us-tx/regs
34 Tex. Admin. Code § 3.293 — Food; Food Products; Meals; Food Service
(a)
Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.
(1) Bakery--A retail location where more than 50% of sales made are sales of bakery items sold from a display case or counter and consumed off the premises. A retail location is a premise occupied temporarily or permanently by the seller where the seller holds or handles bakery items for retail sale. The term includes a table, booth, or other space rented or leased by a seller within a multi-seller marketplace.
(2) Bakery items--Bread, rolls, buns, biscuits, bagels, croissants, pastries, doughnuts, Danish pastries, cakes, tortes, pies, tarts, muffins, bars, cookies, tortillas, and similar items. The term does not include candy, snack items, sandwiches, tacos, or pizzas.
(3) Bulk vending machine--A device that contains unsorted items and randomly dispenses goods in approximately equal amounts without selection of a particular item or type of item by the customer.
(4) Candy--A confection made with natural or artificial sweeteners. Examples include: candy bars; gum; drops; taffy; nuts, raisins, and fruits that have been candied, crystalized, glazed, or coated with chocolate, yogurt, or caramel; and nuts roasted with a sweetener. The term does not include products used exclusively for cooking, such as chocolate bits and cake sprinkles.
(5) Combine--To join two or more food products into a single item.
(6) Eating utensils--Tableware implements for cutting or eating food, or an object used as a container intended for drinking. Examples include trays, plates, knives, forks, spoons, glasses, cups, chop sticks, or straws.
(7) Food and food ingredients--Substances, whether in liquid, concentrated, solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing by humans and are consumed for taste, aroma, or nutritional value.
(A) Food and food ingredients include food products intended for human consumption, such as the following: cereal and cereal products; milk and milk products, butter, and yogurt; oleomargarine; meat and meat products; poultry and poultry products; fish and fish products; eggs and egg products; vegetables and vegetable products; fruit and fruit products; spices, condiments, and salt; sugar products; coffee and coffee substitutes; tea; juice (if more than 50% fruit or vegetable juice by volume); cocoa and cocoa products; canned foods; snack items; or any combination of these.
(B) Food products do not include:
(i) alcoholic beverages;
(ii) cigarettes, tobacco, or tobacco products;
(iii) candy;
(iv) ice;
(v) water; or
(vi) drugs, medicines, tonics, vitamins, dietary supplements, and medicinal preparations in any form. For further information about drugs, medicines, and dietary supplements, see §3.284 of this title (relating to Drugs, Medicines, Medical Equipment and Devices).
(8) Food ready for immediate consumption--Food, drinks, or meals prepared, served, or sold by restaurants, lunch counters, hotels, cafeterias, delis, mobile vendors, or other like places of business, that, when sold, require no further preparation by the purchaser prior to consumption; and food sold through vending machines. A grocery store or convenience store that contains a restaurant, lunch counter, deli, or other similar location is a like place of business selling food ready for immediate consumption, but only for items sold at that location.
(9) Food sold through vending machines--Food dispensed from a machine or other mechanical device that accepts payment.
(10) Mix--To blend two or more food items together into a single item that is more or less a uniform whole, but each ingredient may or may not retain its identity (e.g., potato salad, coleslaw or seafood salad).
(11) Mobile vendor--A person who sells food from a motor vehicle, push cart, or any other form of vehicle.
(12) Prepared food--Prepared food means:
(A) food ready for immediate consumption;
(B) food sold in a heated state or heated by the seller;
(C) food sold with eating utensils provided by the seller; or
(D) two or more food ingredients mixed or combined by the seller for sale as a single item, including items that are sold by weight or volume as a single item, but does not include food that is prepared at an off-site location, refrigerated food that is typically reheated prior to eating, or food that is only cut, repackaged, or pasteurized by the seller.
(13) Retirement facility--A facility that provides permanent housing and residence to individuals, a majority of whom are 60 years of age or older.
(14) Snack items--Snack items means:
(A) breakfast bars, granola bars, nutrition bars, sports bars, protein bars, and yogurt bars, unless they are labeled and marketed as candy;
(B) snack mix and trail mix;
(C) nuts, but not including pine nuts or nuts that have been candied, crystalized, glazed, coated with chocolate, yogurt, or caramel, or roasted with a sweetener;
(D) popcorn;
(E) chips, crackers, hard pretzels, pork rinds, and corn nuts;
(F) sunflower seeds and pumpkin seeds;
(G) ice cream, sherbet, and frozen yogurt; and
(H) ice pops, juice pops, sorbet, and other frozen fruit items containing not more than 50 percent fruit juice by volume.
