(a)
Definitions. The following words and terms, when used in this
section, have the following meanings, unless the context clearly indicates
otherwise:
Juice beverage-A liquid beverage
containing at least 25% by volume natural fruit or vegetable juice.
Meal-A variety of foods prepared for
immediate consumption and sold as a single item.
Operator-A person who makes sales of
tangible personal property, including food or beverages, primarily through a
vending machine.
Selected food and beverage items-Soft
drinks; meals; hot or cold sandwiches, including cold meat sandwiches, cheese
sandwiches, hoagies, hot dogs, hamburgers and similar sandwiches; brewed
coffee; hot beverages such as hot chocolate, hot tea and similar items; food
from salad bars; pizza, soup and other food items dispensed from the vending
machine in a heated form or which are served in cold form and normally heated
in an oven or microwave provided by the operator.
Soft drink-
(i) All nonalcoholic beverages, whether
carbonated or not, such as soda water; ginger ale; Coca Cola; lime cola; Pepsi
Cola; Dr. Pepper; fruit juice when plain or carbonated water, flavoring or
syrup is added; carbonated water; orangeade; lemonade; root beer or all
preparations, commonly referred to as "soft drinks" of whatsoever kind, and are
further designated as including all beverages, commonly referred to as "soft
drinks," which are made with or without the use of any syrup.
(ii) The term does not include a juice
beverage.
Vending machine-A device which
mechanically dispenses tangible personal property, including food and
beverages, for a purchase price.
(b)
Registration. An
operator who sells taxable tangible personal property or selected food and
beverage items through a vending machine is required to obtain a Sales, Use and
Hotel Occupancy Tax License for the purpose of collecting and remitting tax to
the Department. One license is sufficient for any number of machines operated
by the same operator.
(c)
Identification requirement. A sign or a sticker setting forth
the name and address of the operator shall be conspicuously displayed on the
vending machine.
(d)
Scope.
(1)
General. The sale of food or beverages from a vending machine
may be taxable or exempt depending upon the type of food or beverage or upon
the basis of the location from which the food or beverage is sold. Since a
vending machine does not qualify as an eating establishment, only the sale of
selected food and beverage items as defined in subsection (a), is taxable when
sold from a vending machine. Taxable tangible personal property, other than
food and beverages, is also subject to tax when sold from a vending
machine.
(2)
Sales of
taxable tangible personal property, other than selected food and beverage
items.
(i)
Imposition. The sale of taxable tangible personal property,
such as cigarettes, combs, toys, pencils and similar items is subject to tax
upon the purchase price of each individual item.
(ii)
Collection of tax. The
vending machine operator is required to collect tax upon the purchase price of
each individual taxable item of property. The amount to be inserted in the
machine is presumed to include the amount of tax to be collected for each item.
If, however, the Department determines upon audit that the vending machine
operator has not reported and remitted tax in accordance with this section and
the TRC, the presumption will not apply, and the Department will assess the
vending machine operator as though the amount inserted into the machine was the
purchase price without the tax.
Example 1: "A" operates a vending
machine from which pencils may be purchased. To obtain a pencil, the purchaser
is required to insert 35¢ into the machine. The tax is properly reported
and remitted as follows: the purchase price is 33¢ and tax is
2¢.
Example 2: "A" operates a vending
machine from which pencils may be purchased. To obtain a pencil, the purchaser
is required to insert 35¢ into the machine. "A" reports and remits no
Sales Tax. When "A" is audited by the Department, he is assessed as follows:
purchase price 35¢, tax 3¢.
(3)
Sales of selected food and
beverage items.
(i)
Imposition. The sale of selected food and beverage items, as
defined in subsection (a), from a vending machine is subject to tax upon the
total receipts from the sale of the items.
(ii)
Collection of tax. An
operator of a vending machine from which selected food and beverage items are
sold is required to collect and remit Sales Tax at the rate of 6% upon the sale
of the selected food and beverage items. Sales Tax shall be computed by the
following formula: (Total receipts from the sale of selected food and beverage
items ÷ 1.06) x .06 = Sales Tax due.
Example:
"A" operates a vending machine from which milk, coffee
and crackers are sold. "A" removes $100 from the machine representing the
following sales: milk-$50, coffee-$25 and crackers-$25. Coffee is a selected
food and beverage item. Milk and crackers are not. "A" remits tax in the amount
of $1.42 calculated as follows: ($25 ÷ 1.06) x .06 =
$1.42.
(4)
Sales of food and beverages other than selected food and beverage
items.
(i) The sales of food and
beverages of the type described in this paragraph are not subject to Sales Tax
when sold from a vending machine.
(ii) Examples of exempt food and beverages
include:
(A) Baked goods, such as cakes, pies,
cookies.
(B) Potato
chips.
(C) Corn chips.
(D) Cheese balls.
(E) Pretzels.
(F) Crackers.
(G) Milk products, such as plain milk,
chocolate milk, malted milk.
(H)
Ice tea and iced coffee.
(I) Juice
beverages.
(J) Unflavored
water.
(K) Prepackaged ice cream
products, such as ice cream cakes and pies, popsicles, sundaes and
novelties.
(L) Prepackaged frozen
water-based products, such as ice pops, fudge pops, fruit ice, bomb pops and
similar items.
(M) Candy and
gum.
(N) Other food and beverages
not defined as a selected food and beverage item, including cold food for which
heating facilities are not provided.
(e)
Vending machine sales on school
or church property.
(1) Sales of
selected food and beverage items dispensed by means of a vending machine
located on the premises of a school or church are exempt from tax.
(2) Sales of tangible personal property,
other than food or beverages, which are dispensed by means of a vending machine
located on the premises of a school or church, are subject to tax.
(f)
Remitting tax to the
Department. Sales Tax collected by the operator upon the sale of
taxable tangible personal property, including selected food and beverage items,
shall be reported and remitted to the Department.
(g)
Purchase or lease of vending
equipment and supplies.
(1) The
purchase or lease of vending equipment, including parts, accessories, such as
tables, chairs, microwaves, straw and napkin dispensers and other similar
items, and supplies, such as straws, napkins, stirrers, eating utensils and
similar items, is subject to tax.
(2) Wrapping supplies, such as plastic, paper
and styrofoam cups, bowls or similar containers used to wrap property which is
sold, are exempt from tax.
