Which supermarket bags and food-packaging supplies were taxable at checkout, produce, bakery, and meat departments?

Plain-English summary

Paper and plastic bags used to sack groceries at checkout were taxable. Produce-department bags were also taxable, whether customers filled them or store personnel used them for lettuce and other produce.

Bakery bags, cake pans, cake domes, and similar packaging qualified for exemption when the store baked its own goods. If the store bought already baked products, the packaging was taxable. The supplier was to treat the bakery supplies as taxable until the store provided a properly completed exemption certificate stating that it produced its own baked goods.

Foam trays, meat film, meat pads, butcher paper, and freezer paper used in the meat department qualified for exemption because cutting and grinding whole meat into products such as ground meat, roasts, and steaks was processing. The meat department could issue an exemption certificate.

What this means for you

Department and use controlled the result; supermarket packaging was not one uniform category. A supplier needed a valid certificate before treating the qualifying bakery or meat-processing supplies as exempt.

Common questions

Were checkout bags taxable? Yes. Were produce bags taxable? Yes. When was bakery packaging exempt? When the store baked its own goods and documented the exemption. Were meat-department trays and wrapping exempt? Yes, for the described processing use. Did the letter decide every item named in STAR's subject line? No; it did not separately discuss twist ties, deli, cheese, bulk, or shrink-wrap uses.

Citations and references

• The letter does not identify a numbered statute or administrative rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9110L1136E10

Original ruling text

October 9, 1991

Dear **:

Thank you for your recent letter regarding the taxability of wrapping and
packaging supplies. You state that you sell to various supermarkets and asked
about the following items:

Question: Are the paper and plastic bags used to "sack" the groceries at the
check-out stand taxable?

Answer: Yes

Question: Are the bags that are used in the produce department and bakery
department in which the customer places the merchandise taxable?

Answer: The bags used in the produce department are taxable.

The bags, cake pans, cake domes, etc., used in bakery department will qualify
for exemption if the store does its own baking. If the store buys their bakery
goods already baked, the bags are taxable.

It is the store's responsibility to claim the exemption, if applicable. Your
position should be that the bags are taxable until the store presents you with
a properly completed exemption certificate for the bakery department stating
that they produce their own bakery goods.

Question: Are the foam meat trays, meat film, meat pads, butcher paper, and
freezer paper used in the meat department taxable?

Answer: For tax purposes, the meat department is "processing," in that they
take whole meat and grind and cut it into different types of meat products,
such as ground meat, roast, steaks, etc.. The meat department may issue you an
exemption certificate in lieu of tax.

Question: Are the bags that lettuce and other produce are put in by store
personnel, not the customer, taxable?

Answer: Yes

If you have any questions or need more information, you may call me toll free
at 1-800-252-5555, extension 3-4633. The regular number is 512/463-4633.

Sincerely,

Wanda Hutcheson
Tax Administration Division