LR 8269
Taxability of Non-Alcoholic Beverages
September 25, 2023
Dear Applicant:
This is a letter ruling issued by the Director of Revenue under Section 536.021.10, RSMo, and Missouri Code of State Regulations 12 CSR 10-1.020, in response to your letter dated August 5, 2023.
The facts as presented in your letter ruling request and subsequent phone call are summarized as follows:
Applicant is a manufacturer and retailer of non-alcoholic beverages in ready to drink 12 oz aluminum cans to individuals. Approximately 75-80% of applicant's beverages are sold directly to consumers while approximately 15-20% of applicant's sales are sold to other businesses.
ISSUE:
Are Applicant's sales of their non-alcoholic beverages subject to the food sales tax rate under section 144.014, RSMo.?
RESPONSE:
Yes, Applicant's sales of their non-alcoholic beverages are subject to the food sales tax rate under section 144.014, RSMo.
Section 144.014.1 RSMo. provides:
Notwithstanding other provisions of law to the contrary, beginning October 1, 1997, the tax levied and imposed under this chapter on all retail sales of food shall be at one percent.
Section 144.014.2, RSMo. provides:
For the purposes of this section, the term "food" shall include only those products and types of food for which food stamps may be redeemed pursuant to the provisions of the Federal Food Stamp Program as contained in 7 U.S.C. Section 2012, as that section now reads or as it may be amended hereafter, and shall include food dispensed through vending machine For the purpose of this section, except for vending machine sales, the term "food" shall not include food or drink sold by any establishment where the gross receipts derived from the sale of food prepared by such establishment for immediate consumption on or off the premises of the establishment constitutes more than eighty percent of the total gross receipts of that establishment, regardless of whether such prepared food is consumed on the premises of that establishment, including, but not limited to, sales of food by any restaurant, fast food restaurant, delicatessen, eating house, or café.
The Missouri Supreme Court clarified in Gate Gourmet, Inc. v. Director of Revenue, (Mo. Banc 2016) that the relevant factor to determine whether or not food qualifies for the reduced rate is not solely to look at the type of food in the abstract, but to look at the context of the sales transaction that determines. Specifically, the Court focused on whether or not the items are sold for home consumption.
Here, at least 80% of Applicant's sales are directly to customers for home consumption. Therefore, these sales qualify for the reduced food rate found in section 144.014.2, RSMo.
This letter ruling is binding upon the Department of Revenue with respect to the Applicant for three (3) years from the date of this letter and is subject only to statutory changes by the General Assembly and to changes in the interpretation of law by the courts or administrative tribunals. If a change occurs, the taxpayer who relies upon an outdated interpretation may be subject to additional taxes, interest and penalties, which may be imposed prospectively from the date of the change. For this reason, the interpretation set forth above should be reviewed on a regular basis. Please note that any change in or deviation from the facts as presented will render this ruling inapplicable.
Should additional information be needed, please contact Legal Counsel J. Ross Shelton, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, phone (573) 751-0961.
Sincerely,
Wayne Wallingford