Do two whole-food snack bars qualify for Illinois's 1% state food rate or the 6.25% general-merchandise rate?

Plain-English summary

A seller asked IDOR to classify two whole-food snack bars. The Department did not give a product-specific answer because the request did not explain how the company conducted its sales. Instead, the GIL summarized 86 Ill. Adm. Code 130.310.

• Food for human consumption sold for off-premises use generally carried the 1% state rate, except alcoholic beverages, soft drinks, candy, and food prepared for immediate consumption.
• Prepared food and candy carried the 6.25% state general-merchandise rate.
• The candy definition covered sweetened bars, drops, or pieces, but excluded a product that contains flour or requires refrigeration.
• Food sold from a vending machine could qualify as off-premises food, except soft drinks, candy, and products dispensed hot.
• A retailer providing seating or on-premises facilities generally used the higher rate. A mixed establishment could use the lower rate for qualifying grocery items if the dining area was physically partitioned and used a separate means of collecting receipts under Rule 130.310(b)(1).

What this means for you

Food manufacturers and retailers

Ingredients alone may not settle the rate. Flour or required refrigeration can keep a sweetened bar outside the candy definition, while the seller's seating, service format, and checkout setup can affect whether food is treated as prepared for immediate consumption.

Accountants and tax professionals

This GIL supplies general classification rules but leaves the two named bars unresolved. A product conclusion needs the missing sales-method and product facts.

Common questions

Did IDOR rule that the two bars were taxed at 1%? No. It did not classify them on the limited facts.

When is a sweetened bar not candy? Under the rule quoted in the letter, when it contains flour or requires refrigeration.

Does seating matter? Yes. Facilities for on-premises consumption generally point to the higher rate, subject to the partitioned-area and separate-receipts rule.

Citations and references

• 86 Ill. Adm. Code 130.310
• 86 Ill. Adm. Code 130.310(b)(1)

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2014.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2014/st-14-0016.pdf

Original ruling text

ST 14-0016-GIL 04/04/2014 FOOD
This letter discusses the applicable sales tax rates for food and candy. See 86 Ill. Adm. Code 130.310. (This is a
GIL.)

April 4, 2014
Dear Xxxx:
This letter is in response to your letter dated January 17, 2014, 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:
Please review the enclosed product labels for each item listed below, and provide us
with a determination of sales taxability in your state. Please note that these products
are categorized as whole foods.
Products:

COMPANY Bar Spiced Apple + Raisin
COMPANY Bar Wholesome Grains + Cranberries

I will be happy to provide additional information if needed. Thank you for your prompt
attention to this matter.
Thank you for your assistance in this matter.
DEPARTMENT’S RESPONSE:
In the case of food that is sold for human consumption that is to be consumed off the premises
where it is sold (other than alcoholic beverages, soft drinks, candy and food that has been prepared
for immediate consumption), the tax is imposed at the rate of 1%. Food that is prepared for
immediate consumption is taxed at 6.25% (State rate). For further information on the taxability of
food, please see 86 Ill. Adm. Code 130.310. Food that is to be consumed off the premises where it is
sold includes food sold from a vending machine, except soft drinks, candy, and food products that are
dispensed hot from a vending machine.
Your letter does not state how your company conducts sales of its products. Please be
advised that the manner in which food is taxed depends upon the nature of the establishment that is
selling the food. Retailers who provide seating or facilities for on-premises consumption of food
generally incur tax at the high rate (6.25% State rate) on all food sales (including grocery type items).

Page 2
April 4, 2014

However, if establishments sell both food that has been prepared for immediate consumption and
grocery type items and also provide facilities for on-premises consumption, the lower rate of tax (1%)
may be charged on the grocery type items (other than alcoholic beverages, candy, soft drinks, and
food that has been prepared for immediate consumption) if the dining facilities are physically
partitioned from the area where food not for immediate consumption is sold and these facilities utilize
a separate means of collection of receipts. See 86 Ill. Adm. Code 130.310(b)(1).
Beginning September 1, 2009, all candy became 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. Thus, if a product contains flour or requires refrigeration, it would not be considered
“candy” even if it meets all the other elements of the definition. Because the definition of candy
changed in September 1, 2009, the tax treatment of certain products went from the low 1% rate to the
State 6.25% general merchandise 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,

Cara Bishop
Associate Counsel
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