Cal. Code Regs. Tit. 18, § 1574 - Vending Machine Operators
(a) General.
(1) Permits. Persons operating vending
machines dispensing tangible personal property of a kind the gross receipts
from the retail sale of which are subject to tax or dispensing food products at
retail for more than 15 cents must obtain permits to engage in the business of
selling tangible personal property. One permit is sufficient for all machines
of one operator.
A statement in substantially the following form must be affixed upon each vending machine in a conspicuous place:
___________________________
"This vending machine is operated by
___________________________
Name of Operator
___________________________
Address of Operator
___________________________
who holds Permit No.
issued pursuant to the Sales and Use Tax Law."
(2) Records. Adequate
and complete records must be kept by the operator showing the location or
locations of each machine operated by him or her, the serial number thereof,
purchases and inventories of merchandise bought for sale through all such
machines, the prices charged by the operator, the gross receipts derived from
the operation at each location, the receipts from exempt sales, and where
applicable, the sales price to the operator of all tangible personal property
of which the operator is the consumer, see subdivision (b). Records must be
kept of the receipts derived from each machine at a location if differing kinds
of merchandise are vended through separate machines at that location.
(3) Schedule Showing Allocation by County. If
the machines are operated in more than one county, a schedule must be attached
to the return showing the tax allocable to each county. If a person purchases
property under a resale certificate and dispenses it through a vending machine
under circumstances where the person is considered to be the consumer of the
property, see subdivision (b), a schedule must be attached to the return
showing the use tax due thereon allocable to each county.
(4) Sales to Operators Not Furnishing Resale
Certificates. Persons making sales of tangible personal property of a kind the
gross receipts from the retail sale of which are taxable, to operators of
vending machines to be resold through such machines, must notify this board of
the name and address of each operator who fails to furnish a valid resale
certificate. In the event such persons fail to so notify the board, or desire
to assume tax liability for the operations of particular vending machines,
then, pursuant to Revenue and Taxation Code Section
6015,
they are required to return the tax to the state, measured by the receipts from
the retail sale of the property.
(b) Application of Tax.
(1) In General. Persons operating vending
machines dispensing tangible personal property of a kind the gross receipts
from the retail sale of which are subject to tax must report and pay to the
state the tax upon gross receipts from all sales of such property made through
such machines. Sales of tangible personal property through vending machines are
presumed to be made on a tax-included basis. Gross receipts from retail sales
of tangible personal property through the vending machines are total receipts
less the amount of sales tax reimbursement included therein.
(A) Photocopies. Tax applies to the gross
receipts from sales of photocopies through coin- or card-operated copy
machines. However, library districts, municipal libraries, county libraries, or
any vendor making sales pursuant to a contract with a library district,
municipal library, or county library are consumers of photocopies sold at
retail through a coin- or card-operated copy machine located at a library
facility.
(B) Sales by
Parent-Teacher Associations. Parent-teacher associations or equivalent
associations under Regulation 1597(f) (18 CCR
1597(f)), are consumers of
tangible personal property dispensed through vending machines and are not
required to hold seller's permits by reason of such activities.
(C) Sales by Nonprofit, Charitable, or
Education Organizations. Nonprofit, charitable, or education organizations
dispensing tangible personal property for 15 cents or less through a vending
machine are the consumers of such property and are not required to hold a
seller's permit by reason of such activities.
(D) Sales of Water. Sales of purified
drinking water through vending machines where the water enters the machine
through local supply lines and is dispensed into the customer's own containers
are exempt from the tax under Revenue and Taxation Code Section
6353.
(2) Food Products.
(A) Effective January 1, 1986, tax applies to
the gross receipts from the retail sale of food products, including candy and
confectionery, dispensed through a vending machine at retail for more than 15
cents unless otherwise exempted as provided below. Since sales through vending
machines are presumed to be made on a tax-included basis, total receipts from
the taxable retail sale of food products through vending machines should be
adjusted to compensate for the sales tax included therein. The term "food
products" does not include carbonated beverages. A vending machine operator is
a consumer of, and not a retailer of, food products, including candy and
confectionery, dispensed through a vending machine at retail for 15 cents or
less, effective January 1, 1986. Tax is measured by the sale price to the
vending machine operator of such items unless otherwise exempt. If the property
sold to the operator is an exempt food product or a nonreturnable container, no
tax is payable regardless of the nature of the product when dispensed through
the vending machine, and regardless of whether facilities for consumption are
furnished at locations of the vending machines. For the purposes of this
subdivision, the term "candy and confectionery" includes candy-coated gum
products.
