Are refrigerated bagged or packaged salads exempt from Colorado sales tax as food, or are they taxable 'prepared salads'?

Plain-English summary

A retailer sells three kinds of refrigerated salads and asked which are exempt from Colorado sales tax as food. The answer comes down to a single statutory trap: Colorado exempts food for home consumption, but it expressly excludes "prepared salads" from the definition of food. So the more "finished" the salad, the more likely it's taxable.

Colorado exempts food sold for domestic home consumption (§ 39-26-707) and ties its definition of "food" to the federal SNAP/WIC definition (§ 39-26-102(4.5); 7 U.S.C. § 2012(k)), which covers food for home consumption but not hot foods for immediate consumption. On top of that federal definition, Colorado statutorily removes "prepared salads" (§ 39-26-102(4.5)(a)). And because tax exemptions are construed narrowly, the Department resolves doubt against exemption. Here's how the three products sorted out:

1. Bagged salads — lettuce/vegetables, NO dressing, NO utensils (advertised ready-to-eat, triple-washed): likely EXEMPT food for home consumption. These still require some preparation — no dressing is included and you wouldn't eat lettuce straight from the bag — so the Department would not view them as "prepared salads," and they're commonly bought for home, not immediate, consumption.

2. Bagged salad KITS — lettuce, vegetables, fruit, nuts, crisp noodles, AND salad dressing (no utensils): likely TAXABLE. A bag that contains all the ingredients of a salad, including the dressing, is "likely a 'prepared salad'" — and even if it's eaten at home, the statutory exclusion for prepared salads makes it taxable.

3. Bowl-shaped packaged salad — lettuce, vegetables, dressing, a UTENSIL, may include meat: TAXABLE on two independent grounds. It's a "prepared salad" (so not "food"), and it appears to be made for immediate consumption. Either rationale alone defeats the food exemption.

The Department stressed it cannot make a specific determination in a GIL — but the dressing-and-utensil line is the practical pivot.

What this means for you

Grocers and packaged-food retailers

The dividing line is whether the package is a complete, ready-to-eat salad. Greens and veggies with no dressing = exempt food (the buyer still has to finish it). Add the dressing (a kit) and you've likely created a taxable "prepared salad"; add a utensil (a grab-and-go bowl) and it reads as immediate consumption too. If you sell a mix, you'll likely have to tax some SKUs and exempt others — don't apply one rate across the whole salad case.

Caterers and prepared-food sellers

"Prepared salads" are carved out of Colorado's food exemption by statute, so a fully assembled, dressed salad is taxable even when it's clearly meant to be taken home. Bundling in dressing and utensils pushes a product squarely into the taxable column.

Accountants and tax professionals

Run the two-step: (1) is it "food" under the SNAP-based definition (§ 39-26-102(4.5); 7 U.S.C. § 2012(k))? and (2) does the statutory "prepared salads" exclusion (§ 39-26-102(4.5)(a)) or the immediate-consumption test knock it back out? Narrow construction of exemptions (Security Life; Charnes) means borderline products get treated as taxable. Remember locals may elect to tax even exempt food (§ 29-2-105). This is a GIL — guidance, not a determination.

Common questions

Q: Are bagged salads taxable in Colorado?
A: It depends what's in the bag. A bag of lettuce and vegetables with no dressing and no utensils is likely exempt food for home consumption. A bagged "kit" that includes the dressing is likely a taxable "prepared salad."

Q: Why does the dressing matter so much?
A: Colorado's law specifically excludes "prepared salads" from the definition of tax-exempt food. A bag containing all the ingredients of a salad — including dressing — is treated as a prepared salad, so it's taxable even if eaten at home. Without dressing, the product still needs preparation and is treated as exempt food.

Q: What about a grab-and-go salad bowl with a fork?
A: Taxable. A bowl with lettuce, vegetables, dressing, and a utensil (and maybe meat) is both a "prepared salad" and made for immediate consumption — either reason alone makes it ineligible for the food exemption.

