Source: https://texreg.sos.state.tx.us/public/readtac$ext.TacPage?sl=T&app=9&p_dir=F&p_rloc=193494&p_tloc=14631&p_ploc=1&pg=2&p_tac=&ti=34&pt=1&ch=3&rl=293
Timestamp: 2019-04-26 11:51:47+00:00

Document:
(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.
(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.

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