(B) Operative January 1,
1988, tax does not apply to the sales, and the vending machine operator is the
consumer, of any food products, including candy and confectionery other than
beverages or hot prepared food products, sold through a coin-operated bulk
vending machine if the amount of each sale is twenty-five cents ($0.25) or
less. For purposes of this regulation, "bulk vending machine" means a vending
machine containing unsorted food products, including candy and confectionery,
which, upon insertion of a coin, dispenses those products in approximately
equal portions, at random, and without selection by the customer. For the
purposes of this subdivision, the term "candy and confectionery" includes
candy-coated gum products.
(C)
Beginning January 1, 1988, a partial exemption from the tax is allowed any
retailer who receives gross receipts through vending machines from the sale of
cold food products, hot coffee, hot tea and hot chocolate which are subject to
the tax. The following percentages of the gross receipts from the sales of such
products are subject to the tax: 77% for the calendar year 1988, 55% for the
calendar year 1989, and 33% thereafter. This partial exemption does not apply
to sales of hot prepared food products (except hot coffee, hot tea and hot
chocolate) and receipts from such sales may not be included in the computation
of the exemption.
"Gross receipts from the sale of cold food products, hot coffee, hot tea and hot chocolate" represents total receipts after adjusting for sales tax included. Therefore, in order to determine taxable receipts, an adjustment must be made to compensate for sales tax included in total receipts. Following is an example of the computation using the 7 1/4 percent rate:
| Total receipts from sales of cold food products, hot coffee, hot tea and hot chocolate through vending machines................................................................................. | ..........................$10,000.00 | |
| Factor...................................................................................... | ..........................32.2289% | |
| Taxable receipts..................................................................... | ..........................$3,222.89 | |
| Tax rate................................................................................... | ..........................7.25% | |
| Tax included........................................................................... | ..........................$233.66 | |
| Exempt receipts..................................................................... | ..........................$6,543.45 | |
| Proof: | $10,000 -- 233.66 = $9,766.34 | |
| $9,766.34 x 33% = 3,222.89 | ||
Gross receipts from the sale of cold food products, hot coffee, hot tea and hot chocolate subject to the tax may be calculated for the year 1990 and forward using the following percentages for the tax rates indicated:
| TAX RATE | PERCENTAGE | |
| 7.25% | 32.2289% | |
| 7.375% | 32.2160% | |
| 7.50% | 32.2030% | |
| 7.625% | 32.1900% | |
| 7.75% | 32.1771% | |
| 7.875% | 32.1641% | |
| 7.975% | 32.1538% | |
| 8.00% | 32.1512% | |
| 8.125% | 32.1383% | |
| 8.25% | 32.1254% | |
| 8.275% | 32.1228% | |
| 8.375% | 32.1125% | |
| 8.475% | 32.1022% | |
| 8.50% | 32.0996% | |
| 8.725% | 32.0765% | |
| 8.75% | 32.0739% | |
| 9.00% | 32.0482% | |
| 9.25% | 32.0225% |
To compute the cold food factor for other tax rates the formula is as follows:
Cold food factor percentage = 100 / [3.0303 + tax rate (decimal form)] Example: Cold food factor at 7.25% = 100 / (3.0303 + .0725) = 100 / 3.1028 = 32.2289%
(D)
Tax does not apply to sales of any food products, whether sold through a
vending machine or otherwise, to students of a school by public or private
schools, school districts, student organizations, or any blind person (as
defined in Section
19153
of the Welfare and Institutions Code) operating a restaurant or vending stand
in an educational institution under Article 5 (commencing with Section 19625)
of Chapter 6 of Part 2 of Division 10 of the Welfare and Institutions
Code.
(3) Definitions.
(A) Food Products. For the period July 15,
1991 through November 30, 1992, the term "food products" does not include snack
foods (as defined in Regulation 1602 (18
CCR1602), "Food Products"), nonmedicated gum,
candy, and confectionery. Sales during this period of such items through
vending machines are subject to the tax unless exempted under subdivisions
(b)(1) and (b)(2) above.
(B)
Nonprofit Organizations. Nonprofit organizations include any group,
association, or corporation which is formed for charitable, religious,
scientific, social, literary, educational, recreational, benevolent or any
other purpose, provided that no part of the net earnings of such organization
inures to the benefit of any member, shareholder, director, officer, or any
person having a personal and private interest in the activities of the
organization. Examples of this type of organization are museums, veterans
organizations, youth sportsmanship organizations, clubs such as the Kiwanis
Club, fraternal societies, orders or associations operating under the lodge
system such as the Loyal Order of the Moose, and student
organizations.
(C) Charitable
Organizations. Charitable organizations include any group, association, or
corporation created for or devoted to charitable purposes, the net earnings of
which are used solely for charitable purposes such as the relief of poverty,
the advancement of education, the advancement of religion, the promotion of
health and the promotion of government. Examples of this type of organization
are libraries, museums, hospitals, senior citizen community centers, thrift
shops, and organizations such as the Salvation Army and Goodwill.
