Current through Register Vol. 49, No. 13, September 23, 2024
Subpart
1. [Repealed, 29 SR 1273]
Subp.
1a.
Applicable law.
Minnesota Statutes, section
297A.61, subdivision
3, paragraph (d), defines "sale and purchase" to include the preparation of
food for a consideration. Taxable food includes prepared food as defined in
Minnesota Statutes, section
297A.61, subdivision
31; soft drinks, as defined in Minnesota Statutes, section
297A.61, subdivision
32; candy, as defined in Minnesota Statutes, section
297A.61, subdivision
33; and all food sold through vending machines as defined in Minnesota
Statutes, section
297A.61, subdivision
34. Dietary supplements as defined in Minnesota Statutes, section
297A.67,
subdivision 2, are also taxable.
Under Minnesota Statutes, section
297A.67,
subdivision 2, food and food ingredients, except for taxable food described in
Minnesota Statutes, section
297A.61, subdivision
3, paragraph (d), are exempt from tax. Alcoholic beverages and tobacco are not
food and food ingredients and are therefore subject to tax unless another
exemption applies.
Subp. 2.
Food and food ingredients.
"Food and food ingredients" as defined in Minnesota Statutes,
section
297A.67,
subdivision 2, are exempt.
A. Examples
of items that qualify as exempt food or food ingredients include, but are not
limited to, the following: cereal and cereal products, butter, cheese, milk and
milk products, oleomargarine, meat and meat products, fish and fish products,
eggs and egg products, vegetables and vegetable products, fruit and fruit
products, spices and salt, sugar and sugar products, coffee and coffee
substitutes, tea, cocoa and cocoa products.
Exempt "food and food ingredients" also include the following
items: baking powder and soda; beverage powders; chips (potato, corn, etc.);
chip dip; cooking oils; cooking wine; flavoring; freezer pop ingredients; food
coloring; gelatin; ice cream; malted milk powder; nuts; dry, frozen, or
concentrated nonalcoholic cocktail mixes (that is, cocktail mixes intended for
consumption in combination with an alcoholic or other beverage); raisins;
artificial sweeteners; salad dressing; seasonings; condiments; herbs; relishes;
sauces; gravies; sherbet; shortening; vanilla; tonic water; ice cubes; or
unsweetened bottled or canned water.
B. Notwithstanding their inclusion in item A,
food and food ingredients are subject to tax if they qualify as prepared food,
a soft drink, candy, or food sold through vending machines.
C. Examples of items that do not qualify as
food or food ingredients include nonedible cake decorations, Easter egg dye,
garden seeds, pet food, and softener salt.
Subp. 3. [Repealed, 29 SR 1273]
Subp. 4. [Repealed, 29 SR 1273]
Subp. 5.
Soft drinks.
A. "Soft drinks" means nonalcoholic beverages
that contain natural or artificial sweeteners.
B. "Soft drinks" does not include beverages
that contain milk or milk products; or soy, rice, or similar milk
substitutes.
C. "Soft drinks" does
not include beverages that contain more than 50 percent vegetable or fruit
juice. Beverages that are labeled fruit juice, fruit drink, fruit ade, or fruit
nectar are subject to tax when the percentage of fruit juice content is not
specified.
D. Soft drinks are
taxable regardless of serving size or the type of seller. For example, they are
taxable whether they are sold by a grocery store, restaurant, or vending
machine.
E. Examples of sweeteners
are corn syrup, dextrose, invert sugar, sucrose, fructose, fruit juice
concentrates, molasses, evaporated cane juice, rice syrup, barley malt, honey,
and artificial sweeteners. Sweeteners are taxable only when combined with
another ingredient. They are not taxable when sold separately.
F. Examples of soft drinks are soda pop,
bottled or canned water that contains sweeteners, coffee and tea drinks that
contain sweeteners, root beer, nonalcoholic beer, and fruit drinks containing
50 percent or less fruit juice.
G.
Examples of nontaxable items are apple cider; beverage powders or concentrates
such as ground coffee, tea bags, and juice concentrate; carbonated and
noncarbonated bottled or canned water that does not contain sweeteners
regardless of container size; vegetable juices containing more than 50 percent
vegetable juice, even if these beverages contain sugar; and coffee drinks that
contain milk. These items are taxable if they are prepared by the seller,
qualify as an alcoholic beverage, or are sold through a vending
machine.
Subp. 6.
Candy.