(15) Soft drinks--Packaged carbonated and non-carbonated non-alcoholic beverages that contain natural or artificial sweeteners.
(A) The term includes mixes that when combined with water become soft drinks, and bottled and canned teas and coffees that contain natural or artificial sweeteners.
(B) The term does not include beverages that contain milk or milk products, soy, rice, or similar milk substitutes, or juices that contain more than 50% vegetable or fruit juice by volume.
(b)
Sales of exempt food products or water.
(1) Food and food ingredients are exempt from sales tax unless otherwise taxable under subsection (c) of this section.
(2) Water is exempt as explained in §3.318 of this title (relating to Water-Related Exemptions).
(c)
Taxable sales. The following are subject to sales tax:
(1) sales of soft drinks;
(2) sales of candy;
(3) sales of ice;
(4) sales of beer, wine, and other alcoholic beverages unless subject to mixed beverage gross receipts tax and mixed beverage sales tax under Tax Code, Chapter 183 (Mixed Beverage Taxes), or prepared and served by a person holding an airline beverage permit, passenger train permit, or passenger bus permit issued by the Texas Alcoholic Beverage Commission;
(5) sales of cigarettes and other tobacco products;
(6) vending machine sales of food, soft drinks, and candy as explained in subsection (d) of this section;
(7) sales of prepared food as defined in subsection (a)(12) of this section, other than bakery items which are addressed in paragraph (8) of this subsection, including:
(A) all food ready for immediate consumption sold by caterers, mobile vendors, or restaurants, fast food outlets, lunch counters, cafeterias, delis, hotels, and other like places of businesses; and
(B) all sandwiches ready for immediate consumption, including refrigerated triangle-type sandwiches such as ham, cheese, tuna, egg salad, or chicken salad, but not sales of sandwiches that are frozen or partially frozen and that require thawing or heating by the customer prior to consumption;
(8) sales of bakery items at a place of business other than a bakery when sold:
(A) in a heated state;
(B) with plates or other eating utensils that the seller hands to the customer or the seller places on a tray or plate for the customer; or
(C) in conjunction with a taxable meal for which plates or other eating utensils are provided, even if the seller makes a separate charge for the bakery item. For example, a roll served in a restaurant with a meal is taxable even if the roll is served in a napkin rather than directly on the plate; and
(9) sales of snack items sold in individual-sized portions.
(A) A snack item is sold in an individual sized-portion if the snack item:
(i) is labeled as having not more than one serving; or
(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.
(3) A seller of taxable items must keep accurate records that clearly identify sales of exempt items and sales of taxable items. The records must separately state charges for the exempt items from the charges for taxable items. Examples of records include sales invoices, receipts, and cash register coding records. If a seller's records do not clearly identify exempt sales from taxable sales, all sales are presumed taxable.
(4) A seller must pay sales or use tax on the purchase, lease, or rental of all taxable items unless otherwise exempt under the law. Examples of equipment and supply items taxable to a food service business include, but are not limited to, tables, chairs, reusable place mats, tablecloths, cloth napkins, silverware, dishes, dispensers such as salt and pepper shakers and glass creamers, garbage cans and garbage can liners, janitorial items such as mops and mop holders, grill bricks, aprons, menus and menu inserts, and hand tools such as cooking utensils, cutting knives, and lime squeezers.
(5) A seller may give a resale certificate to a supplier for the tax-free purchase of items that are transferred to the customer with the food or beverages. Such items must not be reusable by the seller to qualify for the sale for resale exemption. See §3.285 of this title (relating to Resale Certificates; Sales for Resale). Persons who process food for sale qualify for an exemption on the wrapping and packaging used to package the food for sale and may give an exemption certificate to a supplier. See §3.314 of this title (relating to Wrapping, Packing, Packaging Supplies, Containers, Labels, Tags, Export Packers, and Stevedoring Materials and Supplies). Examples of items qualifying for exemption include disposable paper products, wooden, plastic, and aluminum products that are transferred to the customer. Other examples include cake boxes, lunch boxes, disposable cups, paper and plastic containers, bottle wraps, butter chip trays, disposable paper or plastic plates, plastic knives, forks, and spoons, paper napkins, soda straws, toothpicks, french fry boxes, stir sticks, ice cream sticks, disposable souffle cups, hot dog trays, and other types of disposable trays.
