Does a newsstand owe sales tax on ordinarily-exempt snack and drink items (like potato chips, fruit juice, and ice cream) when the only way in or out of the newsstand is through an adjoining shared area that has tables and chairs available to customers?

Plain-English summary

James Hannell, a visually impaired newsstand operator working through a state program for the blind and visually handicapped, ran a newsstand in Albany's Legislative Office Building, selling snacks, candy, soda, and newspapers. He paid the Commission a percentage-of-income fee rather than rent. His newsstand was in its own separate room, but the only way in or out was through one large doorless entrance connecting the building hallway to an adjoining vending facility — a room containing vending machines plus tables and chairs — before reaching the newsstand's own sliding glass doors. Hannell didn't own the vending machines or the products in them, but the vending area's tables and chairs were available for use by his newsstand customers too. He charged sales tax on obviously taxable items and, because of the tables' proximity, also charged tax on items like potato chips, fruit juice, and ice cream that would ordinarily be exempt as off-premises food — then asked the Department to confirm whether that was correct.

New York generally exempts food items like potato chips, real fruit juice (70%+ natural juice), and ice cream when sold for off-premises consumption — but that exemption never applies when the sale is for consumption on the premises where sold. The regulations define "premises" broadly to include tables, chairs, and similar customer conveniences, and treat food/drink as sold for on-premises consumption whenever it may be consumed on the premises where the vendor conducts business.

The Department found Hannell's situation squarely met that on-premises test: there was no way to enter or exit his newsstand without walking through the adjoining vending area, and that area's tables and chairs — located in close proximity to the newsstand and made available to Hannell's own customers — meant the whole combined space functioned as one set of "premises" where food could be, and reasonably would be, consumed on site. So all of Hannell's food and drink sales (not just the always-taxable ones) were correctly subject to sales tax, and his practice of charging tax on the items he'd flagged was proper.

What this means for you

Newsstands, kiosks, and small retailers sharing space with seating areas

Physical layout, not just what you sell, can determine taxability — if customers must pass through or have ready access to tables/chairs near your point of sale (even ones you don't own or control), your ordinarily-exempt grab-and-go food items can become taxable "on-premises consumption" sales.

Retailers in shared or multi-tenant facilities (office buildings, transit hubs, food courts)

Proximity and access matter more than ownership: seating you don't own but that's available to your customers, especially if it's unavoidable on the path in or out of your space, can pull your food sales into the taxable on-premises category.

Accountants and tax professionals

This is a useful, concrete fact pattern for the "premises" definition under 20 NYCRR § 527.8(c)-(d) — cite it whenever a client's retail food sales sit adjacent to (but don't directly control) a seating area, since the test turns on availability and proximity to the vendor's customers, not on who owns the furniture.

Common questions

Q: Are potato chips, real fruit juice, and ice cream always exempt from sales tax in New York?
A: Only when sold for off-premises consumption. If they're sold in a location where the vendor's customers have on-site tables/chairs available (or must pass through such an area), the sale is treated as being for on-premises consumption and becomes taxable.

Q: Does it matter that the vendor doesn't own the tables and chairs in question?
A: No — the "premises" definition covers tables, chairs, and similar conveniences made available to the vendor's customers regardless of who owns them, as long as they're part of the space the vendor's business effectively uses.

Q: If a small retail space has its own doors, does that automatically separate it from an adjoining seating area for tax purposes?
A: Not necessarily — where the only access to the retail space runs through the adjoining seating area, the two spaces can be treated as one combined "premises" for on-premises-consumption purposes.

Citations and references

Statutes and regulations:

• Tax Law § 1105(a) (retail sales tax); § 1105(d)(i) (on-premises food/drink tax)
• Tax Law § 1115(a)(1) (food exemption; taxable exclusions)
• 20 NYCRR § 527.8(c) (premises definition); § 527.8(d) (on-premises consumption); § 527.8(g) (vending machines in seating areas)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2002.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a02_55s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-02(55)S
Sales Tax
November 7, 2002

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S010416A

On April 16, 2001, the Department of Taxation and Finance received a Petition for Advisory
Opinion from James Hannell d/b/a Jim Hannell’s News, P.O. Box 7337, Albany, NY 12224.
Petitioner, James Hannell d/b/a Jim Hannell’s News, provided additional information pertaining to
the Petition on 4/27/01 and 10/19/01.
The issue raised by Petitioner is whether his newsstand sales of food and drink items were
for on premises consumption and, therefore, subject to sales tax.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner is a visually impaired person who operated a newsstand through a program made
available by the Commission for the Blind and Visually Handicapped. The newsstand was on state
owned property located in the Legislative Office Building, Empire State Plaza, Albany, New York.
Petitioner paid no rent to the Commission for the use of the newsstand space, but paid it a fee which
was a percentage of his income. Petitioner sold snacks, candy, soda, newspapers, etc. at the
newsstand.
The newsstand adjoined a vending facility that consists of vending machines and tables and
chairs. Petitioner did not own the vending machines or any of the products which they contain, but
anticipated he would become responsible for the vending operation under the program with the
Commission in 2002. The vending area was, however, available to Petitioner’s customers for their
use.
The newsstand was in a separate individual room. One large doorless entrance from the
Legislative Office Building’s hallway into the vending facility provided customer access to the
newsstand. This access was gained through the newsstand’s own sliding glass doors which
remained open until Petitioner’s close of business each day.
Petitioner charged sales tax on all taxable food and drink items and, due to the proximity of
the tables and chairs in the adjoining vending area, on certain other food and drink items such as
potato chips, fruit juice, and ice cream which would ordinarily be exempt if sold for off premises
consumption. Recently, Petitioner stopped selling food and drink items at his newsstand.
Applicable Law and Regulations
Section 1105 of the Tax Law imposes sales tax, in part, on:

