How did Louisiana's historical food-for-home-consumption relief distinguish qualifying groceries from taxable prepared food, restaurant sales, and institutional purchases?

Plain-English summary

Under the historical rules, qualifying nonprepared food sold for home consumption received a temporary 2% state rate from January through June 2003 and a state exemption beginning July 1, 2003. Prepared food and restaurant-type sales remained subject to the stated 4% state rate.

The classification depended on the product, seller preparation, utensils, the seller's facilities, and whether the food was actually sold for home consumption.

Four qualification standards

The product first had to be food. The ruling included ordinary groceries, bakery products, candy, soft drinks, condiments, and cooking ingredients, but excluded such items as alcohol, tobacco, containerized water, medicines, and dietary supplements.

Second, it could not be prepared food. Food was prepared when sold heated or heated by the seller, when the seller mixed two or more ingredients for sale as one item subject to listed exceptions, or when the seller provided eating or drinking utensils.

Third, the sale could not be by a restaurant, drive-in, snack bar, candy or nut counter, private club, or similar establishment providing on-premises consumption facilities.

Fourth, the food had to be sold for home consumption. Grocery-store delivery to a purchaser on the seller's premises was presumed to satisfy that condition unless the seller had information showing otherwise.

Retail examples

Seller-prepared sandwiches, hot foods, fountain drinks, lunch plates, boiled seafood, and seller-cooked meat remained taxable. Identical unheated products acquired from wholesalers could receive the relief even when the same retailer separately prepared similar taxable items.

Tables and chairs in a convenience store did not by themselves disqualify otherwise eligible nonprepared food if store personnel did not serve seated customers like restaurant wait staff. A separated in-store restaurant or snack bar likewise did not make the grocery store's other qualifying food sales taxable.

Bakery products qualified when the bakery or doughnut shop provided no on-premises eating facilities. If it provided such facilities, all of its sales were taxable under the ruling.

Non-home and institutional use

Known sales to businesses, institutions, or persons other than home consumers required collection at the stated 4% rate. If a grocery seller reasonably treated a purchase as home consumption but the buyer used it elsewhere, the buyer owed the difference as use tax.

The ruling also treated sales to nongovernmental schools, hospitals, mental institutions, rooming houses, and similar institutions as taxable while the cited meal exemption was suspended through June 30, 2004.

Common questions

Q: Did package size determine whether food qualified?

A: No. The ruling said package size or quantity did not control for otherwise qualifying nonprepared food.

Q: Were all bakery products prepared food?

A: No. Bakery products could qualify if the seller did not provide on-premises consumption facilities.

Q: Did customer seating automatically turn a convenience store into a restaurant?

A: No. Seating alone was not enough under the stated conditions.

Q: Could vending-machine operators use the grocery-retailer advance-tax certification?

A: No. The ruling expressly said they could not use Form R-1006.

Citations and references

• La. Const. art. VII, § 2.2 — source of the historical rate reduction and exemption
• La. R.S. 47:305(D)(2) — meal exemption discussed as suspended
• Act 22 of the 2002 Regular Session — suspension through June 30, 2004
• Form R-1006 — historical wholesale advance-tax certification
• LAC 61:III.101.C — Revenue Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA Revenue Ruling 03-002-A

Original ruling text

Revenue Ruling
No. 03-002-A
August 24, 2005
Sales Tax
State Sales Tax Rate Reduction and Forthcoming Exemption for “Food for Preparation and Consumption in the Home” Explained
The state sales tax rate on sales of food for home consumption will be two percent from January 1,
2003, through June 30, 2003. Thereafter, food for home consumption will be totally exempt from the
state sales and use tax. These changes resulted from voters’ approval of Amendment No. 2 on the
November 5, 2002 ballot, which added Article VII, Section 2.2 to the Constitution of Louisiana. The
purpose of this Revenue Ruling is to explain how the rate reduction and exemption are applied.
Standards of Taxability and Exemption
To determine the reduced rate or exemption eligibility status of a food product, the following standards
must be applied:
1.

The products must be food products, as contemplated by the statute. Food products will
include, by way of example and not limitation, meat, fish, milk, butter, eggs, bread, vegetables,
fruit and their juices, canned goods, oleo, coffee and its substitutes, soft drinks, tea, cocoa and
products of these items, bakery products, candy, condiments, relishes, spreads, as well as food ingredient products such as flour, sugar, salt, spices, shortening, flavoring and cooking oils. Alcoholic beverages, malt beverages and beer, tobacco products, distilled water, carbonated water,
ice, “dry ice”, water sold in containers, medicines, and dietary supplements1 or adjuncts are not
considered to be food.

2.

