Rule 560-12-2-.104 - Food Exemption(1) Sales of food and food ingredients qualify for an exemption from sales and use tax as provided herein.(2) Definitions. (a) "Alcoholic Beverages" means beverages that are suitable for human consumption and contain one-half of one percent or more of alcohol by volume.(b) "Dietary supplement" means any product, other than tobacco, intended to supplement the diet that: 1. Contains one or more of the following dietary ingredients: a vitamin, mineral, herb or other botanical, amino acid, a dietary substance for use by humans to supplement the diet by increasing the total dietary intake, or a concentrate, metabolite, constituent, extract, or combination of any ingredient described above; and2. Is intended for ingestion in tablet, capsule, powder, softgel, gelcap, or liquid form, or if not intended for ingestion in such a form, is not represented as conventional food and is not represented for use as a sole item of a meal or of the diet; and3. Is required to be labeled as a dietary supplement, identifiable by the "Supplemental Facts" box found on the label and as required pursuant to 21 C.F.R. § 101.36.(c) "Eating utensils" includes plates, knives, forks, spoons, glasses, cups, napkins and straws, but does not include other containers or packaging used to transport the food.(d) "Food and food ingredients" means substances, whether in liquid, concentrated, solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value. "Food and food ingredients" shall not include alcoholic beverages, dietary supplements, or tobacco.(e) "Natural person" means an individual human being.(f) "Prepared food", which is subject to both state and local sales and use taxes, means: 1. Food sold in a heated state or heated by the seller at the seller's location (i.e., the place where the sale takes place). This includes food that was heated by the seller at any time before the sale even if the item is in an unheated state at the time of sale; or2. Food with two or more food ingredients mixed or combined at the seller's location by the seller for sale as a single item; or3. Food sold with eating utensils provided by the seller. Food shall be considered to be sold with eating utensils provided by the seller when the food is customarily intended for consumption with the utensils provided. The presence of self-service utensils in a facility does not make otherwise exempt food taxable unless it is customarily intended that the food be consumed with those utensils.(g) "Tobacco" means cigarettes, cigars, chewing or pipe tobacco, or any other item that includes tobacco.(3) Food Exemptions.(a) O.C.G.A. § 48-8-3(57) exemption. Effective for transactions occurring on or after January 1, 2011, food and food ingredients sold to natural persons for consumption off premises are not subject to state sales and use tax, but are subject to any local sales and use tax.1. The state sales and use tax exemption for food and food ingredients is not available to businesses including but not limited to corporations, partnerships, limited liability companies, and sole proprietorships. Unless another exemption applies, business entities, including nonprofit organizations, must pay both state and local sales and use tax on all purchases of food and food ingredients.2. For purposes of the exemption for food and food ingredients contained in O.C.G.A. § 48-8-3(57), "food and food ingredients" does not include the following: (ii) Items ingested or chewed primarily for medical or hygiene purposes, such as cough drops, throat lozenges, breath strips, and over the counter medications;(iii) Alcoholic beverages;(iv) Tobacco and tobacco products;(v) Dietary supplements; and(vi) Food intended for non-human consumption, such as dog food, cat food and animal feed.(b) O.C.G.A. § 48-8-3(53) exemption. Food and food ingredients purchased with food stamps is exempt after January 1, 2011 to the same extent that it was exempt before January 1, 2011.(c) O.C.G.A. § 48-8-3(12) exemption. Food and food ingredients, including prepared food, sold and served to pupils and employees of public schools as part of a school lunch program are exempt from state and local sales tax.(d) O.C.G.A. § 48-8-3(13) exemption. Sales of food and food ingredients, including prepared food, consumed by pupils and employees of bona fide private elementary and secondary schools, which have been approved by the Internal Revenue Service as organizations eligible to receive tax deductible contributions, are exempt from state and local sales tax when application for exemption is made to the Department and proof of the exemption is established.(e) O.C.G.A. § 48-8-3(59) exemption. (i) Sales of food and food ingredients to and by member councils of the Girl Scouts of the U.S.A. in connection with fundraising activities of any such council are exempt from state and local sales tax.(ii) Sales of food and food ingredients to and by member councils of the Boy Scouts of America in connection with fundraising activities of any such council are exempt from state and local sales tax.