Source: http://lawfilesext.leg.wa.gov/law/wsr/2012/01/12-01-027.htm
Timestamp: 2020-07-09 15:36:38
Document Index: 258235610

Matched Legal Cases: ['§ 271', '§ 458', '§ 458', '§ 458', '§ 458', '§ 458', '§ 458', '§ 458', '§ 458', '§ 458', '§ 458', '§ 458']

WSR 12-01-027
[ Filed December 12, 2011, 11:10 a.m. , effective January 12, 2012 ]
Purpose: WAC 458-20-244 (Rule 244) Food and food ingredients, provides guidelines for determining if food or food ingredients qualify for retail sales tax and use tax exemptions provided by RCW 82.08.0293 and 82.12.0293.
The department amended Rule 244 to recognize Initiative 1107, passed by the voters in November 2010 and codified as chapter 2, Laws of 2011. Initiative 1107, in part, repealed the retail sales tax imposed on sales of bottled water and candy by chapter 23, Laws of 2010 1st sp. sess. Additionally, the subsection explaining the supplemental nutrition assistance program was updated to remove references to the Food Stamp Act of 1977, stamps, and coupons. The term "benefits" is now used in lieu of "stamps" or "coupons."
Other Authority: RCW 82.08.0293 and 82.12.0293.
Adopted under notice filed as WSR 11-20-114 on October 5, 2011.
Date Adopted: December 12, 2011.
OTS-4237.1
AMENDATORY SECTION(Amending WSR 10-21-010, filed 10/7/10, effective 11/7/10)
(b) What other sections might apply? The following sections may contain additional relevant information:
• WAC 458-20-119, Sales of meals;
• WAC 458-20-124, Restaurants, cocktail bars, taverns and similar businesses;
• WAC 458-20-12401, Special stadium sales and use tax;
• WAC 458-20-166, Hotels, motels, boarding houses, rooming houses, resorts, summer camps, trailer camps, etc.;
• WAC 458-20-167, Education institutions, school districts, student organizations, and private schools;
• WAC 458-20-168, Hospitals, medical care facilities, and adult family homes;
• WAC 458-20-169, Nonprofit organizations; and
• WAC 458-20-229, Refunds.
(b) Bulk sales of ice. Ice sold in bags, containers, or units of greater than ten pounds and blocks of ice of any weight are not considered a food or food ingredient. Ice sold in cubed, shaved, or crushed form in packages or quantities of ten pounds or less is considered a food or food ingredient. Refer to WAC 458-20-120, Sales of ice, for additional guidance on the sale of ice.
(e) Candy. Effective June 1, 2010, ((chapter 23, Laws of 2010, sp. sess., (2ESSB 6143) excludes)) candy was excluded from the exemptions and retail sales tax was imposed on sales of candy. See chapter 23, Laws of 2010, sp. sess. Sales of candy again became exempt effective December 2, 2010. See chapter 2, Laws of 2011.
(i) "Candy" means a preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts, or other ingredients or flavorings in the form of bars, drops, or pieces.
(ii) "Candy" does not include any preparation containing flour and does not require refrigeration.
(iii) For a list of products and whether they meet the definition of candy, refer to the department's internet site at http://dor.wa.gov/. If the product in question is not listed on the internet site write the department, including a label or copy of label for the product, for a ruling at:
(f) Bottled water. ((From June 1, 2010, through June 30, 2013, chapter 23, Laws of 2010, sp. sess., (2ESSB 6143) excludes)) Effective June 1, 2010, bottled water was excluded from the exemptions and retail sales tax was due on sales of bottled water. See chapter 23, Laws of 2010, sp. sess. Sales of bottled water again became exempt effective December 2, 2010. See chapter 2, Laws of 2011.
(i) "Bottled water" means water that is placed in a sealed container or package for human consumption.
(ii) Bottled water is calorie free and does not contain sweeteners or other additives except that it may contain:
(A) Antimicrobial agents;
(C) Carbonation;
(D) Vitamins, minerals, and electrolytes;
(iii) "Bottled water" includes water that is delivered to the buyer in a reusable container that is not sold with the water.
(iv) See subsection (8) of this section for limited exceptions to the tax on bottled water.
(g) Soft drinks. Soft drinks are excluded from the exemptions. "Soft drinks" means any nonalcoholic beverage that contains natural or artificial sweeteners, except beverages that contain:
(h) Dietary supplements. Dietary supplements are excluded from the exemptions. "Dietary supplement" means any product intended to supplement the diet, other than tobacco, which meets all of the following requirements:
(i) Prepared food. Prepared food is excluded from the exemptions. Prepared food generally means heated foods, combined foods, or foods sold with utensils provided by the seller, as described in more detail in subsection (4) of this section. "Prepared food" does not include food sold by a seller whose proper primary North American industry classification system (NAICS) classification is manufacturing in sector 311, except subsector 3118 (bakeries), unless the food is sold with utensils provided by the seller (see subsection (4)(c) of this section).