The products must not be prepared foods. “Prepared food” means:
a. Food sold in a heated state or heated by the seller;
b. Two or more food ingredients mixed or combined by the seller for sale as a single item,
which does not include food that is only cut, repackaged, or pasteurized by the seller,
or eggs, fish, meat, poultry, and food containing these raw animal foods requiring
cooking by the consumer in order to prevent food borne illnesses; or
c. Food sold with eating or drinking utensils provided by the seller, including plates,
knives, forks, spoons, glasses, cups, napkins, or straws. Containers, wraps, or other
packaging intended solely to transport food are not considered the equivalent of plates

1

For this purpose, a “dietary supplement” is a product, other than tobacco, intended to supplement the diet that includes one or more of vitamins; minerals; herbs or other botanicals; amino acids; dietary substances for use by humans to supplement their diets by increasing total dietary intake; or concentrates, metabolites, constituents, extracts,
any combination of vitamins, minerals, herbs, other botanicals, or amino acids, and that 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 a conventional food and is not represented for use as the sole item of a meal or of the diet. Such products are
required to be labeled as a “dietary supplements,” and are identifiable by the fact that their package labels contain
“Supplemental Facts” boxes.

Revenue Ruling No. 03-002
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for the purpose of classifying as “prepared food” products that would not otherwise be
so considered.
All sales of food that is prepared by the sellers of the food are taxable, regardless of the establishment from which the sales are made. Examples of taxable products typically prepared by sellers are turkeys or chickens sold either whole or in portions, baked hams,
boiled crawfish or shrimp, other cooked meats or seafood, sandwiches, salads, and cooked
vegetables.
Individual bakery products, dairy products, packaged, canned, or bottled soft drinks, fresh
fruits and vegetables, or packaged foods requiring further preparation by the purchaser are
considered “food for home consumption”. However, if the products are sold by restaurants,
drive-ins, snack bars, candy and nut counters, private clubs or other establishments providing on-premises facilities for the consumption of the food, they are not eligible for the reduced tax rate or exemption.
3.

The food products must not be sold by restaurants, drive-ins, snack bars, candy and
nut counters, private clubs, or other establishments that provide facilities for the onpremises consumption of food. Sales of food by these establishments are subject to the 4
percent state sales tax rate, even though some of the products sold might not be consumed
immediately or on the sellers' premises. For example, restaurants must collect 4 percent state
sales tax on the sale of wedding or birthday cakes, even though the cakes are removed from the
restaurants for consumption. Facilities for the consumption of the food on the premises include both inside facilities and outside facilities, including drive-in facilities. Grocery
stores, convenience stores, and other businesses that sell soft drinks with cups, glasses, or
straws will be considered “snack bars” with respect to those sales.

4.

The food products must be sold for home consumption. Sales of non-prepared food
products by grocery stores and similar businesses, where the food products are delivered to
the purchasers on the sellers’ premises, will be presumed to be sold for home consumption.
However, when grocery stores or any other type of sellers sell and deliver to businesses,
institutions, or persons other than home consumers, or make recorded institutional sales of
food for other than for home consumption, those sellers must collect the 4 percent sales tax
rate on those sales.
In cases where grocery stores and other sellers of non-prepared foods have no information
at the time of sales to indicate that the food purchased from them is other than for home
consumption, but the actual consumption of the food is other than in homes, the purchasers
will be required to remit use tax to the department equal to the difference between the 4
percent state sales tax rate that was due on the food purchased, and the state sales tax rate
that was actually remitted to their vendors. Purchasers of food products for dispensing
through vending machines will likewise be liable for the payment, either to vendors or directly to the Department of Revenue, of 4 percent sales or use tax on their purchases.

Sales by Grocery Stores, Delis, Meat and Seafood Markets, Convenience Stores, etc.
All sales of non-prepared food by grocery stores, delicatessens, meat and seafood markets, convenience stores, variety stores, department stores, and other retailers for home consumption are eligible for
the reduced state sales tax rate or exemption. Food products that do not constitute prepared food, as
discussed above, are eligible for the reduced rate or exemption, without regard to package size or

Revenue Ruling No. 03-002
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quantity of product that is sold. For example, a one-pound bag of chips, a one-ounce bag of chips, a
one-pound box of candy, a one-ounce bar of candy, a two-liter bottle of soft drink, and a 12-ounce can
of soft drink are all eligible for the reduced tax rate or exemption.
Prepared foods sold by grocery stores, department stores, variety stores, drug stores, delicatessens,
convenience stores, meat markets, seafood markets, and similar businesses are taxable at 4 percent.
Prepared foods include items that are sold in a heated state, that are heated by the sellers, that are combinations of ingredients mixed or combined by the sellers for sale as single items, or that are sold with
eating or drinking utensils supplied by the sellers. Products taxable at 4 percent include, but are not
limited to, seller-prepared sandwiches, iced drinks, cups of hot coffee or cocoa, beverages poured from
fountains within these sellers’ facilities, lunch or dinner plates, servings of vegetables, whole or sliced
hot pizza, crawfish boiled by sellers, and meats or seafood cooked by sellers regardless of the size or
quantity sold.
Sellers who sell food products in the identical unheated conditions in which the products were acquired from wholesalers, and who also sell similar products that they themselves have prepared, must
apply different state sales tax rates to the two classes of foods, as explained above. For example, a
delicatessen that makes sandwiches must tax the sales of the sandwiches made by its personnel, but
can exempt or apply the reduced tax rate to all sales of sandwiches sold in the same condition in which
the sandwiches were acquired from others.

