Current through Register Vol. 30, No. 38, September 20, 2024
For the purpose of these rules, unless the context requires
otherwise, the following definitions will apply:
1. "Accessory food items" means coffee, tea,
cocoa, carbonated and uncarbonated drinks, candy, condiments and spices, and
other non-staple foods.
2.
"Attendant" means a person, generally the employee of the retailer, who waits
on the customers, or tends to their needs.
3. "Automatic retailer" means a coin operated
mechanical device or system which sells tangible personal property. Such device
or system must itself vend or sell the items, i.e., a device or system which
delivers the subject of the sale, or by automatic action physically delivers
the thing sold. Vending machines are considered automatic retailers.
4. "Caterer" means a person engaged in the
business of serving meals, food and drinks on the premises used by his
customer, but does not include employees hired by the hour of day.
5. "Delicatessen" means a business which
sells specialty food items, such as prepared cold meats, perishable food and
grocery items kept under refrigeration.
6. "Facilities for the consumption of food"
means appropriate furniture, tableware, or parking areas for sitting both in or
on the premises of the business, either in or out of a motor vehicle.
7. "Food"
a. Under A.R.S. § 42-1387, the
Department is required to promulgate rules defining food as those items that
may be purchased from an eligible grocery business with food coupons, but in no
event may such definition of food include food for consumption on the premises,
alcoholic beverages or tobacco. Even though alcoholic beverages and food for
consumption on the premises may be intended for human consumption, such items
are not considered food by the statutory provisions. In these rules, items that
are considered food by the Statutes, and therefore tax exempt if sold by a
qualified retailer, shall be referred to as "tax exempt foods." Other items
that may be intended for human consumption but are excluded from the definition
of food by the Statute, and are therefore subject to the Sales Tax, shall be
referred to herein as "taxable foods."
b. "Food" means: Items intended for human
consumption. Food is deemed to be intended for human consumption when its
intended or ordinary use is as a food for human consumption or is an ingredient
used in preparing food for human consumption. For example, even though animal
food may be used by some humans, its ordinary or intended use is not for human
consumption. Also, even though vitamins and other medication may be ingested,
its intended or ordinary use is as a health aid or therapeutic agent or a
deficiency corrector and is not intended for use as food. Following is a
numeration of items which the Department does not consider food for human
consumption:
i. Pet food and
supplies
ii. Cosmetics and grooming
items
iii. Tobacco
products
iv. Soaps and paper
products and household supplies
v.
Dietary supplements such as vitamins or protein supplements
vi. Medicines
vii. Fertilizer
8. "Food for consumption on the premises"
a. "Food for consumption on the premises"
means the following:
i. Hot prepared food,
including products, items or ingredients of food which are prepared and sold or
are intended to be sold in a heated condition. This also includes a combination
of hot and cold food items or ingredients if a single price is charged by the
retailer.
ii. Hot or cold sandwiches
including frozen sandwiches.
iii.
Food served by an attendant to be eaten at tables, chairs, benches, booths,
stools, counters and within parking areas (for in-car consumption).
iv. Food served with trays, glasses, dishes
or other tableware. Food which is generally selected by the customer from
available displays and then taken by the customer to a checkout stand for
payment is not considered to be served by the retailer.
v. Beverages sold in cups, glasses or open
containers. Beverages shall include items such as milk shakes and ice cream
floats.
vi. Food sold by
caterers.
vii. Food sold within the
premises of theaters, exhibitions, fairs, amusement parks, bowling alleys,
athletic events, and other shows or contests and any businesses which charge
admission, entrance or cover fees for exhibition, amusement, entertainment or
instruction. While food for consumption on the premises includes any food sold
within the premises of certain businesses, including businesses that charge
admission, entrance or cover fees for exhibition, amusement, entertainment or
instruction, food for consumption on premises does not include sales of tax
exempt food by a qualified retailer within the premises of a full time
educational institution that charges tuition for a full course of
studies.
b. Any item
enumerated in subparagraph (a) which is sold on a take-out or to-go basis is
still considered to be food for consumption on the premises and therefore
taxable.