(4) What is "prepared food"? Food or food ingredients are "prepared foods" if any one of the following ((are)) is true:
(i) Example 1. Fast Cafe sells hot and cold coffee and mixed coffee and mixed milk beverages, cold soft drinks, milk and juice in single-serving containers, sandwiches, whole fruits, cold pasta salad, cookies and other pastries. Fast Cafe prepares the pasta salad on-site. It orders the pastries from a local bakery, including specialty cakes which it sells both as whole cakes and by the slice. It purchases its sandwiches from a local caterer. The sandwiches are delivered by the caterer prewrapped in plastic with condiments and a plastic knife. Fast Cafe makes straws, napkins and cup lids available for all customers by placing them on a self-service stand. In its first full year of operation, Fast Cafe's annual gross sales of all food and food ingredients, including prepared food, soft drinks, and dietary supplements is $100,000. Of this gross sales total, $80,000 is from the sale of hot coffee and hot and cold mixed coffee and milk beverages, all sold in disposable paper or plastic cups with the Fast Cafe logo.
• Milk and juice in single serving containers, whole fruit, cookies, pastries, slices of cake, and whole cakes are not subject to retail sales tax unless the seller's customary practice is to hand a utensil to the customer as part of the sales transaction. None of these items are heated by the seller, combined by the seller, or require a plate, glass, cup, or bowl in order to receive the item. Even if Fast Cafe heats the pastries for its customers, the pastries are not subject to retail sales tax.
A combination wine and cheese picnic basket contains four items packaged together: A bottle of wine, a wine opener, single-serving cheeses, and the picnic basket holding these items. The seller's purchase price for the wine, wine-opener, and picnic basket totals ten dollars. The seller's purchase price for the cheeses is two dollars. The seller must collect retail sales taxes on the entire package, because the seller's purchase price for the taxable items (ten dollars) is greater than fifty percent of the combined purchase price (twelve dollars).
(a) Meals served. The exemptions apply to food and food ingredients furnished, prepared, or served as meals:
(i) Under a state-administered nutrition program for the aged as provided for in the Older Americans Act (Public Law 95-478 Title III) and RCW 74.38.040;
(ii) That are provided to senior citizens, individuals with disabilities, or low-income persons by a not-for-profit organization organized under chapter 24.03 or 24.12 RCW; or
(iii) Effective August 1, 2009, RCW 82.08.0293 provides to residents, sixty-two years of age or older, of a qualified low-income senior housing facility by the lessor or operator of the facility. The sale of a meal that is billed to both spouses of a marital community or both domestic partners of a domestic partnership meets the age requirement in this subsection (a)(iii) if at least one of the spouses or domestic partners is at least sixty-two years of age. For purposes of this subsection, "qualified low-income senior housing facility" means a facility:
(A) That meets the definition of a qualified low-income housing project under Title 26 U.S.C. Sec. 42 of the federal Internal Revenue Code, as existing on August 1, 2009;
(B) That has been partially funded under Title 42 U.S.C. Sec. 1485 of the federal Internal Revenue Code; and
(C) For which the lessor or operator has at any time been entitled to claim a federal income tax credit under Title 26 U.S.C. Sec. 42 of the federal Internal Revenue Code.
(b) Foods exempt under the Supplemental Nutrition Assistance Program (SNAP). Under RCW 82.08.0297, eligible foods ((under the Food Stamp Act of 1977)) purchased with food ((coupons)) benefits under the SNAP or a successor program are exempt from the retail sales tax. This is a separate and broader exemption than the retail sales tax exemption for food and food ingredients under RCW 82.08.0293. For example, soft drinks ((and)), garden seeds, and plants which produce food for the household to eat are "eligible foods" but are not "food or food ingredients." If such items are purchased with food ((coupons)) benefits under SNAP or a successor program, they are exempt from the retail sales tax under RCW 82.08.0297, even though the items do not qualify for the exemption under RCW 82.08.0293.
(i) ((Definition of food coupons. The term "food coupons," as used in this subsection means any coupon, stamp, type of certificate, authorization card, cash or check issued in lieu of a coupon, or access device, including an electronic benefit transfer card or personal identification number issued pursuant to the provisions of the Food Stamp Act of 1977. See 7 CFR § 271.2, as amended or renumbered as of January 1, 2003.
(ii))) Use of food ((coupons)) benefits combined with other means of payment. When both food ((coupons)) benefits and other means of payment are used in the same sales transaction, for purposes of collecting retail sales taxes, the other means of payment shall be applied first to items which are food and food ingredients exempt under RCW 82.08.0293. The intent is to apply the ((coupons)) benefits and other means of payment in such a way as to provide the greatest possible exemption from retail sales tax.