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Sales Tax
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(a) The receipts from every retail sale of tangible personal property, except
as otherwise provided in this article.
Section 1105(d)(i) of the Tax Law imposes sales tax on:
The receipts from every sale of . . . food and drink of any nature or of food
alone, when sold in or by restaurants, taverns or other establishments in this state . . .
(1) in all instances where the sale is for consumption on the premises where
sold;
*

*

*

(3) in those instances where the sale is made through a vending machine that
is activated by use of coin, currency, credit card or debit card (except the sale of
drinks in a heated state made through such a vending machine) or is for consumption
off the premises of the vendor, except where food (other than sandwiches) or drink
or both are (A) sold in an unheated state and, (B) are of a type commonly sold for
consumption off the premises and in the same form and condition, quantities and
packaging, in establishments which are food stores other than those principally
engaged in selling foods prepared and ready to be eaten.
Section 1115 of the Tax Law provides, in part:
(a) Receipts from the following shall be exempt from the tax on retail sales
imposed under subdivision (a) of section eleven hundred five and the compensating
use tax imposed under section eleven hundred ten:
(1) Food, food products, beverages, dietary foods and health supplements,
sold for human consumption but not including (i) candy and confectionery, (ii) fruit
drinks which contain less than seventy percent of natural fruit juice, (iii) soft drinks,
sodas and beverages such as are ordinarily dispensed at soda fountains or in
connection therewith (other than coffee, tea and cocoa) and (iv) beer, wine or other
alcoholic beverages, all of which shall be subject to the retail sales and compensating
use taxes, whether or not the item is sold in liquid form. The food and drink
excluded from the exemption provided by this paragraph under subparagraphs (i),
(ii) and (iii) of this paragraph shall be exempt under this paragraph when sold for
seventy-five cents or less through any vending machine activated by the use of coin,
currency, credit card or debit card. With the exception of the provision in this
paragraph providing for an exemption for certain food or drink sold for seventy-five
cents or less through vending machines, nothing herein shall be construed as

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exempting food or drink from the tax imposed under subdivision (d) of section
eleven hundred five.
Section 527.8 of the Sales and Use Tax Regulations provides, in part:
(a) Imposition. Sales tax is imposed on the receipts . . . from every sale of . . .
food or drink of any nature sold in or by restaurants, taverns or other establishments
in this State or by caterers:
(1) in all instances where the sale is for consumption on the premises where
sold;
*

*

*

(3) in those instances where the sale is for consumption off the premises of
the vendor all sandwiches and other food or drink unless the food or drink is sold in:
(i) an unheated state; and
(ii) the same form and condition, quantities and packaging commonly used
by food stores not principally engaged in selling foods prepared and ready to be
eaten.
*

*

*

(c) Premises. The term premises shall mean the total space and facilities in
or on which the vendor conducts his business, including but not limited to . . .
counter space, indoor or outdoor tables, chairs, benches and similar conveniences.
(d) Consumption on premises. The phrase for consumption on the premises
shall mean that the food or drink sold may be consumed on the premises where the
vendor conducts his business.
(e) Consumption off premises. The phrase for consumption off the premises
shall mean that the food, including sandwiches, or drink is intended to be consumed
at a place away from the vendor’s premises.
*

*

*

(g) Sales through vending machines. (1) Vending machine operations carried
on in premises where facilities such as tables, chairs, benches, counters, etc. are
provided for customers are considered to be eating establishments selling food or

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drink for on-premises consumption and sales made through such machines are
taxable.
Opinion
Petitioner was engaged in the sale of candy, beverages, and snacks at the newsstand he
operated under a program made available by the Commission for the Blind and Visually
Handicapped. The newsstand was in close proximity to an adjoining vending facility that contains
tables and chairs and was available to Petitioner’s customers for their use.
Sales of food and drink are subject to the imposition of sales tax in all instances where the
sales are for consumption on the premises where sold. See Section 1105(d)(i)(1) of the Tax Law.
The exemption for certain food and drink contained in Section 1115(a)(1) of the Tax Law, e.g.,
potato chips, fruit drinks containing at least 70% of natural fruit juices, and ice cream, does not
apply to sales of food and beverages where the sales are for consumption on the premises of the
vendor where sold. See Section 1105(d)(i)(1) of the Tax Law.
Where food or drink sold may be consumed in or on the premises where a vendor conducts
his business and facilities such as tables and chairs are provided for customers, the sales are deemed
to be for on premises consumption. See Section 527.8(c) of the Sales and Use Tax Regulations. In
this case, there is no access into or out of Petitioner’s newsstand without walking into the vending
area where the tables and chairs are located. The tables and chairs located in this common area are
in close proximity to the newsstand location and the common area has been made available to
Petitioner for use by his customers. Accordingly, all of Petitioner’s sales of food and drink are
considered to have been for consumption on the premises, subject to sales tax under Section
1105(d)(i)(1) of the Tax Law, and it was proper for him to charge tax on such items. See Sections
527.8(c) and (d) of the Sales and Use Tax Regulations.

DATED: November 7, 2002

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.