Did brewed coffee and frozen food heated by customers in a store microwave receive Illinois's lower food-tax rate?

Plain-English summary

Retailer-prepared coffee was taxed at Illinois's higher 2010 state rate, while a frozen item generally kept the lower food rate when the customer heated it in a self-service microwave. Coffee, tea, cappuccino, and similar drinks prepared by the retailer for individual consumption counted as food prepared for immediate consumption.

By contrast, an item such as a frozen burrito that needed heating generally remained eligible for the lower food rate even if the store provided a microwave. The Department's reason was that the retailer had not prepared or made the food ready; the customer did the heating.

The broader result depended on the store's setup and records. A retailer with on-premises seating or eating facilities was presumed to owe the higher rate on all food unless the eating area was physically separated and the retailer separately recorded immediate-consumption and grocery-type sales. A store without eating facilities also needed separate records when it sold both categories; otherwise all food sales were presumed taxable at the higher rate. Alcohol, candy, and soft drinks were always assigned the higher state rate under the rules described.

What this means for you

Track retailer-prepared items separately from packaged grocery food and document whether customers, rather than employees, perform the final heating. Seating, eating facilities, and point-of-sale accounting can affect the rate applied across the store.

Common questions

Q: Did providing a microwave automatically raise the tax rate on frozen food?
A: No. The GIL said a frozen item generally stayed at the lower rate because the customer heated it.

Q: Was self-serve brewed coffee taxed like grocery food?
A: No. Coffee prepared by the retailer for individual consumption was assigned the higher rate whether served hot or cold.

Citations and references

• 86 Ill. Adm. Code 130.310(b)(3) (food sellers with eating facilities)
• 86 Ill. Adm. Code 130.310(c)(2) and (c)(2)(A)(v) (immediate consumption)
• 86 Ill. Adm. Code 130.ILLUSTRATION C (Food Flow Chart)
• 2 Ill. Adm. Code 1200.120 (GILs)

Subject

Food

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2010.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2010/st-10-0079.pdf

Original ruling text

ST 10-0079-GIL 08/30/2010 FOOD
This letter discusses the State tax rates applicable to sales of food.
130.310. (This is a GIL.)

See 86 Ill. Adm. Code

August 30, 2010

Dear Xxxxx:
This letter is in response to your letter dated April 12, 2010, in which you request information.
The Department issues two types of letter rulings. Private Letter Rulings (“PLRs”) are issued by the
Department in response to specific taxpayer inquiries concerning the application of a tax statute or
rule to a particular fact situation. A PLR is binding on the Department, but only as to the taxpayer
who is the subject of the request for ruling and only to the extent the facts recited in the PLR are
correct and complete. Persons seeking PLRs must comply with the procedures for PLRs found in the
Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General Information Letter
(“GIL”) is to direct taxpayers to Department regulations or other sources of information regarding the
topic about which they have inquired. A GIL is not a statement of Department policy and is not
binding on the Department. See 2 Ill. Adm. Code 1200.120. You may access our website at
www.tax.illinois.gov to review regulations, letter rulings and other types of information relevant to your
inquiry.
The nature of your inquiry and the information you have provided require that we respond with
a GIL. In your letter you have stated and made inquiry as follows:
ABC would like a written opinion on the taxability of brewed coffee and foods heated in
our stores by microwave. The coffee would be brewed and available to our customers
for purchase and would be self-serve. Frozen foods in our freezer section can be
purchased for home consumption. If a microwave was available for the customer to
heat the food item would this change the taxability of the food item heated?

DEPARTMENT’S RESPONSE:
The Department’s regulation regarding the appropriate tax rates for food can be found at 86 Ill.
Adm. Code 130.310. Food that is to be consumed off the premises where it is sold (other than
alcoholic beverages, candy, soft drinks, and food that has been prepared for immediate consumption)
is taxed at the State rate of 1% plus applicable local taxes rather than the 6.25% general State
merchandise rate.
Please note that amendments to Section 130.310 regarding candy and soft
drinks have recently been adopted and the updated rule is now available on the Department’s
website.
The manner in which food is taxed depends upon the nature of the establishment that is selling
the food.
Retailers who provide seating or facilities for on-premises consumption of food are
presumed to incur tax at the high rate (6.25% State rate) on all food sales (including bulk or grocery
type items). However, this presumption can be rebutted by evidence that the area for on-premises

consumption are physically partitioned from the area where food not for immediate consumption is
sold and these facilities utilize a separate means of recording and accounting for collection of receipts
from the sales of food prepared for immediate consumption (6.25% State rate) and the sales of food
that are not prepared for immediate consumption (1% low State rate of tax). See 86 Ill. Adm. Code
130.310(b)(3). Please note that alcoholic beverages, candy and soft drinks are always taxed at the
6.25% State rate.
If establishments have no seating or facilities for on-premises consumption of food, the tax rate
incurred on food sales is determined by whether the retailer has a separate means of recording and
accounting for collection of receipts from sales of food prepared for immediate consumption (6.25%
State rate of tax) and food not prepared for immediate consumption (1% low State rate of tax). If the
establishment has a separate means of recording and accounting for collection of receipts from sales
of food prepared for immediate consumption and food not prepared for immediate consumption, then
only hot foods, soft drinks, candy, alcoholic drinks, and food prepared by the retailer for immediate
consumption are subject to the 6.25% State rate of tax. If the establishment sells food prepared for
immediate consumption and food not prepared for immediate consumption but has no separate
means of recording and accounting for collection of receipts from sales of food prepared for
immediate consumption and food not prepared for immediate consumption, all sales at that
establishment are presumed to be at the 6.25% State rate of tax. If the establishment only sells food
not prepared for immediate consumption, then all sales at that establishment (except for soft drinks,
candy, and alcoholic beverages) are subject to the 1% State rate of tax.
The Food Flow Chart set out in the Department’s administrative rules provides a quick
reference for most retailers (other than restaurants and cafeterias) engaged in the sale of food. 86
Ill. Adm. Code 130.ILLUSTRATION C.
Please note that the term “food prepared for immediate consumption” means “food that is
prepared or made ready by a retailer to be eaten without substantial delay after the final stage of
preparation by the retailer.” 86 Ill. Adm. Code 130.310(c)(2). All coffee, tea, cappuccino and other
drinks prepared by a retailer for individual consumption, whether hot or cold, are subject to the high
rate of tax. 86 Ill. Adm. Code 130.310(c)(2)(A)(v).
Items that are sold by a retailer that require
heating in order to be consumed, such as a frozen burrito, generally remain subject to the low State
rate of tax even if that retailer provides a self-serve microwave oven for its customers to heat such
items because the food is not being prepared or made ready by the retailer.
I hope this information is helpful. If you require additional information, please visit our website
at www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at (217) 782-3336.
Very truly yours,

Terry D. Charlton
Senior Counsel, Sales & Excise Taxes
TDC:msk