A. "Candy" means a
preparation of sugar, honey, or other sweeteners in combination with chocolate,
fruits, nuts, or other ingredients or flavorings in the form of bars, drops, or
pieces. All bars, drops, or pieces, not depending on size, are
taxable.
B. "Candy" does not
include food items that require refrigeration or that contain flour such as
white, whole wheat, rice, corn, or brown flour, as long as the label lists
"flour" as one of the ingredients.
C. Examples of sweeteners are corn syrup,
dextrose, invert sugar, sucrose, fructose, fruit juice concentrates, molasses,
evaporated cane juice, rice syrup, barley malt, honey, and artificial
sweeteners.
D. Examples of candy
are caramel-coated popcorn, honey roasted and honey coated nuts, gum, breath
mints, fruit roll-ups, marshmallows, sweet or semisweet cooking bars or chips,
artificially sweetened candy, almond bark, glazed apricots, and
chocolate-coated potato chips.
E.
Examples of food items that are not candy include:
(1) items that are not in the form of bars,
drops, or pieces, including jam, jelly, honey, preserves, or syrup;
(2) items that contain flour, including
pretzels, cookies, or cake mix;
(3)
items that require refrigeration, including ice cream bars; and
(4) items not combined with a sweetener,
including nonsweetened dried fruit.
The foods listed in this item are taxable if prepared by the
seller or sold through a vending machine.
Subp. 7.
Prepared food,
candy, or soft drinks served at hospitals, sanitariums, nursing homes, senior
citizens' homes, and correctional, detention, and detoxification
facilities.
A. Under Minnesota
Statutes, section
297A.67,
subdivision 4, prepared food, candy, or soft drinks served to patients,
inmates, or persons residing at hospitals, sanitariums, nursing homes, senior
citizens' homes, and correctional, detention, and detoxification facilities are
exempt. This exemption applies when the prepared food, candy, or soft drinks
are purchased as well as sold by these facilities. For purposes of this
subpart, the definitions in subitems (1) to (5) apply:
(1) "Hospital or sanitarium" means a hospital
or sanitarium as defined in Minnesota Statutes, section
144.50,
subdivision 2.
(2) "Nursing home"
means a nursing home as defined in Minnesota Statutes, section
144A.01, subdivision
5, and a boarding care home as defined in part
4655.0100.
(3) "Senior citizens' home" means an
establishment providing housing to adult residents, at least 80 percent of
which are 55 years of age or older, and offering supportive services such as
health-related services and social services. A senior citizens' home may be
operated either for profit or on a nonprofit basis.
(4) "Correctional and detention facilities"
means any facility or program under the direct control of the commissioner of
corrections in which individuals are incarcerated, or any public or private
facility licensed or certified by the Department of Corrections under Minnesota
Statutes, section
241.021.
(5) "Detoxification facility" means a
facility providing a program operating under Minnesota Statutes, section
254A.08.
B. All prepared food, candy, or
soft drinks served to patients and residents by hospitals, sanitariums, nursing
homes, senior citizens' homes, and correctional, detention, and detoxification
facilities are exempt, including prepared food, candy, or soft drinks that are
prepared by separate entities.
C.
Food items, including prepared food, candy, or soft drinks sold through vending
machines, coffee shops, and cafeterias that operate in these facilities are
subject to tax and are not considered to have been served to the patients,
inmates, or persons residing at the facilities enumerated in item A.
Subp. 8.
Prepared food,
candy, or soft drinks served at schools.
A. Under Minnesota Statutes, section
297A.67,
subdivision 5, prepared food, candy, or soft drinks served at public and
private elementary, middle, or secondary schools, as defined in Minnesota
Statutes, section
120A.05, are exempt.
This exemption applies to prepared food, candy, or soft drinks when purchased
as well as sold by the schools.
B.
All prepared food, candy, or soft drinks served at public and private
elementary, middle, or secondary schools are exempt, including prepared food,
candy, or soft drinks that are prepared or served by separate entities and
prepared food, candy, or soft drinks that are purchased by employees or the
general public.
C. Prepared food,
candy, or soft drinks served to students at institutions of higher education
are subject to sales tax unless provided to students under a board contract.
For purposes of this subpart, "institutions of higher education" means
colleges, universities, and private career schools. The exemption for board
contracts applies only when a contract that includes the sale of prepared food,
candy, or soft drinks exists between a student and an institution of higher
education, or between a student and a residential student organization that is
recognized by the institution, for an educational activity that takes place on
the premises of that institution. The student is not required to be enrolled at
the institution at which the activity is conducted. If the food is not provided
as part of a board contract, the institution may only purchase the prepared
food, candy, or soft drinks exempt for resale from a third party if the food is
intended to be resold at retail. The rules in subitems (1) to (4) apply for
purposes of the exemption for board contracts.