The presence within a convenience store of tables and chairs for use by the customers of the store
would not of itself cause non-prepared food sales that would otherwise be eligible for tax exemption to become taxable, provided that convenience store personnel do not interact with customers
seated as those table in the same or similar ways that the wait staff of a restaurant would interact
with dining customers within a restaurant’s facilities. For example, a customer who selects nonprepared food items from a convenience store’s regular grocery inventory, pays for the items at the
store’s checkout, carries the items himself to tables within the facility, and consumes the items before leaving the store premises would be entitled to the sales tax exemption on the items, even if
the customer himself/herself heats the items in seller-provided equipment. Whether sit-down dining areas associated with meat or seafood markets would cause the combined facilities to be classified restaurants in their entirety, all sales of which would be taxable, would depend upon the
level of physical and organizational separation of the dine-in facilities from the over-the-counter
sales of prepared and non-prepared food. Physical separation could include separate entrances and
walls or room dividers. Organizational separation could include separate personnel and separate
checkouts assigned to each facility.
Sales by Bakeries and Doughnut Shops

All bakery products, including those prepared by the sellers, are eligible for the reduced tax rate or exemption for food for home consumption, provided that the sellers do not provide facilities for onpremises consumption of their foods. Bakeries and doughnut shops that provide facilities for onpremises consumption must collect the four percent state tax on all of their sales, regardless of the
quantity sold or whether the items are consumed on or off of the premises. Bakeries and doughnut
shops that do not have eating facilities will as of January 1, 2003, collect the temporary 2 percent rate
on the sale of bakery products and other foods for home consumption and will exempt those sales as of
July 1, 2003.
Sales or Prepared Foods by Grocery Stores
Some grocery stores sell prepared foods and provide facilities for the consumption of that food on their

Revenue Ruling No. 03-002
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premises in sections of their stores that could be construed as restaurants, snack bars, or candy and nut
counters. All of these sales or prepared food are subject to the 4 percent state sales tax. However, the
housing within grocery stores of separate facilities that could be construed as restaurants, snack bars,
or candy and nut counters does not cause other sales by such grocery stores of foods for home consumption to lose eligibility for the reduced rates or exemptions that are otherwise applicable to those
food sales.
Sales of Food to Schools, Hospitals, Nursing Homes, Mental Institutions, and Rooming Houses
Sales of food to educational institutions, hospitals, mental institutions, rooming houses, and similar
institutions are taxable. Although R.S. 47:305(D)(2) would otherwise provide a sales tax exemption,
under certain conditions, for sales of meals furnished to the staff and students of educational institutions; the staff and patients of hospitals; the staff, inmates and patients of mental institutions,
boarders of rooming houses, and for occasional sales of meals by educational, religious, or medical organizations, the exemption is suspended through June 30, 2004, as provided by Act No. 22
of the 2002 Regular Session of the Louisiana Legislature. All sales of food to these types of institutions that are non-governmental are subject to the 4 percent state sales tax rate. Vendors who sell
and deliver to these institutions must collect and remit the state sales tax. In any case when vendors do not collect the tax on sales to these institutions, such as sales in grocery stores where the
vendors treat the eligible food purchases as being for home consumption, the purchasers must remit use tax directly to the Louisiana Department of Revenue.
Advance Sales Tax Collection by Wholesale Dealers
Wholesale dealers must collect advance sales tax at the 4 percent rate on sales of food products to restaurants, drive-ins, snack bars, and other retailers whose food sales are taxable under the law. As of
January 1, 2003, the advance tax is collectible at the 2 percent rate on sales of food items to grocery
stores and other retailers who certify that the majority of their retail sales of food will be subject to the
2 percent temporary state sales tax rate. The Department of Revenue has published form R-1006 for
use in making this certification. Vending machine operators cannot use the form.
Sales by wholesale dealers of food products that are subject to the 2 percent advance sales tax collection rate will not be subject to advance sales tax on or after July 1, 2003, when eligible food products
become fully exempt from the state sales tax.
Questions concerning the food-related sales tax reduced rate and exemption can be directed to the Taxpayer Services Division at 225.219.7356 or to any of the department’s regional offices.
Cynthia Bridges
Secretary of Revenue
By:

Raymond E. Tangney
Senior Policy Consultant
Policy Services Division

A Revenue Ruling is written to provide guidance to the public and to Department of Revenue employees. It
is issued under LAC 61:III.101.C to apply principles of law to a specific set of facts. A Revenue Ruling does
not have the force and effect of law and is not binding on the public. It is a statement of the Department's
position and is binding on the department until superseded or modified by a subsequent change in statute,
regulation, declaratory ruling, or court decision.