Mich. Admin. Code R. 205.136 - Food for human consumption
Rule 86.
(1)
Retail sales of food for human consumption normally considered as grocery items
for home consumption are tax exempt.
(2) Alcoholic beverages (containing
½ of 1% or more of alcohol by volume) such as beer, wine, and liquor,
are subject to tax.
(3) Tobacco and
tobacco products are subject to tax.
(4) "Prepared food" is subject to tax. All of
the following apply:
(a) "Prepared food"
means any of the following:
(i) Food sold in a
heated state or that is heated by the seller.
(ii) Two or more food ingredients mixed or
combined by the seller for sale as a single item.
(iii) Food sold with eating utensils provided
by the seller.
(b)
"Prepared food" does not include any of the following:
(i) Food that is only cut, repackaged, or
pasteurized by the seller.
(ii) Raw
eggs, fish, meat, poultry, and foods containing those raw items requiring
cooking.
(iii) Food sold in an
unheated state by weight or volume as a single item, without eating utensils.
The following are used to determine weight or volume:
(A) Weight is a measure of heaviness,
expressed in units such as pounds or grams.
(B) Volume is a 3-dimensional measure,
expressed in units such as pints, quarts, cubic centimeters, or
liters.
(C) An item is sold by
weight or volume when the sales price is determined by multiplying its per unit
price by the items weight or volume.
(iv) Bakery items, including bread, rolls,
buns, biscuits, bagels, croissants, pastries, doughnuts, danish, cakes, tortes,
pies, tarts, muffins, bars, cookies, and tortillas, sold without eating
utensils.
(5)
An eating utensil is considered a tool, instrument, or item used or intended to
be used to facilitate the eating of food. Examples of eating utensils include,
but are not limited to, knives, forks, spoons, ice cream/popsicle sticks,
skewers, glasses, cups, napkins, straws, and plates. The following apply:
(a) An eating utensil does not include a
container or packaging used to transport food, such as a plastic carton in
which take-out soup or salad is sold. A waxed paper sheet used to select an
item, such as a donut or cookie, and then placed in a box or bag for transport
with the baked good, is not considered an eating utensil.
(b) Eating utensils are "provided by the
seller" under all of the following conditions:
(i) For a seller with a prepared food sales
percentage greater than 75%, eating utensils are "provided by the seller" when
the utensils are made available to purchasers.
(ii) For a seller with a prepared food sales
percentage of 75% or less, eating utensils are "provided by the seller" if the
seller's practice, as represented by the seller, is to physically give or hand
the utensils to purchasers. Plates, bowls, glasses, or cups necessary for the
purchaser to receive the food, for example, a glass for a dispensed soft drink
or milk, or a plate for salad from a salad bar, need only be made
available.
(iii) A seller's
"prepared food sales percentage" is a fraction determined by dividing the
following described numerator by the following described denominator:
(A) The numerator shall consist of the
seller's annual sales of all of the following:
(1) Food sold in a heated state or heated by
the seller.
(2) Two or more food
ingredients mixed or combined by the seller for sale as a single item, not
including food items specifically excluded in subrule (4)(b) of this
rule.
(3) Food where plates, bowls,
glasses, or cups are necessary to receive the food, for example, dispensed soft
drink or milk, or salad bar.
(B) The denominator shall consist of the
seller's total annual sales of all food and food ingredients at the
establishment including prepared food, candy, dietary supplements, and soft
drinks.
(C) Sales of alcoholic
beverages are not included in the numerator or denominator.
(c) For a seller with a
prepared food sales percentage greater than 75% who sells an item that contains
4 or more servings packaged as 1 item sold for a single price, that item does
not become prepared food due to the seller having utensils available. Both of
the following shall apply:
(i) If the seller
provides utensils for that item as in subdivision (b) of this subrule, then the
item is considered prepared food.
(ii) Whenever available, serving sizes shall
be determined based on a label on an item sold. If no label is available, then
a seller shall reasonably determine the number of servings in an
item.
(d) When a seller
sells a food item that has a utensil placed in the package by a person other
than the seller, both of the following shall apply:
(i) If that person's North American Industry
Classification System (NAICS) classification code is that of manufacturer
(sector 311), the seller is not considered to have provided the utensil except
as provided in subdivisions (a), (b) and (d) of this subrule.
(ii) For any other packager with any other
NAICS classification code, for example, sector 722 for caterers, the seller is
considered to have provided the utensil.
(e) The prepared food sales percentage shall
be calculated by a seller for each tax year or business fiscal year, based on
the seller's data from the prior tax year or business fiscal year, as soon as
possible after accounting records are available, but not later than 90 days
after the beginning of the seller's tax year or business fiscal year.
(f) A single prepared food sales percentage
shall be determined annually, for all of the seller's establishments in this
state.
(g) A new business shall
make a good faith estimate of its prepared food sales percentage for its first
year. A new business shall adjust its good faith estimate prospectively after
the first 3 months of operation if actual prepared food sales percentages
materially affect the 75% threshold test.
(6) Examples of nontaxable food items sold
without eating utensils by a grocer or other food retailer for human
consumption include, but are not limited to, the following:
(a) Baked goods and baking
ingredients.
(b) Bouillon and
soups.
(c) Butter, margarine, and
peanut butter.
(d) Candy,
chocolate, and confectionery.
(e)
Carbonated beverages (bottle deposits are not subject to tax).
(f) Cereal and cereal products.
(g) Chewing gum, non-medicated. .
(h) Cocktail mixes, dry or liquid.
(i) Coffee, coffee substitutes, coffee beans,
and tea (loose or bags).
(j)
Condiments, relishes, and spices.
(k) Diet food, dietary supplements
(identified as a dietary supplement in the supplemental facts box on the label,
and containing a vitamin, mineral, herb or other botanical, or amino acid),
energy drinks, and health foods.
(l) Eggs and egg products.
(m) Extracts and flavoring as an ingredient
of food products.
(n) Fruit and
fruit products.
(o)
Gelatin.
(p) Ice,
only when to be ingested by humans.
(q) Ice cream, sherbets, and
toppings.
(r) Meat and meat
products.
(s) Milk and milk
products.
(t) Powdered drink mixes,
pre-sweetened or natural.
(u)
Pre-packaged snack foods such as, crackers, potato chips, and
popcorn.
(v) Shortening.
(w) Vegetables and vegetable
products.
(x) Vitamins and vitamin
drinks.
(y) Water,
bottled.
(7) Examples of
items subject to tax include, but are not limited to, the following:
(a) Alcoholic beverages (containing
½ of 1% or more of alcohol by volume).
(b) Animal and pet foods.
(c) Animal bait such as, carrots, sugar
beets, corn.
(d) Cough drops and
cough syrup.
(e) Decorative gourds
and jack-o-lanterns.
(f) Ice not
for ingestion by humans, such as for use in a cooler or an ice chest.
(g) Medicated chewing gum.
(h) Salt blocks.
(i) Toothpaste and mouthwash.
(j) Throat lozenges.
Notes
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