Were an out-of-state online bakery's products exempt, and did decorative tins or Florida internet sales require registration?

Plain-English summary

Florida treated an out-of-state online bakery's ordinary brownies, cookies, and bars as exempt food products sold by a bakery without eating facilities.

Decorative packaging could change the result. If a taxable tin or wooden box represented more than 25% of a single-price package's value, the whole charge was taxable. If the container represented 25% or less, the package remained exempt, though tax could still apply to taxable items the seller bought exempt for resale.

On the 2020 facts, the bakery had no Florida employees, agents, property, inventory, fulfillment, or own-vehicle deliveries and shipped by common carrier. Florida found no nexus requiring dealer registration. Because remote-seller law can change, that historical conclusion should not be treated as current blanket guidance.

What this means for you

Bakeries and gift-food sellers

Separate or measure the value of decorative packaging when combining exempt food with taxable containers.

Remote sellers

Recheck current Florida nexus and registration law. This ruling applies only to its 2020 facts and expressly anticipates that future nexus could make nonexempt packages taxable.

Common questions

Were ordinary bakery products exempt? Yes.

When was a decorative package taxable? When the taxable container exceeded 25% of the package value for a single charge.

Did this bakery have to register? No, on the specific 2020 facts.

Citations and references

• Fla. Stat. Sec. 212.08(1)
• Fla. Stat. Sec. 212.18(3)
• Fla. Admin. Code R. 12A-1.011(3)(d)
• Fla. Admin. Code R. 12A-1.011(10)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 20A-003

Original ruling text

QUESTION: Whether XXXXX XXXXX XXX’s bakery products and bakery products
packaged in decorative tins and boxes constitute food products exempt from sales tax as
defined in Section 212.08(1)(b), Fla. Stat., and whether XXXXX XXXXX XXXXX must
register with the Florida Department of Revenue (the “Department”) as a dealer required
to file sales and use tax returns with the Department.
ANSWER: Yes, the bakery products described are considered tax-exempt food products
sold by a bakery for consumption off the premises, pursuant to Florida law and rule.
Although XXX XXXXX XXX also sells non-exempt items, which consist of brownies,
cookies and bars sold in decorative boxes and tins, it is not required to register as a
dealer in Florida because there exists no nexus with Florida which would subject these
sales to taxation.
February 28, 2020
XXXXX XXXXX
XXXXXXXXX XXXXXXXX
XXXXX XXXXX XXX
XXXX XXXX XXXX XXXXXX
XXXXX XXX
XXXXX XXXXXX XXXXX
Technical Assistance Advisement (TAA)
TAA #: 20A-003
Taxpayer Name: XXX XXXXX XXX
FEIN: XXXXXXXXXX
Sales & Use Tax – Restaurants, Bakeries, Caterers
Sections 212.0596, 212.06, 212.08, and 212.18, Florida Statutes
Rules 12A-1.011 and 12A-1.097, Florida Administrative Code
Dear Mr. XXXXXX,
This is in response to your letter dated August 21, 2019, requesting this Department’s
issuance of a Technical Assistance Advisement (“TAA”) pursuant to Section 213.22,
Florida Statutes (Fla. Stat.), and Chapter 12-11, Florida Administrative Code (Fla. Admin.
Code), regarding the taxability of bakery products sold exclusively via the internet by a
non-Florida business. Your request has been carefully examined, and the Department

Technical Assistance Advisement
Page #2

finds it to be in compliance with the requisite criteria set forth in Chapter 12-11, Fla. Admin.
Code.
As provided in Section 213.22(1), Fla. Stat., 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), Fla. Stat., 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.
This response to your request constitutes a TAA and is issued to you under the authority
of Section 213.22, Fla. Stat.
Issue
Whether Taxpayer’s brownies, cookies, and bars, as well as brownies, cookies, and bars
packaged and sold in decorative containers, constitute food products exempt from sales
tax as defined in Section 212.08(1)(b), Fla. Stat., and whether Taxpayer must register
with the Florida Department of Revenue (the “Department”) as a dealer required to file
sales and use tax returns with the Department.
Facts Provided by Taxpayer
Taxpayer is an XXXXXX corporation whose operations are located in XXXXX, XXXXXX.
It is a bakery solely dedicated to the exclusive manufacture and sale of brownies, cookies,
and bars for human consumption. At times, Taxpayer’s baked goods may be packaged
in a decorative container, which is of substantially less value than the food items
contained therein.
Taxpayer’s brownies, cookies, and bars are sold exclusively through the company’s
website, through telephone orders to the company, and through third party internet
platforms. However, no inventory is stored in any warehouse in Florida, nor does a third
party fulfill any of Taxpayer’s orders. No deliveries are made to Florida using Taxpayer’s
own vehicle. All food products are packaged in non-returnable containers and shipped
to customers directly from XXXXX through a common carrier. Taxpayer does not have
any employees, agents, or other representatives working in Florida, nor does it have an
office, warehouse, or other place of business located in Florida. Taxpayer is not currently
registered for sales/use tax purposes in Florida.
Law and Discussion
Exempt Food Products
In accordance with Section 212.08(1)(a), Fla. Stat., general groceries, which include food
products for human consumption, are exempt from taxation. Pursuant to Section
212.08(1)(b), Fla. Stat., “…the term ‘food products’ means edible commodities, whether