(f) O.C.G.A. § 48-8-3(81) exemption. The sale of food and food ingredients to a qualifying airline for service to passengers and crew in the aircraft is exempt from state and local sales tax, whether in flight or on the ground; and the furnishing without charge of food and food ingredients to qualifying airline passengers and crew in the aircraft, whether in flight or on the ground. "Qualifying airline" is defined in O.C.G.A. § 48-8-3(81).(4)Examples of the food exemption in O.C.G.A. § 48-8-3(57). (a) Food and food ingredients that are exempt from state sales and use tax include: 1. Most prepackaged or repackaged items sold for ingestion by humans for taste or nutritional value, such as prepackaged boxed cereal, cartons of milk, peanut butter ground in the store by either the seller or the customer, candy;2. Food that is only cut, repackaged, or pasteurized by the seller, such as: (i) Deli meat sliced by the seller and sold by weight; and(ii) Potato salad purchased in bulk by the seller and sold to customers by weight or volume as long as the seller does not add any ingredients to the potato salad;3. Raw animal foods such as eggs, fish, meat, poultry, and foods comprised of these raw animal foods, that require cooking by the consumer;4. Packaged beverages of all kinds, including bottled water;5. Liquids such as cooking wine and vanilla extract used in cooking that exceed an alcohol content of 0.5% but are not intended for sale as a beverage (drinkable liquid);6. Food sold without eating utensils by a seller whose proper primary North American Industrial Classification System (NAICS) code is subsector 311 (food manufacturing) except industry group 3118 (bakeries and tortilla manufacturing); and7. Prepackaged food sold from vending machines.(b) Food and food ingredients that are not exempt and are subject to both state and local sales and use tax include:1. Business purchases and uses of food and food ingredients. (i) A business purchases frozen turkeys to give to employees as holiday gifts. The purchase of such turkeys is subject to both state and local sales and use tax because the purchaser is a business entity, and not an individual human being, making a purchase for off-premises consumption. Food purchases by a sole proprietorship are considered to be purchases by a business that are subject to both state and local sales tax. If the business does not pay state sales tax at the time of purchase, the business should accrue and remit state use tax on its purchase of the food items.(ii) Water in bottles, coolers, or other containers purchased by a business that provides the water for no charge to its employees or customers is subject to both state and local sales and use tax.(iii) A daycare center or for-profit nursing home purchases food at a grocery store to use in providing its service. Daycare centers and nursing homes are not natural persons and thus the exemption in O.C.G.A. § 48-8-3(57) does not apply to their purchases. The purchases are subject to both state and local tax; and if the day care center or for-profit nursing home only pays local tax at the time of purchase, it should accrue and remit state use tax on the purchase.2. Food and food ingredients sold for on-premises consumption, such as prepackaged candy sold at movie theaters and sports arenas.(c) Prepared food, which is not exempt and is subject to both state and local sales and use tax, generally includes: 1. Food sold by restaurants, street food vendors, food carts, and fast food establishments;2. Popcorn and fountain beverages sold by movie theaters because the popcorn is heated onsite and the fountain beverages are made by mixing ingredients;3. Cakes, breads and pastries made by a retail bakery onsite and sold with or without utensils for off-premises consumption;4. Bread heated or baked by the seller at the seller's location, even though the dough was made off-site;5. Food with two or more food ingredients mixed or combined at the seller's location by the seller for sale as a single item, such as: (i) Potato salad purchased in bulk by the seller to which the seller adds an ingredient, such as salt or pepper, and then sells by weight or volume; and(ii) Deli sandwiches made by the seller at the seller's location;6. Prepackaged food sold with a utensil such as yogurt sold by a coffee shop with a spoon for off-premises consumption; and7. Heated food sold by a vending machine, such as coffee.Ga. Comp. R. & Regs. R. 560-12-2-.104
O.C.G.A. Secs. 48-2-7; 48-2-12, 48-8-2, 48-8-3.
Original Rule entitled "Food Exemption" was adopted as ER. 560-12-2-0.10-.104. F. Sept. 19, 1996; eff. Oct. 1, 1996, to remain in effect for 120 days or until the effective date of a permanent Rule covering the same subject matter superseding this ER., is adopted, as specified by the Agency.Amended: Permanent Rule of same title adopted. F. Nov. 12, 1996; eff. Dec. 2, 1996.Amended: F. Mar. 15, 2012; eff. Apr. 4, 2012.