Are pre-cooked, packaged meals that a remote seller ships to Colorado customers — meals that need further cooking and aren't sold hot or with utensils — exempt from Colorado sales and use tax as food for home consumption?
Plain-English summary
The Colorado Department of Revenue ruled that a remote seller's pre-cooked, packaged meal products are exempt from Colorado state sales and use tax as food for home consumption. The seller had no physical presence in Colorado and sold through its website; a third party cooked, air-chilled, and packaged the meals with FDA nutrition labels, then shipped them in insulated cold-pack boxes to customers, who had to finish cooking them by stovetop, oven, or microwave.
Food is tangible personal property and is taxable unless an exemption applies. Colorado's food exemption ties the definition of "food" to the federal SNAP (food stamp) definition — food for home consumption, excluding hot foods and food ready for immediate consumption. The Department walked through why these meals qualify:
- They're for home consumption, not marketed or intended for immediate eating — they require further preparation.
- They're not "prepared food." Prepared food is food sold hot, kept warm to be eaten right away, or marketed to be heated on the premises. These meals are pre-cooked then air-chilled, sold cold, and shipped — none of those triggers apply.
- They're not the specifically excluded items. Colorado pulls prepared salads and salad bars, packaged and unpackaged cold sandwiches, and deli trays out of the "food" definition. The seller's meals (protein, vegetables, whole grains) don't include those.
- They're not sold with utensils or from a restaurant, café, deli, kiosk, grocery, or mobile facility.
So the meals are exempt food for home consumption. The Department added the usual local-tax caveat: food for home consumption is a local-option exemption, so the seller must check whether each state-administered city, town, or county has adopted it. Colorado's GIS tool and the DR 1002 publication show which jurisdictions exempt food for home consumption; self-collected home-rule cities set their own rules.
What this means for you
Meal-delivery and remote food sellers
If you ship pre-cooked, packaged meals that customers finish cooking at home — sold cold, with nutrition labels, and not hot or with utensils — Colorado generally treats them as exempt food for home consumption, even if you have no Colorado location and use a third party to produce and ship them. The exemption is about the nature of the food (home vs immediate consumption), not where the seller sits. Watch the excluded categories, though: prepared salads, cold sandwiches, and deli trays are carved out and remain taxable.
Grocers, delis, and prepared-food businesses
The line is home consumption vs immediate consumption. Cold, packaged food meant to be prepared later is exempt; food sold hot, kept warm for immediate eating, marketed to be heated on premises, or served with utensils is taxable "prepared food." And remember the specific statutory exclusions — salads, salad bars, cold sandwiches, deli trays — are taxable regardless.
Accountants and tax professionals
The exemption flows from § 39-26-707 and the SNAP-linked definition in § 39-26-102(4.5)(a), 7 U.S.C. § 2012(k), and 7 C.F.R. § 271.2, applied through 1 CCR 201-4, Rule 39-26-102(4.5). The state exemption is firm here; the open variable is local tax, because food for home consumption is a local-option exemption under § 29-2-105(1)(d)(I)(C) — use the state GIS tool and DR 1002 to determine each jurisdiction. Home-rule cities are outside this ruling.
Common questions
Q: Are shipped/meal-kit foods taxable in Colorado?
A: Cold, pre-cooked, packaged meals that need further preparation and aren't sold hot or with utensils are exempt food for home consumption at the state level. Hot or ready-to-eat "prepared food," and excluded items like salads, cold sandwiches, and deli trays, are taxable.
Q: Does it matter that the seller is out of state and uses a third-party producer?
A: No. The exemption turns on whether the food is food for home consumption, not on where the seller is located or who physically makes and ships it. (Remote sellers still have their own collection obligations where tax does apply.)
Q: Do I still have to worry about local sales tax?
A: Yes. Food for home consumption is a local-option exemption, so a state-administered city, town, or county taxes it unless it has adopted the exemption. Check Colorado's GIS tool and the DR 1002 publication; self-collected home-rule cities set their own rules.
Q: Does this ruling apply to my business?
A: Not automatically. A private letter ruling binds the Department only for the taxpayer and facts it was issued to and explicitly cannot be relied on by anyone else. It shows the Department's reasoning, but your facts may differ.
Q: Does this cover city sales tax too?
A: Not for self-collected home-rule cities. The Department administers state and state-administered local sales tax only. Home-rule cities set their own rules and may tax differently. Check with each home-rule city.