9. "Food intended
for home consumption" means food, other than food for consumption on the
premises, which is usually intended to be consumed at home. Unless the taxpayer
can establish to the contrary, food delivered by a retailer to an office or
other business establishment shall not be considered food intended for home
consumption.
10. "Home" means a
natural person's usual or habitual dwelling place, including rest homes,
nursing homes, jails and other such institutions.
11. "Premises" means the total space and
facilities, including buildings, grounds and parking lot that are made
available for use by the retailer for the purpose of consuming food sold by
such retailer.
12. "Qualified
retailer"
a. A qualified retailer or qualified
retail business is one that may be eligible to sell tax exempt food without
including the sale of tax exempt food items in its taxable base. A retailer
other than a qualified retailer must pay a tax measured by the sale of
otherwise exempt food even though the sale of such items would be exempt if
sold by a qualified retailer.
b.
Qualified retailers are:
i. An eligible
grocery business, which includes retailers who are eligible to participate in
the United States Department of Agriculture Food Stamp Program, whether such
retailer actually participates in the food stamp program. If a retailer is
eligible to participate in the food stamp program, but does not participate in
such program, such retailer may only be an eligible grocery business if the
retailer first makes application to the Department to sell food tax exempt.
Examples of retailers that might be considered eligible grocery businesses
include:
(1) Grocery stores;
(2) Convenience stores;
(3) Butcher shops;
(4) Bakeries;
(5) Dairy stores;
(6) Cheese stores;
(7) Farmer's markets.
ii. Retailers whose primary business is not
the sale of food, but who sell food in a manner similar to grocery stores. This
category includes stores such as department stores, drug stores, and gas
stations.
iii. Retailers who sell
food and who do not provide any facilities for consumption of food on the
premises. This category may include certain health food stores, and certain
outlets retailing soda and other similar beverages in bottles or cans, but not
cups.
iv. Delicatessen business, if
such retailer conducts his business so that the sale of tax exempt foods and
other taxable items may be separately accounted for, through, for example, the
use of two (2) cash registers, or a cash register with at least two (2) tax
computing keys which are used to record taxable and tax exempt sales.
v. A retailer who is a street or sidewalk
vendor who uses a pushcart.
vi. Vending machines and other automatic
retailers.
13.
"Staple food" means those food items intended for home preparation and
consumption, which includes meat, poultry, fish, bread and bread stuffs,
cereals, vegetables, fruits, fruit and vegetable juices, and dairy
products.
14. "Taxable foods" are
items which may be intended for human consumption, but are still subject to the
Sales Tax when sold. Examples of taxable foods would be alcoholic beverages,
and food for consumption on the premises.
15. Tax-exempt foods
a. "Tax exempt foods" are generally those
items of food intended for home consumption which, if purchased from an
eligible grocery business, would be eligible as of January 1, 1979, to be
purchased with food coupons issued by the United States Department of
Agriculture.
b. Tax-exempt food
shall also include any new items of food intended for human consumption which
would have been eligible for purchase with food coupons issued by the United
States Department of Agriculture if such items would have existed for sale on
January 1, 1979.
c. The following
are examples of items which the Department will consider as tax exempt food:
bread and flour products
vegetables and vegetable products
candy and confectionery
sugar, sugar products and substitutes
cereal and cereal products
butter, oleomargarine, shortening and cooking oils
cocoa and cocoa products
coffee and coffee substitutes
milk and milk products
eggs and egg products
tea
meat and meat products
spices, condiments, extracts and food colorings
fish and fish products
frozen foods
soft drinks and soda (including bottles on which a deposit
is required to be paid)
fruit and fruit products
packaged ice cream products
dietary substitutes
ice cubes and bottled water including carbonated and mineral
water
purchases of seed and plants for use in gardens to produce
food items for personal consumption
16. "Two tax computing keys" shall mean the
mechanical or electronic function in a cash register which can separately
record and accumulate taxable and nontaxable items without having the items
presorted.
