Were bakery items sold by outlets with seating exempt when packaged and recorded for off-premises consumption?

Plain-English summary

The Florida Department of Revenue concluded that bakery products sold by retail bakery outlets with eating facilities were exempt when packaged to show off-premises consumption and separately recorded as exempt at the point of sale.

The result applied regardless of quantity, including six, twelve, two dozen, twenty-five, or fifty items. Sealed, taped, stapled, glued, or wrapped packaging could overcome the presumption that small-quantity bakery sales at an establishment with seating were for on-premises consumption.

The taxpayer also had to use a special POS key or another permitted method to account separately for the exempt sales. Coffee beans, ground coffee, and K-cup portion packs not sold for immediate consumption were exempt food products.

What this means for you

Retail bakeries with seating

Packaging and transaction records matter as much as quantity. Use sealed takeaway packaging and a distinct POS treatment for exempt off-premises sales.

Accountants and operators

Do not apply a blanket tax rule to all bakery transactions; separately track on-premises and properly documented takeaway sales.

Common questions

Q: Were small bakery orders automatically taxable?
A: No, if the packaging and records established off-premises consumption.

Q: Were packaged coffee beans and K-cups exempt?
A: Yes.

Citations and references

• Fla. Stat. §§ 212.08(1) and 213.22
• Fla. Admin. Code r. 12A-1.011(3)(c)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 12A-028

Original ruling text

Interim
Executive Director
Marshall Stranburg

QUESTION: Whether the sale of bakery products in retail bakery outlets for consumption
off the seller’s premises are subject to sales tax imposed under Chapter 212, F.S.
ANSWER: Regardless of quantity, sales of the bakery products for consumption off the
premises are exempt when packaged in a manner consistent with an intention by the customer to
consume the products off the seller’s premises and the sale is recorded through the POS using a
special key to record the exempt sale. Taxpayer’s sales of coffee beans, ground coffee, and “kcup portion packs” are exempt as food products.

December 14, 2012

Re:

Technical Assistance Advisement – TAA 12A-028
Sale of Bakery Products
Taxpayer Name: XXX
Taxpayer ID Number: XXX
Sales and Use Tax
Section 212.08(1), Florida Statutes (F.S.)
Rule 12A-1.011, Florida Administrative Code (F.A.C.)

Dear XXX:
This response is in reply to your letter to the Department, dated XXX, in which you are
requesting the Department's issuance of a Technical Assistance Advisement ("TAA") pursuant to
s. 213.22, F.S., and Chapter 12-11, F.A.C., regarding whether the sale of bakery products in
retail bakery outlets for consumption off the seller’s premises are subject to sales tax imposed
under Chapter 212, F.S. An examination of your petition has established that you have complied
with the statutory and regulatory requirements for issuance of a TAA. Therefore, the
Department is hereby granting your request for issuance of a TAA.
As provided in Section 213.22(1), F.S., a technical assistance advisement may be issued to a
taxpayer who requests an advisement relating to the exemptions in Section 212.08(1) or (2), F.S.,
at any time. Technical assistance advisements shall have no precedential value except to the
taxpayer who requests the advisement and then only for the specific transaction addressed in the
technical assistance advisement, unless specifically stated otherwise in the advisement.

Child Support Enforcement – Ann Coffin, Director  General Tax Administration – Maria Johnson, Director
Property Tax Oversight – James McAdams, Director  Information Services – Tony Powell, Director

www.myflorida.com/dor
Tallahassee, Florida 32399-0100

Technical Assistance Advisement
Page 2

PRELIMINARY FACTS
Taxpayer is a Florida limited liability company and owns and operates 14 retail bakery outlets in
southwest Florida. Each outlet is a “XXX” franchisee and operates a “XXX” outlet. In addition
to the retail outlets, Taxpayer owns XXX, a Florida limited liability company that operates a
central manufacturing location (bakery). The bakery manufactures fresh bakery products for,
and delivers them to, its affiliated retail outlets. The bakery also provides products to other
affiliated retail outlets as well as to the franchise operations of other XXX franchisees.
As stated in your request, more than XXX percent of the retail business is made up of baked
goods and coffee and all of the retail outlets have seating. The seating is sparse in all of the
shops and almost half of the business at the retail outlets is derived from drive-thru service.
XXX of the XXX retail outlets are licensed by the Department of Agriculture as a “Retail Bakery
with Food Service or Specialty Food Shops” and XXX are licensed by the Department of
Business and Professional Regulation as “Seating Food Service.” You assert that these XXX
locations had ice cream service which has been extracted, and Taxpayer expects that in 2013
these locations will be licensed by the Department of Agriculture as a Retail Bakery with Food
Service or Specialty Food Shop. The bakery is licensed by the Department of Agriculture as a
Wholesale Bakery.
As stated in your request for technical assistance:
. . . the vast majority of the food products sold by these outlets are bakery
products, such as doughnuts, muffins, bagels and croissants, and related
beverages, such as coffee or tea. Although some sandwiches may be sold, sales
tax is charged and collected for sandwiches, even though sandwiches are made
with bakery products. Wait service and full meals are not offered, and the
Division of Hotels and Restaurants does not license these entities. Therefore, the
retail outlets are not restaurants but are bakeries or pastry shops.
The retail outlets sell bakery products for human consumption on and off their
premises. When customers purchase bakery products in quantities of five or less,
sales tax is charged and collected. When bakery products are sold in quantities of
six or more, the customer is given the product in special packaging that is secured
with tape or a seal/sticker, and the sale is recorded through the POS using a
special key or keys for these transactions. This procedure permits [Taxpayer] to
establish that bakery products are sold in a manner consistent with the intent by its
customers to consume the product off the premises, and the retail outlets are able
to separately account for non-taxable from taxable sales.

