Are items like foam meat trays, soaker pads, plastic wrap, deli containers, and grocery bags exempt from Utah sales tax when a grocery store buys them to package items sold to customers?

Plain-English summary

A grocery trade association asked the Commission to clarify the line between taxable "goods consumed" (supplies used up in preparing or maintaining products for sale, like cleaning supplies or bakery slip sheets) and tax-exempt packaging materials (items that leave the store with the customer's purchase), and specifically asked whether new House Bill 279 ("Sales Tax-Container Exemption") changed anything for items like foam meat trays, soaker pads, and plastic wrap.

The Commission's answer: HB 279's amendment to § 59-12-104(24) was a clarification of how containers and packaging materials had already been administered for years — it did not change the long-standing treatment of the items the association listed. All of the items are exempt from sales tax when purchased by the grocery store, as long as they're nonreturnable containers or packaging materials that go out the door with the customer along with the item sold. The Commission gave a concrete illustrative list: produce bags and twist ties, deli foam cups/bowls/plates, bakery boxes and cellophane tape, checkout grocery bags and sacks, meat department foam trays/soaker pads/plastic wrap/butcher paper, and salad-bar plasticware and napkins.

What this means for you

Grocery and retail store owners

Nonreturnable packaging that ends up in the customer's hands along with the product — bags, wraps, trays, cups, boxes, disposable utensils — can be purchased tax-free by your store under the container exemption. This is a purchasing-side exemption: you don't pay sales tax when buying these supplies, because the cost is built into the taxable retail sale of the product itself.

Accountants for retail and grocery clients

Keep the "goods consumed" vs. "packaging materials" distinction sharp: items consumed in preparing or maintaining a product (cleaning supplies, bakery slip sheets used during baking) are taxable purchases for the retailer, while items that leave with the customer's purchased good are exempt. Rule R865-19S-48 has further detail if a specific item's classification is unclear.

Common questions

Q: Do I owe sales tax when I buy foam trays or plastic wrap for my meat department?
A: No — these are exempt as nonreturnable packaging materials that leave the store with the customer's purchase.

Q: Did House Bill 279 expand the container exemption?
A: No. The Commission confirmed HB 279 only clarified the existing statutory language; it did not change how these packaging items had already been treated.

Q: What about supplies I use up in preparing food, like bakery slip sheets or cleaning supplies?
A: Those are treated differently — as "goods consumed" in preparing or maintaining a product for sale, they remain taxable purchases, separate from the packaging-materials exemption addressed in this ruling.

Q: Does this ruling apply to my store?
A: Not automatically. This is a private letter ruling binding only on the Commission as to this taxpayer's specific facts. Another taxpayer can't rely on it as binding, though it may carry weight in a later appeal depending on how closely the facts match.

Citations and references

Statutes and rules:

• Utah Code Ann. § 59-12-104(24) (nonreturnable container/packaging exemption, as clarified by House Bill 279)
• Utah Admin. Rule R865-19S-48 (containers and packaging materials guidelines)

Source

• Landing page: https://tax.utah.gov/commission/rulings/
• Original PDF: https://files.tax.utah.gov/tax/commission/ruling/94-025.pdf

Original ruling text

94-025

Request

W. Val Oveson,
Chairman

Utah State Tax
Commission

210 North 1950 West

Salt Lake City, Utah
84134

Dear Val:

This letter is a
request by our XXXXX, the XXXXX, for written clarification from the Tax
Commission on taxable versus nontaxable status for goods consumed in our retail
operations. The Utah State Tax
Commission�s publication �Sales Tax Information for Retail Grocery Stores,�
which came out in XXXXX cleared up a lot of the confusion in our industry. In the Commission�s publication starting on
page 5, there was a distinct line drawn.
If we consume a product in the maintenance or preparation of a consumer
good--the product or ingredient is taxable.
These include cleaning supplies, restroom supples, bakery slip sheets
used in baking, etc. If the product is
used to package the consumer good, such as plastic bags in the produce area,
foam cups for salads or soups in the deli area, boxes for cakes in the bakery,
grocery bags and sacks, then the packaging product is tax-free. Would you please review the section on
�Goods Consumed� and see if the legislation passed this year changes anything
in this section.

With the passage of
House Bill 279, �Sales Tax-Container Exemption,� earlier this year, we have
discovered some inconsistencies in the way our members are interpreting the changes
in the law. According to the bill,
�sales of nonreturnable containers, nonreturnable labels, nonreturnable bags,
nonreturnable shipping cases and nonreturnable casings to a manufacturer,
processor, wholesaler, or retailer for use in packaging tangible personal
property to be sold by that manufacturer, processor, wholesaler, or retailer�
is exempt form sales tax. Our members
purchase and use items such as foam trays, soaker pads or plastic wrap in the
meat department. According to some of
our accounting people, with the passage of HB 279 these products are now
exempt. What is your interpretation?

Please feel free to
contact me if you need further clarification on this issue. Thank you for your help.

Sincerely,

XXXXX

Re: Advisory Opinion - Sales Tax Application to
Purchases or Sales of Containers and Packaging Materials

Dear XXXXX:

Your request for an
advisory opinion as to how the Utah sales or use tax applies to your members� purchases
of items such as foam trays, soaker pads, plastic wrap, etc. was referred to
the Auditing Division for their analysis.

The division�s staff
recommendations are as follows:

1.
The change to Utah Code Annotated Section 59-12-104(24) by House Bill
279 was for clarification of the treatment of containers and packaging
materials as administered for many years.
The change in the statute does not change long-standing treatment of the
types of items enumerated in your letter.

2.
Of the items listed, all are exempt from the tax at time of purchase by
your members if they are, in fact, nonreturnable containers and packing
materials that �go out the door with the customer� with items sold. This treatment is not a change from past
practice.

3.
For clarification, items generally exempt under this treatment would
include consumer good packaging materials and containers such as plastic bags
in the produce area; twist ties for such bags; foam cups, bowls, plates etc.
for salads or soup in the deli area; bodes and cellophane tape in the baker;
grocery bags and sacks at the checkout area; foam trays, soaker pads, plastic
wrap, butcher paper, etc. in the meat department; and plastic knives, forks,
spoons and paper napkins at the salad bar.
Rule R865-19S-48 provides further guidelines and is attached to this
response for your review.

Based upon the facts
presented in your letter, we are in agreement with the Auditing Division�s
recommendations. Obviously, if there
are deviations from these facts, this opinion may be negated.

Respectfully,

Alice Shearer

Commissioner