(a) There are exempted from the taxes imposed by this part the gross receipts from the sale of, and the storage, use, or other consumption in this state of, food products for human consumption.
(b) For the purposes of this section, “food products” include all of the following:
(1) Cereals and cereal products, oleomargarine, meat and meat products, fish and fish products, eggs and egg products, vegetables and vegetable products, fruit and fruit products, spices and salt, sugar and sugar products, candy, gum, confectionery, coffee and coffee substitutes, tea, and cocoa and cocoa products.
(2) Milk and milk products, milkshakes, malted milks, and any other similar type beverages that are composed at least in part of milk or a milk product and that require the use of milk or a milk product in their preparation.
(3) All fruit juices, vegetable juices, and other beverages, whether liquid or frozen, including bottled water, but excluding spirituous, malt, or vinous liquors or carbonated beverages.
(c) For purposes of this section, “food products” do not include medicines and preparations in liquid, powdered, granular, tablet, capsule, lozenge, and pill form sold as dietary supplements or adjuncts.
(d) None of the exemptions in this section apply to any of the following:
(1) When the food products are served as meals on or off the premises of the retailer.
(2) When the food products are furnished, prepared, or served for consumption at tables, chairs, or counters or from trays, glasses, dishes, or other tableware whether provided by the retailer or by a person with whom the retailer contracts to furnish, prepare, or serve food products to others.
(3) When the food products are ordinarily sold for immediate consumption on or near a location at which parking facilities are provided primarily for the use of patrons in consuming the products purchased at the location, even though those products are sold on a “take out” or “to go” order and are actually packaged or wrapped and taken from the premises of the retailer.
(4) When the food products are sold for consumption within a place, the entrance to which is subject to an admission charge, except for national and state parks and monuments, marinas, campgrounds, and recreational vehicle parks.
(5) When the food products are sold through a vending machine.
(6) When the food products sold are furnished in a form suitable for consumption on the seller’s premises, and both of the following apply:
(A) Over 80 percent of the seller’s gross receipts are from the sale of food products.
(B) Over 80 percent of the seller’s retail sales of food products are sales subject to tax pursuant to paragraph (1), (2), (3), or (7).
(7) When the food products are sold as hot prepared food products.
(e) “Hot prepared food products,” for the purposes of paragraph (7) of subdivision (d), include a combination of hot and cold food items or components where a single price has been established for the combination and the food products are sold in combination, such as a hot meal, a hot specialty dish or serving, a hot sandwich, or a hot pizza, including any cold components or side items. Paragraph (7) of subdivision (d) does not apply to a sale for a separate price of bakery goods or beverages (other than bouillon, consommé, or soup), or where the food product is purchased cold or frozen; “hot prepared food products” means those products, items, or components that have been prepared for sale in a heated condition and that are sold at any temperature that is higher than the air temperature of the room or place where they are sold.
(f) Notwithstanding paragraph (6) of subdivision (d), if the seller elects to separately account for sales of food products specified in subdivision (b), then the gross receipts from the sale of those food products shall be exempt under subdivision (a), provided that the separate accounting is fully documented in the seller’s records. However, if the seller’s records do not reflect the separate accounting of the gross receipts from sales of nontaxable food products, the seller’s election under this subdivision shall be revoked.
(Amended by Stats. 1996, Ch. 124, Sec. 100. Effective January 1, 1997. Note: This section was amended on Nov. 3, 1992, by initiative Prop. 163.)
Last modified: October 25, 2018