(1) Prepared food, candy, or soft drinks
purchased under a prepaid contract, or where a lump sum charge is made for a
set term of time, are considered furnished under a board contract.
(2) A board contract also includes a contract
that provides lodging, food, and tuition, separately or in combination, for a
single charge.
(3) Prepared food,
candy, or soft drinks are exempt when purchased with debit cards, "flex money,"
or "bonus bucks" issued either by the institution or by the recognized
residential student organization, or when purchased by any other method
authorized by the institution of higher education under a board
contract.
(4) Prepared food, candy,
or soft drinks are not provided under a board contract when they are sold to
faculty, other employees of the institution of higher education, and sponsors
of conferences, sports camps, or other activities held on the premises of the
institution. Prepared food, candy, or soft drinks sold to student clubs or
other organizations are subject to tax.
D. Food items, including prepared food,
candy, or soft drinks sold through vending machines at all schools, including
K-12 institutions and institutions of higher education, are taxable.
E. Administrative offices located off the
school premises are not considered part of the school and prepared food, candy,
or soft drinks served at those offices are taxable.
Subp. 9.
Incidental prepared food,
candy, or soft drinks at educational programs.
A. Prepared food, candy, or soft drinks that
are provided as part of an educational service, such as a children's camp or a
professional seminar, are generally not taxable. When providing prepared food,
candy, or soft drinks is incidental to the total program fee, and charges for
the prepared food, candy, or soft drinks are included in the fee to attend the
program, the prepared food, candy, or soft drinks are not taxable to the
program participants.
B. If the
educational program purchases prepared food, candy, or soft drinks to serve to
participants in the program, the program must pay sales or use tax on the
prepared food, candy, or soft drinks purchased if participants are not billed
separately for the prepared food, candy, or soft drinks. If the charges to
participants for the prepared food, candy, or soft drinks are separately
stated, they may be purchased by the educational program exempt for resale, and
tax must be charged on the separately stated fees for the prepared food, candy,
or soft drinks charged to participants.
Subp. 10.
Prepared food, candy, or soft
drinks provided to employees.
A. When
an employer purchases prepared food, candy, or soft drinks, to provide to
employees for no consideration, the prepared food, candy, or soft drinks
provided to employees is exempt. The purchase of these items by the employer is
taxable. When an employer in the business of selling prepared food, candy, or
soft drinks provides these items free to employees, the employer owes use tax
on its cost of the prepared food, candy, or soft drinks and all other taxable
items, including disposable plates, soft drinks, napkins, cups, and
flatware.
B. Notwithstanding this
subpart, prepared food, candy, or soft drinks served to employees at K-12
schools, as provided in Minnesota Statutes, section
297A.67,
subdivision 5, are exempt even if the employees are required to pay for the
items.
Subp. 11.
Purchases of equipment and products by retailers of prepared food, candy,
or soft drinks.
Retailers of prepared food, candy, or soft drinks, including
but not limited to restaurants and fast food establishments, must pay the tax
on all purchases of equipment and products used or consumed in the business,
including fixtures and reusable items such as linens, flatware, glassware, and
towels. Restaurants are specifically excluded from the class of manufacturers
considered to be engaged in industrial production, as defined in Minnesota
Statutes, section
297A.68,
subdivision 2, paragraph (c). In addition, machinery and equipment used by
restaurants in the furnishing, preparing, or serving of prepared food, candy,
or soft drinks is not included in the exemption for capital equipment as
defined in Minnesota Statutes, section
297A.68,
subdivision 5, paragraph (c), clause (7). Consequently, sales of equipment,
electricity, gas, and steam and all other items to retailers of prepared food,
candy, or soft drinks are taxable, except for the sale of exempt food and food
ingredients and nonreusable items to such retailers. Nonreusable items such as
souffle cups; straws; ice; swizzle sticks; paper products such as placemats,
tablecloths, napkins, and doilies; paper, plastic, or wooden plates; cups;
forks; toothpicks; or other items which are used or consumed by the customer as
an integral part of the prepared food, candy, soft drinks, or alcoholic drinks
are considered sold with the prepared food, candy, or soft drinks. Sales of
these nonreusable items to persons engaged in the business of selling prepared
food, candy, or soft drinks are, accordingly, sales for resale.
Statutory Authority: MS s
14.388;
270.06;
270C.06;
297A.29