Q: Could my city still tax the exempt bags?
A: Yes. Even where the state food exemption applies, local jurisdictions may elect to tax food (§ 29-2-105), and self-collected home-rule cities set their own rules. Check the DR 1002 listing and each home-rule city.

Q: Can I rely on this letter?
A: No. This is a General Information Letter — a general good-faith discussion that makes no specific determination and binds no one. For a binding answer, request a private letter ruling under Reg. 24-35-103.5.

Citations and references

Statutes:
- § 39-26-707, C.R.S. — food for home consumption exemption
- § 29-2-105, C.R.S. — local-government option to tax food
- § 39-26-102(4.5), C.R.S. — definition of "food" (tied to SNAP/WIC)
- § 39-26-102(4.5)(a), C.R.S. — statutory exclusion of "prepared salads" from "food"
- 7 U.S.C. § 2012(k) — federal SNAP definition of food for home consumption

Regulation and cases referenced:
- Reg. 39-26-102.4.5(b)(9) (dietary supplements not eligible for the food exemption)
- Security Life & Accident Co. v. Heckers, 177 Colo. 455, 495 P.2d 225 (1972) — exemptions narrowly construed
- Regional Transp. Dist. v. Charnes, 660 P.2d 24 (Colo. App. 1982)
- Reg. 24-35-103.5 (general information letters vs. private letter rulings)

Related Colorado rulings (food exemption):
- [[gil-13-017-seeds-and-plants-food-and-dietary-supplements-medical-supplies-test-ki]]
- [[gil-15-019-nonessential-food-articles]]
- [[gil-18-013-sales-tax-on-food-platters-and-lids]]
- [[plr-23-003-sales-and-use-tax-on-food-for-home-consumption]]
- [[plr-25-004-sales-tax-exemption-for-items-sold-by-bakery]]

Source

• Landing page: https://tax.colorado.gov/sales-use-tax-letter-rulings
• Original PDF: https://tax.colorado.gov/sites/tax/files/documents/GIL-13-028.pdf

Original ruling text

Office of Tax Policy
P.O. Box 17087
Denver, CO 80217-0087
[email protected]

GIL-13-028
November 27, 2013
XXXXXXXXXXXXXXX
ATTN: XXXXXXXXXXX
XXXXXXXXXXXXXXX
XXXXXXXXXXXXXXX
Re: Bagged or Packaged Salads
Dear XXXXXXXXX,
You submitted on behalf of a XXXXXXXXXXXX (“Company”) a request for guidance to
determine the taxability of bagged or packaged salads.
The Colorado Department of Revenue (“Department”) issues general information letters and private
letter rulings. A general information letter provides a general overview of the relevant tax issues
and is not binding on the Department. A private letter ruling provides a specific determination for a
specific set of facts, is binding on the Department but not on the taxpayer, and requires payment of
a fee. For more information about general information letters and private letter rulings, please see
Department regulation 24-35-103.5 at www.colorado.gov/revenue/tax > Tax Library > Rulings.
The Department initially treats your request as one of a general information letter. If you would like
the Department to issue a private letter ruling on the issues you raise, you can resubmit a request
and fee in compliance with regulation 24-35-103.5. It is important to remember that general
information letters, such as this one, are general discussions of tax law and are not a determination
of the tax consequence of any particular action or inaction.
Issue
Are certain refrigerated bagged or packaged salads sold by Company exempt from Colorado sales
and use tax as food?
Background
Company sells certain refrigerated bagged or packaged salads at retail stores in Colorado. Several
bagged salads consist of one or more varieties of lettuce and may include additional vegetables but
do not include salad dressing or utensils. These bagged salads are advertised as ready to eat,
and, depending on the salad, Company states that the contents are triple washed. There are also
bagged salads kits that include lettuce, vegetables, fruit, nuts, crisp noodles, and salad dressing but