(6) A person processing food for sale is a manufacturer and may claim a sales or use tax exemption on purchases of equipment and other taxable items that qualify for exemption under Tax Code, §151.318. For example, a restaurant may claim an exemption on the purchase of an oven or a mixer directly used in baking or mixing. See §3.300 of this title (relating to Manufacturing; Custom Manufacturing; Fabricating; Processing) for further information regarding these exemptions. The exemption in Tax Code, §151.317 for natural gas and electricity used in manufacturing is not applicable when the gas or electricity is used to prepare or store prepared food.
(7) As a matter of convenience, a food service business, such as a restaurant selling prepared food, may sell prepared food tax free to a food service employee immediately before, during, or immediately after the employee's shift. This provision applies to employees involved in preparing or serving food at the food service location.
(i)
Universities, colleges, junior colleges, or other institutions of higher learning. Universities and colleges are required to collect sales tax on taxable sales as explained in subsection (c) of this section. If a charge for meals is not separately stated and is included in a lump-sum price to a student for room and board, sales tax is due on the portion of the lump-sum charge attributable to the taxable meals.
(j)
Hotels and other places that provide sleeping accommodations. Persons that provide sleeping accommodations to the public, including motels, tourist houses, lodging houses, inns, rooming houses, bed and breakfast places, must collect hotel occupancy tax under Tax Code, Chapter 156.
(1) A hotel must collect tax on prepared food.
(2) If the charges for prepared food are not separately stated and are billed with the lodging as a lump-sum price, then hotel occupancy tax, not sales tax, is due on the lump-sum charge. See §3.162 of this title (relating to Hotel Occupancy Tax Base and Collection of the Tax).
(3) A hotel is not required to collect sales tax on a separately stated charge for use of a hotel meeting room if the charge is unrelated to the sale, provision, or service of prepared food or the sale of other taxable items such as an admission charge for a taxable amusement service. See §3.298 of this title (relating to Amusement Services). The charge for the meeting room is subject to hotel occupancy tax if the meeting room is located in the hotel building where sleeping accommodations are provided.
(4) A hotel is required to pay sales tax on its purchase of taxable items (e.g., prepared food purchased from a caterer, soft drinks, candy, ice) provided to guests free of charge as complimentary items. However, a hotel is not required to accrue and pay sales tax on its purchase of exempt food products (loaves of bread, milk, cereal, fruit) even if provided to guests as free complimentary items.
(k)
Caterers.
(1) Caterers are persons engaged in the business of preparing and serving meals, drinks, or other food products at locations designated by customers. A caterer is a seller of prepared food and beverages and must collect sales tax on all charges billed in connection with the sale of taxable meals.
(2) A caterer owes tax on the purchase, lease, or rental of such items as tables, chairs, tablecloths, steam tables, and table decorations used in providing catered meals. A caterer may claim a resale exemption on the purchase of nonreusable items transferred to customers and a manufacturing exemption on qualifying equipment, such as mixers, used to prepare the food. See §3.300 of this title for information on qualifying equipment.
(3) If a caterer uses a room or facility in a hotel that is subject to hotel occupancy tax, the caterer is required to pay the occupancy tax to the hotel. There is no resale exemption for hotel occupancy tax. In addition, a caterer must collect sales tax on a separately stated charge passed on to the customer for the cost or expense of the room (including the occupancy tax) when billed to a customer as part of the taxable sale of catered meals.
(l)
For information on the responsibilities of persons who sell and serve mixed alcoholic beverages, see §3.289 of this title (relating to Alcoholic Beverage Exemptions).
(m)
Grocery stores and convenience stores. Subject to the exemptions described in subsection (b) of this section, grocery stores and convenience stores should collect sales tax on the items listed in subsection (c) of this section. Taxable items include ice, candy, packaged soft drinks, and prepared food. Food and drinks sold in a heated state, fountain drinks, and food sold with eating utensils are considered to be prepared food ready for immediate consumption regardless of the location in the store from which the food is sold. Other food or drinks that can be immediately consumed and that are sold by a restaurant, lunch counter, deli, or other similar location within the store are also considered to be taxable prepared food. For example, a bottle of unsweetened iced tea sold at a grocery store deli is considered to be ready for immediate consumption and is taxable. However, a bottle of unsweetened iced tea sold at the checkout lane of a grocery store is not considered to be food ready for immediate consumption and is not taxable.
Source Note: The provisions of this §3.293 adopted to be effective September 18, 2006, 31 TexReg 8002; amended to be effective June 5, 2017, 42 TexReg 2938; amended to be effective December 18, 2018, 43 TexReg 8141.
Source: official text