Technical Assistance Advisement
Page #3

processed cooked, raw, canned, or in any other form, which are generally regarded as
food.” Tax-exempt food products include baked goods that are ready-to-eat, cookies,
and bakery products sold by bakeries that do not have eating facilities. See Rules 12A1.011(2)(a)2., 12A-1.011(2)(a)9., and 12A-1.011(3)(d), respectively. Additionally, Form
DR-46NT, incorporated by reference in Rule 12A-1.097, Fla. Admin. Code, includes in its
list of tax-exempt general groceries “baked goods,” “cookies,” and “bakery products sold
by bakeries… that do not have eating facilities.”
Taxpayer’s baked items thus meet the definition of “food products,” as set forth in Section
212.08(1)(b), Fla. Stat., and constitute a tax-exempt bakery product sold by a bakery that
does not have eating facilities, as set forth in Rule 12A-1.011(3)(d), Fla. Admin. Code.
However, you relate that Taxpayer also sells these exempt food products in reusable
decorative tins and wooden boxes. Rule 12A-1.011(10), Fla. Admin. Code, provides the
following guidelines regarding sales of exempt food products sold in conjunction with
taxable products such as decorative baskets, cans, glasses, or jars:
(a) When a package contains both exempt food products and taxable
tangible personal property (e.g., a basket of food and candy, a basket of
nuts, or decorated cans or glasses filled with food items) and the tax-exempt
food products are separately itemized and priced from the taxable tangible
personal property, no tax is due on the tax-exempt food products.
(b) When the total charge for a package containing both exempt food
products and taxable tangible personal property is a single charge, the
application of tax depends upon the essential character of the complete
package, as follows:

1. When the taxable tangible personal property represents more
   than twenty-five (25) percent of the value of the package, the total
   charge is subject to tax.
2. When the taxable tangible personal property represents twentyfive (25) percent or less of the value of the package, the total sale
   is exempt. The seller is required to pay tax on any taxable items
   included in the package that were purchased tax-exempt for the
   purposes of resale. The cost price of any promotional items
   included in the package is subject to tax.
   Although the food products (brownies, cookies, bars) may be exempt from sales tax, the
   exemption may not apply when such products are sold as a package, along with taxable
   tangible personal property such as decorative wooden boxes and tins, for a single price.
   If the value of the box or tin is greater than 25% of the value of the package, the total
   charge for the package is subject to sales and use tax. If the value of the decorative box
   or tin is 25% or less of the total sales price, the lump-sum amount charged is not subject
   to sales and use tax.

Technical Assistance Advisement
Page #4

Nexus to Florida
Section 212.18(3), Fla. Stat., provides that all persons must be registered with the
Department of Revenue before engaging in business subject to sales tax in Florida.
Florida law defines those persons who are required to register, collect, and remit tax as
"dealers." Section 212.06(2)(b), Fla. Stat., defines the term "dealer" to include every
person who imports tangible personal property from any state or foreign country into
Florida for sale, use, consumption, or distribution, or for storage in Florida. The term
“dealer” includes a retailer who transacts mail order sales. See Section 212.06(2)(c), Fla.
Stat.
It is a well-settled principle that visible territorial boundaries will not always establish the
limits of a state's taxing power or jurisdiction. In the past, courts have turned to the
activities of out-of-state dealers to establish the necessary ties, or "nexus," between an
out-of-state dealer and taxing state.
While physical presence is no longer required after the Wayfair case (South Dakota v.
Wayfair, Inc. et al., 138 S.Ct. 2080 (2018)), the U.S. Supreme Court reaffirmed the
principles set forth in Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977),
governing the constitutional validity of a state tax. More specifically, state tax laws still
must:
a.
b.
c.
d.

apply to an activity with a substantial nexus (sufficient connection) to the
taxing state;
be fairly apportioned (not taxing beyond the state’s fair share);
not discriminate against interstate commerce (not taxing out-of-state activity
while exempting in-state activity); and
be fairly related to the services provided by the state.

Mail order sales are addressed in Section 212.0596(2), Fla. Stat. That statute provides
twelve (12) factors that indicate when a dealer who makes mail order sales is subject to
taxation by the State of Florida.
Under the specific facts presented here, the Taxpayer does not have nexus with the State
of Florida for purposes of Sales and Use Tax.
Concluding Statement
The bakery products described are considered tax-exempt food products sold by a
bakery that does not have eating facilities, pursuant to Florida law and rule. Even though
Taxpayer does, in some instances, sell taxable products - baked goods packaged in
decorative wooden boxes and tins - it is not required to register as a dealer in Florida
because it appears to have no nexus with the state of Florida. However, if nexus with
Florida were to occur in the future, the non-exempt products, as described above, would
be taxable.

Technical Assistance Advisement
Page #5

This response constitutes a Technical Assistance Advisement under Section 213.22, Fla.
Stat., which is binding on the Department only under the facts and circumstances
described in the request for this advice, as specified in Section 213.22, Fla. Stat. 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, Fla. Stat., and are subject to disclosure to the
public under the conditions of Section 213.22, Fla. Stat. Confidential information must be
deleted before public disclosure. In an effort 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 10 days of the date of this letter.
Respectfully,

Donna La Plante
Donna La Plante
Senior Attorney
Florida Department of Revenue
Technical Assistance and Dispute Resolution

Record ID: #xxxxx