(D) Education Organizations. Education
organizations include any profit or nonprofit group, association, or
corporation which normally maintains a regular faculty and curriculum and
normally has a regularly enrolled body of pupils or students in attendance at
the place where its education activities are regularly carried on. Examples of
such organizations are primary and secondary schools, colleges, professional
and trade schools, whether public, private, nonprofit or profit
making.
(4) Resale and
Exemption Certificates.
(A) Vendors of Items
for 15 Cents or Less Only. A purchaser who sells the property purchased only
through vending machines for 15 cents or less may give an exemption certificate
with respect to the purchase of nonreturnable containers, but may not give a
resale certificate with respect to the purchase of any other property. The
supplier is responsible for payment of sales tax on the gross receipts from the
sales to the purchaser of property, the sale of which is subject to
tax.
(B) Vendors of Items for 15
Cents or Less and Over 15 Cents. A purchaser who holds a valid seller's permit
and who sells the property purchased only through vending machines both at
prices of 15 cents or less and at prices of more than 15 cents may give a
resale certificate with respect to the purchases of such property.
(C) Vendors Selling Both Through Vending
Machines and Otherwise. A purchaser who holds a valid seller's permit and who
sells the property purchased both through vending machines and other than
through vending machines may give a resale certificate with respect to the
purchases of such property.
(D)
Vendors Not Segregating Purchases. A purchaser who does not wish to segregate
the purchases of property which is sold through vending machines for 15 cents
or less from purchases of like property which is otherwise sold, may reimburse
his or her vendor for sales tax measured by the retail selling price of all
such property provided the vendor is authorized to report and pay the tax to
the state in the manner provided by Section 6015.
Notes
2. Reinstatement of section as it existed prior to emergency amendment filed 8-24-83 by operation of Government Code section 11346.1(f) (Register 85, No. 5).
3. Amendment filed 2-1-85; effective thirtieth day thereafter (Register 85, No. 5).
4. Editorial correction adding HISTORY NOTE 2 (Register 85, No. 34).
5. Amendment of subsection (b) filed 8-23-85; effective thirtieth day thereafter (Register 85, No. 34).
6. Amendment of subsections (a)(1) and (b) filed 6-3-86; effective thirtieth day thereafter (Register 86, No. 23).
7. Amendment of subsections (b)(5) and (c)(2) for clarification of existing law filed 6-1-87; operative 7-1-87 (Register 87, No. 23).
8. Amendment filed 7-27-88; operative 8-26-88 (Register 88, No. 32).
9. Amendment filed 10-14-93; operative 11-15-93 (Register 93, No. 42).
10. Amendment of subsections (a)(1)-(2), (b)(1), (b)(2)(A) and (b)(2)(C) filed 9-20-2001; operative 10-20-2001 (Register 2001, No. 38).
11. Change without regulatory effect amending subsection (b)(1)(B) filed 11-2-2004 pursuant to section 100, title 1, California Code of Regulations (Register 2004, No. 45).
12. Change without regulatory effect amending subsection (b)(2)(C) filed 9-24-2008 pursuant to section 100, title 1, California Code of Regulations (Register 2008, No. 39).
Note: Authority cited: Section 7051, Revenue and Taxation Code. Reference: Sections 6015, 6066- 6068, 6353, 6359, 6359.2, 6359.4, 6359.45, 6363, 6364 and 6370, Revenue and Taxation Code; and Canteen Corporation v. State Board of Equalization (1985), 174 Cal. App. 3d 952.
2. Reinstatement of section as it existed prior to emergency amendment filed 8-24-83 by operation of Government Code section 11346.1(f) (Register 85, No. 5).
3. Amendment filed 2-1-85; effective thirtieth day thereafter (Register 85, No. 5).
4. Editorial correction adding HISTORY NOTE 2 (Register 85, No. 34).
5. Amendment of subsection (b) filed 8-23-85; effective thirtieth day thereafter (Register 85, No. 34).
6. Amendment of subsections (a)(1) and (b) filed 6-3-86; effective thirtieth day thereafter (Register 86, No. 23).
7. Amendment of subsections (b)(5) and (c)(2) for clarification of existing law filed 6-1-87; operative 7-1-87 (Register 87, No. 23).
8. Amendment filed 7-27-88; operative 8-26-88 (Register 88, No. 32).
9. Amendment filed 10-14-93; operative 11-15-93 (Register 93, No. 42).
10. Amendment of subsections (a)(1)-(2), (b)(1), (b)(2)(A) and (b)(2)(C) filed 9-20-2001; operative 10-20-2001 (Register 2001, No. 38).
11. Change without regulatory effect amending subsection (b)(1)(B) filed 11-2-2004 pursuant to section 100, title 1, California Code of Regulations (Register 2004, No. 45).
12. Change without regulatory effect amending subsection (b)(2)(C) filed 9-24-2008 pursuant to section 100, title 1, California Code of Regulations (Register 2008, No. 39).
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
No prior version found.