Citations and references
Statutes and rules:
- § 39-26-104(1)(a), C.R.S. (imposition of sales tax on retail sales)
- § 39-26-102(15)(a)(I), C.R.S. (definition of "tangible personal property")
- § 39-26-707(1)(e), (2)(d), C.R.S. (food exemption)
- § 39-26-102(4.5)(a), C.R.S. (definition of "food," tied to SNAP; excludes salads, cold sandwiches, deli trays)
- 7 U.S.C. § 2012(k); 7 C.F.R. § 271.2 (federal SNAP definition of food for home consumption)
- 1 CCR 201-4, Rule 39-26-102(4.5) (home vs immediate consumption test)
- § 29-2-105(1)(d)(I)(C), C.R.S. (food for home consumption as a local-option exemption)
- Colorado GIS tool (tax.colorado.gov/GIS-info) and Department publication DR 1002 (local exemption lookup)
Source
- Landing page: https://tax.colorado.gov/sales-use-tax-letter-rulings
- Original PDF: https://tax.colorado.gov/sites/tax/files/documents/PLR-23-003.pdf
Original ruling text
COLORADO
Department of Revenue
iS
Taxation Division
Office of Tax Policy
P.O. Box 17087
Denver, CO 80217-0087
[email protected]
PLR 23-003
June 14, 2023
XXXXXXXXX
XXXXXXXXX
XXXXXXXXX
XXXXXXXXX
Via Electronic Mail: XXXXXXXXXX
Re: Sales and Use Tax on Food for Home Consumption
Dear XXXXXXXXX:
You submitted a request for a private letter ruling on behalf of XXXXXXXXX (“Company”),
regarding the sales and use tax on food for home consumption, to the Colorado Department of
Revenue (“Department”) pursuant to 1 CCR 201-1, Rule 24-35-103.5. This letter is the
Department's private letter ruling. This ruling is binding on the Department to the extent set forth
in 1 CCR 201-1, Rule 24-35-103.5. It cannot be relied upon by any taxpayer other than the
taxpayer to whom the ruling is made.
Issue
Whether the food products sold by Company are food for home consumption that is exempt
from state sales and use tax.
Conclusion
Yes, the food products sold by Company are food for home consumption and are therefore
exempt from state sales and use tax.
Background!’
The Company is a remote seller of food products and has no physical presence in Colorado.
The Company does not have any retail locations.
The Company is not a restaurant, café, lunch counter, cafeteria, hotel, social club, nightclub,
cabaret, resort, snack bar, caterer, carry out shop or similar place of business. It is also not a
pushcart, motor vehicle, or other mobile facility. The food products are not sold from a location
1 Paragraph (4)(b)(ii) of 1 CCR 201-1, Rule 24-35-103.5 requires the request for a private letter ruling to include a
statement of facts. This section generally recites the statement of facts provided in the request, which is not an
indication that the Department found such facts relevant to its analysis. Some relevant facts may be omitted to
ensure confidentiality as required by section 24-35-103.5(5), C.R.S. The terms used in this section to describe the
factual background are generally those of the requester.
PLR 23-003
June 14, 2023
Page 2
in Colorado that has a kitchen or that actively sells food on a to-go basis such as a salad bar,
kiosk, or grocery store location. The food products are also not sold by a meal preparation
kitchen where a customer may walk in and either prepare their own food or have someone
prepare the food for them. The food products are not sold with utensils.
The food products sold by the Company are purchased from an independent third party on a per
unit basis and resold to its customers through the Company’s website. The food products are
pre-cooked, packaged, and shipped to the Company’s customers by the third party. The third-
party purchases all the food and food ingredients and then creates the food products with its
own employees located outside Colorado. Once the food products have been cooked and
cooled by the third party, the food products are then air-chilled and packaged with an attached
nutrition label (which follows U.S. Food and Drug Administration standards) and placed in
insulated packaging with cold-packs for shipment to a customer’s mailing address through
postal services. The food products are not delivered by an on-demand delivery service.
Typical food products include a meat or plant-based protein, vegetables, and whole grains and
do not include prepared salads. The Company’s website lists several different meal plans that
offer variations based on the customer’s specific dietary needs or preferences. Customers are
not able to request custom food products.
The Company’s food products are not intended for, nor are they marketed for, immediate
consumption and require further preparation to be eaten as intended. Instructions are provided
to customers to prepare the food by stovetop, oven, or microwave.
Discussion
Colorado generally imposes a sales tax on retail sales of tangible personal property.? The term
“tangible personal property” means “corporeal personal property,” and generally embraces all
goods, wares, merchandise, products and commodities, and all tangible or corporeal things and
substances that are dealt in and capable of being possessed and exchanged.? Because food is
tangible personal property, it is subject to state sales and use tax unless a specific exemption
applies.
