Did IDOR determine whether two meal-replacement products and mixed supplement bundles received the lower food tax rate?

Plain-English summary

A seller asked IDOR to confirm that two meal-replacement products qualified for favorable food treatment and to explain the percentage exemption and treatment of bundles containing food and dietary supplements.

IDOR did not provide the requested product-specific or bundle ruling. It supplied the general rule:

• Qualifying food for off-premises consumption was taxed at the lower 1% state rate plus applicable local taxes.
• Alcoholic beverages, candy, soft drinks, and food prepared for immediate consumption were excluded from that low-rate category.
• “Food” included solid, liquid, powder, or other items intended primarily for human internal consumption.
• A sweetened nonalcoholic beverage was a “soft drink,” but not if it contained milk or milk products, soy, rice, or a similar milk substitute, or more than 50% fruit or vegetable juice by volume.

Because the response stopped at those definitions, the public letter does not support saying whether either redacted product or a mixed food/supplement kit qualified.

Common questions

Did IDOR approve the two meal replacements for the low rate? The letter did not expressly do so.

Did it explain mixed-bundle treatment? No.

Could milk content affect the soft-drink definition? Yes, under the definition quoted in the letter.

Citations and references

• 86 Ill. Adm. Code 130.310

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2012.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2012/st-12-0050.pdf

Original ruling text

ST 12-0050-GIL 09/04/2012 FOOD
This letter discusses the State tax rates applicable to sales of food. See 86 Ill. Adm.
Code 130.310. (This is a GIL.)
September 4, 2012
Dear:
This letter is in response to your letter dated July 5, 2012, 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:
Our Company, COMPANY, enjoys a wide product line made up of both food
replacement and dietary supplements. Upon conducting a review of your Sales Tax
Laws & Publications, our sales tax consultants have determined that two of our food
products may qualify for sales tax exemption. This exemption is currently extended to
food products in your State.
Prior to taking any action in exempting these two products, we would like written
confirmation from your department that our PRODUCT1 and PRODUCT2 are, indeed,
sales tax exempt. Please utilize the supporting information below in conducting your
review.
We ask that you be specific in your ruling to include exemption detail like percentage of
exemption, as well as treatment of bundles & kits (i.e. a bundle/kit contains both food
and dietary supplements).

1. PRODUCT1 (Nutrition Facts Label, Meal Replacement)
   Product Description:
   • meant to replace a meal, not supplement a meal
   • for home consumption, must be prepared with other liquids, mixers,
   flavors, etc.
   • may be bought with any card, including food stamps.
   • powdered food drink mix
   • dietary food/health food item
2. PRODUCT2 (Nutrition Facts Label, Meal Replacement)
   Product Description:

ST 12-0050-GIL
September 4, 2012
Page 2
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meant to replace a meal; not supplement a meal
for home consumption
can also be a snack, where a meal is not available for hours at a time
may be bought with any card, including food stamps.
dietary food/health food item

We appreciate your time on this matter.
We ask that you submit your final determination at your earliest convenience. Should
you have any questions or concerns, please feel free to reach out to us by calling X, or
email us at X.
DEPARTMENT’S RESPONSE:
Food sold at retail in Illinois is subject to Retailers’ Occupation Tax and Use Tax. Items that qualify as
food, drugs and medical appliances are taxed at the low State rate of 1%. 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 rate of 1%
plus applicable local taxes. Food is defined as any solid, liquid, powder or item intended by the seller
primarily for human internal consumption, whether simple, compound or mixed, including foods such
as condiments, spices, seasonings, vitamins, bottled water and ice.
As you can see in the
regulation, "soft drinks" mean non-alcoholic beverages that contain natural or artificial sweeteners;
but "soft drinks" do not include beverages that contain milk or milk products, soy, rice or similar milk
substitutes, or greater than 50% of vegetable or fruit juice by volume.
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,

Debra M. Boggess
Associate Counsel