Did Illinois tax dark chocolate at the lower food rate because of claimed health benefits?

Plain-English summary

Claimed health benefits did not move dark chocolate from Illinois's candy category into the lower-rate food category. Under the 2010 rule described, candy included sweetener combined with chocolate, fruit, nuts, or other ingredients or flavorings in bars, drops, or pieces.

The definition excluded preparations containing flour or requiring refrigeration. The Department said the law did not otherwise distinguish dark chocolate from other candy for the general merchandise rate.

The GIL reported a 1% state rate plus local taxes for qualifying food and a 6.25% general state rate for candy under the law then in effect. The request reported that the shopper was charged 9.5%; the letter's rates are historical.

What this means for you

Classify chocolate from the statutory ingredients and product-form test, not health marketing. Check flour and refrigeration before applying the candy rule, and verify current rates.

Common questions

Q: Did dark chocolate receive the lower food rate because it might have health benefits?
A: No.

Q: Did the candy definition include every sweet preparation?
A: No. Preparations containing flour or requiring refrigeration were excluded from that definition.

Subject

Food, Drugs & Medical Appliances

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2010.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2010/st-10-0097.pdf

Original ruling text

ST 10-0097-GIL 10/26/2010 FOOD, DRUGS & MEDICAL APPLIANCES
This letter concerns the low 1% State rate of tax applicable to food, drugs and medical
appliances. See 86 Ill. Adm. Code 130.310 and 130.311. (This is a GIL.)

October 26, 2010

Dear Xxxxx:
This letter is in response to your letter dated October 8, 2010, in which you request
information. The Department issues two types of letter rulings. Private Letter Rulings (“PLRs”) are
issued by the Department in response to specific taxpayer inquiries concerning the application of a
tax statute or rule to a particular fact situation. A PLR is binding on the Department, but only as to the
taxpayer who is the subject of the request for ruling and only to the extent the facts recited in the PLR
are correct and complete. Persons seeking PLRs must comply with the procedures for PLRs found in
the Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General Information
Letter (“GIL”) is to direct taxpayers to Department regulations or other sources of information
regarding the topic about which they have inquired. A GIL is not a statement of Department policy
and is not binding on the Department. See 2 Ill. Adm. Code 1200.120. You may access our website
at www.tax.illinois.gov to review regulations, letter rulings and other types of information relevant to
your inquiry.
The nature of your inquiry and the information you have provided require that we respond with
a GIL. In your letter you have stated and made inquiry as follows:
On September 28, 2010, I bought four packages of Moser Ross Premium Dark
Chocolate 70% Cocoa at STORE/LOCATION. The price per package was $1.69 and
the total for four was $6.76, so I was surprised when the cashier said that the total with
tax was $7.40. I thought the tax would be about 2%, but she said it was 9.5%.
On Tuesday, October 5, I called 1-800-732-8866 and spoke with Manina. I asked why I
was charged the 9.5% tax. She checked and said that the law was changed, effective
on September 1, 2009, to say that chocolate candy should be considered candy, not
food, so it’s been charged at the higher rate of 9.5%.
For several years, I have read articles stating the health benefits of dark chocolate. I
have been buying it regularly at STORE, eating one or two bars each day. Since I
usually buy the dark chocolate along with other food, I didn’t notice the higher tax rate
until last week, when I bought only the chocolate.
I am enclosing a copy of an article from WebMD that explains the heart benefits of dark
chocolate, as well as an empty package, which lists ingredients and nutrition facts.
Therefore, I believe that it should be taxed at the 2.25% rate for food.
I look forward to hearing from you soon.

DEPARTMENT’S RESPONSE:
All gross receipts from sales of tangible personal property in Illinois are subject to Retailers'
Occupation Tax and Use Tax unless an exemption is specifically provided. Qualifying food, drugs,
medicines and medical appliances are not taxed at the general merchandise rate of 6.25%. These
items are taxed at a lower state rate of 1% plus any applicable local taxes. See 86 Ill. Adm. Code
130.310 and 130.311.
Food that is to be consumed off the premises where it is sold (other than alcoholic beverages,
soft drinks, and food that has been prepared for immediate consumption) is taxed at the rate of 1%
plus applicable local taxes. Food is defined as any solid, liquid, powder or item intended by the seller
primarily for human internal consumption, whether simple, compound or mixed, including foods such
as condiments, spices, seasonings, vitamins, unsweetened bottled water and ice. Beginning
September 1, 2009, all candy is taxable at the State 6.25% general merchandise rate. Candy is
defined as a preparation of sugar, honey, or other natural or artificial sweeteners in combination with
chocolate, fruits, nuts or other ingredients or flavorings in the form of bars, drops, or pieces. Candy
does not include any preparation that contains flour or requires refrigeration.
The law that changed the tax rate on candy did not distinguish between dark chocolate and
other types of candy for purposes of imposing sales tax at the high rate.
I hope this information is helpful. If you require additional information, please visit our website
at www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at (217) 782-3336.
Very truly yours,

Debra M. Boggess
Associate Counsel
DMB:msk