(((iii))) (ii) Example. A customer purchases the following at a grocery store: Meat for three dollars, cereal for three dollars, canned soft drinks for five dollars, and soap for two dollars for a total of thirteen dollars. The customer pays with seven dollars in ((coupons)) benefits and six dollars in cash. The cash is applied first to the soap because the soap is neither exempt under RCW 82.08.0293 nor an eligible food under ((the Food Stamp Act)) SNAP. The remaining cash (four dollars) is applied first to the meat and the cereal. The food ((stamps)) benefits are applied to the balance of the meat and cereal (two dollars) and to the soft drinks (five dollars). Retail sales tax is due only on the soap.
(8) Exceptions to tax on bottled water. ((Chapter 23, Laws of 2010, sp. sess., (2ESSB 6143) provides)) Effective June 1, 2010, two exemptions to the retail sales and use taxes on bottled water ((effective June 1, 2010)) were as described in (a) and (b) of this subsection. Effective December 2, 2010, the retail sales and use taxes on bottled water were repealed. The exemptions are no longer applicable effective December 2, 2010.
(a) Prescription issued bottled water. Bottled water prescribed to patients for use in the cure, mitigation, treatment, or prevention of disease or other medical condition and delivered to the buyer in a reusable container that is not sold with the water is exempt provided the buyer provides the seller with a completed buyer's retail sales tax exemption certificate or a streamlined sales tax exemption certificate. A seller must retain a copy of the certificate for their files. Tax will be collected on all other sales of prescribed bottled water. Any buyer that has paid at least twenty-five dollars in state and local sales taxes on purchases of bottled water subject to this exemption may apply for a refund of the collected taxes directly from the department. No refund may be made for tax paid more than four years after the end of the calendar year in which the tax was paid to a seller.
(b) Potable water not readily available. Bottled water for human use to persons who do not otherwise have a readily available source of potable water and delivered to the buyer in a reusable container that is not sold with the water is exempt provided the buyer provides the seller with a completed buyer's retail sales tax exemption certificate or a streamlined sales tax exemption certificate. A seller must retain a copy of the certificate for their files. Tax will be collected on all other sales of bottled water. Any buyer that has paid at least twenty-five dollars in state and local sales taxes on purchases of bottled water subject to this exemption may apply for a refund of the collected taxes directly from the department. No refund may be made for tax paid more than four years after the end of the calendar year in which the tax was paid to a seller.
(c) Forms and additional information are available. Forms and additional information can be obtained from the department's internet site at http://dor.wa.gov/ or by contacting the department at:
(9) Vending machine sales. The exemptions do not apply to sales of food and food ingredients dispensed from vending machines. There are special requirements for reporting sales tax collected on vending machine sales, discussed in (a) of this subsection. "Honor box" sales (sales of snacks or other items from open display trays) are not considered vending machine sales.
(i) Food or food ingredients dispensed in a heated state and soft drinks. For food or food ingredients dispensed from vending machines in a heated state (e.g., hot coffee, soups, tea, and hot chocolate) and vending machine sales of soft drinks, a vending machine owner must calculate the amount of retail sales tax that has been collected ("tax in gross") based on the gross vending machine proceeds. The "tax in gross" is a deduction against the gross amount of both retailing B&O and retail sales. The formula is:
To determine the amount of retail sales tax she collected on the sale of candy and water, Jane calculates the "tax in gross" amount as follows:
[Statutory Authority: RCW 82.32.300, 82.01.060(2), 82.08.0293, and 82.12.0293. 10-21-010, § 458-20-244, filed 10/7/10, effective 11/7/10. Statutory Authority: RCW 82.32.300 and 82.01.060(2). 07-24-038, § 458-20-244, filed 11/30/07, effective 12/31/07; 07-11-066, § 458-20-244, filed 5/14/07, effective 6/14/07; 03-24-031, § 458-20-244, filed 11/25/03, effective 1/1/04. Statutory Authority: RCW 82.32.300. 88-15-066 (Order 88-4), § 458-20-244, filed 7/19/88; 87-19-139 (Order 87-6), § 458-20-244, filed 9/22/87; 86-21-085 (Order ET 86-18), § 458-20-244, filed 10/17/86; 86-02-039 (Order ET 85-8), § 458-20-244, filed 12/31/85; 83-17-099 (Order ET 83-6), § 458-20-244, filed 8/23/83; 82-16-061 (Order ET 82-7), § 458-20-244, filed 7/30/82. Statutory Authority: RCW 82.01.060(2) and 82.32.300. 78-05-041 (Order ET 78-1), § 458-20-244 (Rule 244), filed 4/21/78, effective 7/1/78.]