Technical Assistance Advisement
Page 3

REQUESTED RULING
You are requesting a ruling concerning whether the retail bakery outlets are required to collect
sales tax on bakery items sold in quantities of six or more as follows:
half dozen bagels; dozen bagels; half dozen donuts; dozen donuts; two dozen donuts; 25 XXX;
50 XXX when the customer is given the product in special packaging that is secured with tape or
a seal/sticker, and the sale is recorded through the POS using a special key to establish the
products are sold for consumption off the premises. You also seek guidance concerning whether
Taxpayer is required to collect sales tax on the sale of coffee beans, ground coffee and “k-cup
portion packs,” which are not sold for immediate consumption.
LAW
Pursuant to Section 212.08(1), F.S., there are exempted from tax imposed by this Chapter, 212,
F.S., food products for human consumption. The term "food products," as defined in Section
212.08(1)(b), F.S., means edible commodities, whether processed, cooked, raw, canned, or in
any other form, which are generally regarded as food. Food products include coffee and coffee
substitutes, meat and meat products, baked goods, fish and seafood products, vegetables and
vegetable products, fruit and fruit products.
Section 212.08(1), F.S., exempts the sale of bakery products when they are sold by bakeries,
pastry shops, or like establishments for consumption off the seller’s premises. As provided in
Rule 12A-1.011(3)(c)2., F.A.C.:
For the purpose of this paragraph, there shall be a rebuttable presumption that the
sale of bakery products by bakeries, pastry shops, or like establishments that have
eating facilities are taxable when:
a. Such bakery products are sold in quantities of five (5) or fewer
items; or
b. The bakery products sold, regardless of the quantity, are not
packaged in a manner consistent with an intention by the customer
to consume the products off the seller’s premises.
As stated in Rule 12A-1.011(3)(c)3., F.A.C., bakery products that are sold, regardless of the
quantity, in packaging that is glued, stapled, wrapped, or sealed are examples of packaging
consistent with an intention by the customer to consume products off the seller’s premises. As
provided in Rule 12A-1.011(3)(c)4., F.A.C.:

4. Bakeries, pastry shops, or like establishments that have eating facilities and
   make tax-exempt sales of bakery products that are for consumption off the
   premises are required to separately account for the tax-exempt sales of bakery
   products for consumption off the premises.

Technical Assistance Advisement
Page 4

a. Examples of methods to separately account for tax-exempt sales
of bakery products for consumption off the premises are: using
sales invoices which contain documentation that the sale of the
bakery product is for consumption off the premises; using a
separate key on a cash register to record tax-exempt sales of
bakery products; or using a separate cash register to record taxexempt sales of bakery products.
b. Example. A bakery operates an establishment with eating
facilities. The bakery sells donuts, toasted bagels, and other
pastries, as well as coffee and other drinks. The bakery sells
bakery products to patrons who take the products home for
consumption in sealed containers. Products sold for consumption
on the premises are served to the customers on trays. The bakery
uses separate keys on its cash registers to account for the sales of
tax-exempt bakery products to patrons who purchase the products
for consumption off the premises in sealed containers separately
from the accounting for taxable sales of toasted bagels, coffee,
other drinks, and bakery products for consumption on the
premises. The bakery products sold for consumption off the
premises are exempt, because the bakery’s packaging and
accounting methods overcome the rebuttable presumption that the
products are sold for consumption on the premises.
DETERMINATION
Regardless of quantity, sales of the bakery products for consumption off the premises are exempt
when packaged in a manner consistent with an intention by the customer to consume the
products off the seller’s premises and the sale is recorded through the POS using a special key to
record the exempt sale. Taxpayer’s sales of coffee beans, ground coffee, and “k-cup portion
packs” are exempt as food products.
This response constitutes a Technical Assistance Advisement under s. 213.22, F.S. which is
binding on the department only under facts and circumstances described in the request for this
advice, as specified in s. 213.22, F.S. Our response is predicated on those facts and the specific
situation summarized above. You are advised that subsequent statutory or administrative rule
changes or judicial interpretations of the statutes or rules upon which this advice is based may
subject similar future transactions to a different treatment than expressed in this response.
You are further advised that this response, your request and related backup documents are public
records under Chapter 119, F.S., and are subject to disclosure to the public under the conditions
of s. 213.22, F.S. Confidential information must be deleted before public disclosure. In an effort

Technical Assistance Advisement
Page 5

to protect confidentiality, we request you provide the undersigned with an edited copy of your
request for Technical Assistance Advisement, the backup material and this response, deleting
names, addresses and any other details which might lead to identification of the taxpayer. Your
response should be received by the Department within 15 days of the date of this letter.
If you have any further questions with regard to this matter and wish to discuss them, you may
contact me directly at (850) 717-7202.
Sincerely,

Richard R. Parsons
Tax Law Specialist
Technical Assistance & Dispute Resolution
(850) 717-7202
Record ID: 132445