Colorado exempts the sale and use of food,’ which is defined as “food for home consumption as
defined in 7 U.S.C. sec. 2012 (k), as amended, for purposes of the federal food stamp
program.”° The food stamp program referred to in Colorado statute is the U.S. Department of
Agriculture’s (USDA) Supplemental Nutrition Assistance Program (SNAP). SNAP defines “food”
as “any food or food product for home consumption except . . . hot foods or hot food products
ready for immediate consumption. . . ."° The Secretary of Agriculture further describes “eligible
food” under SNAP as “[a]ny food or food product intended for human consumption except .. .
hot foods and hot food products prepared for immediate consumption. . . .”” According to the
2 Section 39-26-104(1)(a), C.R.S.
3 Section 39-26-102(15)(a)(I), C.R.S.
4 Section 39-26-707(1)(e) and (2)(d), C.R.S.
5 Section 39-26-102(4.5)(a), C.R.S.
67 U.S.C. § 2012(k).
7 Paragraph (1) of the definition of “eligible food” in 7 C.F.R. § 271.2.
PLR 23-003
June 14, 2023
Page 3
federal Food and Drug Administration (FDA), food products intended for human consumption
and offered for sale, not including food for immediate consumption, must include nutrition
labeling.®
Because of Colorado’s reliance on the USDA’s definition of food for purposes of the sales and
use tax exemption, the exemption for food generally includes food sold for home consumption,
but the exemption for food does not include prepared food or food for immediate consumption.
Food sold for home consumption includes, among other things, meat, poultry, fish, bread,
cereals, vegetables, and fruits.? However, Colorado specifically excludes prepared salads and
salad bars, packaged and unpackaged cold sandwiches, and deli trays from the definition of
food.'°
Prepared food or food marketed for immediate consumption, and therefore not exempt, includes
food that is hot at the point of sale, food kept above room temperature to make it palatable and
suitable for immediate consumption, food marketed to be heated on the premises whether or
not hot at the point of sale."
The Company is a remote seller of food products that are pre-cooked, packaged with an
attached FDA-approved food label, and shipped to the Company’s customers by a third party.
Typical food offerings include a meat or plant-based protein, vegetables, and whole grains, and
do not include prepared salads or cold sandwiches. The food products require further
preparation to be consumed as intended.
The Company’s food products are food for home consumption and are not prepared food or
food marketed for immediate consumption. Therefore, the Company’s food products are exempt
from the state sales and use tax.
The Colorado Revised Statutes authorize cities, towns, counties, and certain types of special
districts to impose a sales tax.'? These sales taxes are collected, administered, and enforced by
the Department in the same manner as the state sales tax.'* In most cases, these local sales
taxes are imposed upon the same property and services subject to the state sales tax." Cities,
towns, and counties are, however, permitted to deviate from the state sales tax base with
respect to certain exemptions.'® Food for home consumption is one of the local option
exemptions.'® Therefore, the Company will need to determine whether state-administered local
governments have adopted this exemption in calculating any local tax due. The Company can
8 21 C.F.R. § 101.9)(a) and (j).
® Paragraphs (1)(c)(4), (1)(c)(6), and (1)(c)(9) of 1 CCR 201-4, Rule 39-26-102(4.5).
10 Section 39-26-102(4.5)(a) C.R.S.
11 Paragraph (1)(c)(4) of 1 CCR 201-4, Rule 39-26-102(4.5).
12 Section 29-2-102, C.R.S. (regarding incorporated towns and cities); 29-2-103, C.R.S. (regarding counties). The
taxing authority for those entities that the Department refers to generally as “special districts” is found in the statutes
permitting the establishment of the entity. See, e.g., section 32-9-119(2)(a), C.R.S. (empowering the board of the
Regional Transportation District to impose a sales tax); 32-13-107(1)(a), C.R.S. (same with respect to the board of
the Scientific and Cultural Facilities District); 43-4-605(1)(j)(|) (same with respect to regional transportation
authorities).
13 Section 29-2-106, C.R.S. For special districts, refer to the enabling statutes as described in note 12, above.
14 Section 29-2-105, C.R.S. (with respect to cities and towns). For special districts, refer to the enabling statutes as
described in note 12, above.
15 Section 29-2-105(1)(d), C.R.S.
16 Section 29-2-105(1)(d)(I)(C), C.R.S.
PLR 23-003
June 14, 2023
Page 4
utilize the state-supplied geographic information system (https://tax.colorado.gov/GIS-info) to
search for rate and taxability information (select “food for home consumption” from the product
list). Local exemption information is also available in Department publication DR 1002.
Miscellaneous
This ruling is premised on the assumption that Company has completely and accurately
disclosed all material facts, that all representations are true and complete, and that Company
has otherwise complied with the requirements of section 24-35-103.5, C.R.S., and the rules
promulgated pursuant thereto. The Department reserves the right, among others, to
independently evaluate Company’s facts, representations, and assumptions. The ruling is null
and void if any such fact, representation, or assumption is incorrect and has a material bearing
on the conclusions reached in this ruling. This ruling is binding on the Department and is subject
to modification or revocation, in accordance with 1 CCR 201-1, Rule 24-35-103.5.
The Department administers state and state-administered local sales and use taxes. This letter
does not address sales and use taxes administered by self-collected home-rule cities. You may
wish to consult with those local governments that administer their own sales or use taxes about
the applicability of those taxes. Visit our website at tax.colorado.gov for more information about
state and local sales taxes.
Thank you for your request.
Sincerely,
Office of Tax Policy
Colorado Department of Revenue
This ruling cannot be relied upon by any other taxpayer other than the taxpayer to whom
the ruling is made.