *Safe Harbor for Stores Authorized as Retail Food Stores Under 7 U.S.C. 2012(o) or Qualifying as Retail Food Stores for Purposes of the Supplemental Nutrition Assistance Program (SNAP).*The sale of a grocery item, as defined in ORS 317A.100(8), by a store authorized as a retail food store under 7 U.S.C. 2012(o), with a valid permit as a SNAP qualified retail food store from the U.S. Department of Agriculture, is considered the retail sale of groceries for home consumption and excluded from the taxpayer's commercial activity. Receipts from the sale of groceries realized by a store that meets the requirements to qualify as a retail food store under 7 U.S.C. 2012(o), regardless of whether the store holds a permit as a SNAP qualified retail food store from the U.S. Department of Agriculture, are also considered the retail sales of groceries for home consumption and are excluded from the taxpayer's commercial activity, provided that the taxpayer can demonstrate that the store meets the requirements to qualify as a retail food store under 7 U.S.C. 2012(o).

# (7)

(7) A store may not exclude receipts under ORS 317A.100(1)(b)(EE), if the store's receipts from the sale of hot food or hot prepared food constitutes 80 percent or more of the total receipts that the store realized from the sale of all food items. The fact that the store's receipts are at least 80 percent from sales of hot food or hot prepared food is evidence that the store does not intend to sell, or typically sell, groceries to the final consumer for home consumption; therefore, sales from the store are not excludable as retail sales of groceries.

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Publications:

Contact the Oregon Department of Revenue for information about how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and ORS 183.355(1)(b).]