no utensils. Lastly, there are packaged salads in the shape of a bowl that consist of lettuce,
vegetables and salad dressing and include a utensil, and may include meat.
Discussion
Food sold for domestic home consumption is exempt from sales and use taxes levied by the
State of Colorado.1 State-administered local tax jurisdictions have the choice to tax food.2
Colorado defines “food” by adopting the definition of food used by the U.S. Department of
Agriculture’s (USDA) Supplemental Nutrition Assistance Program (SNAP) and Woman, Infants
and Children (WIC) Program.3 Colorado incorporates these federal requirements and
limitations in its regulation of food.4
Food is defined under federal law5 (and, therefore, under Colorado law for sales and use tax
purposes), which states, in pertinent part:
(1) any food or food product for home consumption except alcoholic beverages,
tobacco, and hot foods or hot food products ready for immediate consumption other
than those authorized pursuant to clauses (3), (4), (5), (7), (8), and (9) of this
subsection;
...
In addition to this federal requirement, Colorado has, by statute, excluded “prepared salads”
from the definition of food.6
As an initial matter, we note that exemptions from tax are narrowly construed.7 Unless the
exemption clearly applies, the exemption must be denied.
It appears that the bagged salads that do not include salad dressing or utensils would qualify
as food for home consumption. These salads still require some level of preparation because
no dressing is included and consumers would not, presumably, eat the lettuce and
vegetables out of the bag. Thus, we would not view these as prepared salads. Moreover,
the product is commonly understood to be used for home consumption as opposed to
immediate consumption.
Bagged salad that contains all the ingredients of a prepared salad, including the salad
dressing, is likely a “prepared salad” within the meaning of the statutory term. Although it
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§39-26-707, C.R.S.
§29-2-105, C.R.S. For a list of cities, counties, and special districts and the taxability of food in those
jurisdictions, go to www.Colorado.gov/revenue/tax and click on Forms > Sales Forms > DR 1002.
See, §39-26-102(4.5), C.R.S. and 7 U.S.C. §2012(k)
With respect to dietary supplements, Department regulation 39-26-102.4.5(b)(9) states that “These products
[vitamins, minerals and other dietary deficiency correctors] serve as supplements to food or food products rather
than as food and, therefore, are not eligible for the food exemption. Because essential vitamins and minerals
occur naturally in foods, a good diet will include a variety of foods that together will supply all nutrients needed.
Since these products serve as deficiency correctors or therapeutic agents to supplement diets deficient in
essential nutrition rather than as foods, they are not eligible.” The distinction here can be difficult to apply.
Because of this difficulty, and as discussed in footnote 7, below, the USDA now relies on the Federal Drug
Administration (FDA) label selected by the manufacturer to make this distinction.
7 U.S.C. §2012(k)
§39-26-102(4.5)(a), C.R.S.
Security Life & Accident Co. v. Heckers, 177 Colo. 455, 495 P.2d 225, 226 (1972). Regional Transp. Dist. v.
Charnes, 660 P.2d 24, 25 (Colo. App. 1982).

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may be the case that this prepared salad is commonly understood to be consumed at home
and an exempt “food”, it is not exempt because of the express statutory exclusion for
prepared salads from the definition of “food”.
The packaged salad in the shape of a bowl that contains a variety of lettuce, vegetables,
salad dressing, a utensil, and may include meat is a “prepared salad” (and, therefore, not
“food”) but also appears to be made for immediate consumption. Under either rationale, this
product is not “food” eligible for the food exemption.
Lastly, it is worth restating that the Department is not making and cannot make a specific
determination as to whether these products are exempt or taxable in the context of a general
information letter.
Miscellaneous
This letter represents the good faith opinion of Department personnel who are knowledgeable on
state taxes issues. However, the Department does not make a specific determination here on any
of the issues raised and the Department is not bound by this general information letter.
The Department administers state and state-administered local sales and use taxes. This letter
does not address sales and use taxes administered by home-rule cities and home-rule counties.
You may wish to consult with local governments which administer their own sales or use taxes
about the applicability of those taxes. Visit our web site at www.colorado/revenue/tax for more
information about state and local sales taxes.
Enclosed is a redacted version of this letter. Pursuant to statute and regulation, this redacted letter
will be made public within 60 days of the date of this letter. Please let me know in writing within that
60 day period whether you have any suggestions or concerns about this redacted letter.
Sincerely,
Office of Tax Policy
Colorado Department of Revenue

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