When could Louisiana food retailers buy resale food without advance sales tax, and which prepared-food, bottled-water, packaging, and vending purchases remained taxable?

Plain-English summary

A food retailer could buy inventory without Louisiana advance sales tax when the final retail sale was expected to qualify as exempt food for home consumption.

The ruling generally used Form R-1006 to document those purchases. Food bought specifically for taxable prepared-food sales, bottled water, separately sold packaging and utensils, and vending-machine inventory did not qualify.

The mixed-use majority rule

When the same food item was resold both exempt for home consumption and taxable as store-prepared ready-to-eat food:

• If more than half of retail sales from that item were exempt, the retailer could buy all of that item without advance tax.
• If more than half were taxable prepared-food sales, all purchases of that item were subject to advance tax.

The retailer could claim qualifying advance state tax paid as a credit on the sales-tax return described in the ruling.

Foods and sellers that qualified

The ruling identified bakery and dairy products, soft drinks, fresh fruits and vegetables, and packaged foods needing further consumer preparation as potentially exempt food for home consumption.

The exemption depended on the seller and transaction. Restaurants and similar establishments providing on-premises eating facilities generally had to pay advance tax on food purchases.

Items that remained subject to tax

Prepared-food ingredients

Items acquired specifically for seller-prepared food—such as fountain-drink syrup and carbon dioxide, brewed-coffee inputs, or hot-food ingredients—were subject to advance tax.

Bottled water

The ruling said water sold in bottles, jugs, or containers was not an exempt food product.

Packaging and utensils

Separately purchased containers, wrappers, plates, cups, lids, forks, and straws did not qualify for the food exemption.

Vending-machine food

Sales to vending-machine operators were treated as retail sales. Operators paid tax when buying inventory, could not use Form R-1006, and could not claim the described advance-tax credit. A distributor operating its own machines owed use tax on cost if purchase tax had not been paid.

Common questions

Q: Could a grocery store buy home-consumption food without advance tax?

A: Yes, under the ruling, generally by providing Form R-1006.

Q: Could prepared-food ingredients be bought exempt?

A: No, when acquired specifically for taxable food prepared by the seller.

Q: Was bottled water treated as exempt food?

A: No.

Q: Could a vending operator use the food exemption certificate?

A: No.

Citations and references

• Louisiana Constitution art. VII, § 2.2 — food-for-home-consumption exemption
• La. R.S. 47:301(10)(b), 47:305(D)(1), (3), and 47:306(B)
• LAC 61:I.4401.F — food-for-home-consumption rule
• Forms R-1006 and R-1028/LGST 9 — exemption documents described in the ruling
• LAC 61:III.101.C — Revenue Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA Revenue Ruling 05-007

Original ruling text

Revenue Ruling
No. 05-007
December 23, 2005
Louisiana State Sales and Use Tax
Advance Sales Tax on Food Purchases by Retailers
Issue
The State’s recent adoption of a constitutional exemption for food sold for preparation and
consumption in the home has brought about questions from distributors of food products and
owners of grocery and convenience stores, supermarkets, and food marts regarding the advance
sales tax that must be collected on food purchased for resale. This Revenue Ruling provides
guidance on the state sales tax that is collected on food products purchased for resale by grocery
and convenience stores, supermarkets, and food marts. It explains when retailers can purchase
food for resale without paying sales tax and what forms should be used when making these
purchases.
This Revenue Ruling also describes the specific tax treatment on purchases of bottled water and
ingredients used for food that will be prepared by the seller, packaging materials for food
products, food sold by distributors to vending machine operators, and food sold in vending
machines operated by food distributors.
Exemption for Food
Article VII, Section 2.2 of the Louisiana Constitution prohibits the taxation of food for home
consumption at more than two percent effective January 1, 2003, and exempts food for home
consumption beginning July 1, 2003. The department, on August 20, 2003, adopted a rule in
connection with this constitutional provision. Under LAC 61:I.4401.F, an item is eligible for
exemption as food for consumption in the home if it meets the following criteria:
1.

The item must be a food product as contemplated by the statute. Bakery and dairy products,
soft drinks, fresh fruits and vegetables, and packaged foods requiring further preparation by
the purchaser are specifically identified under La. R.S. 47:305(D)(1)(n-r) as food products
eligible for the exemption. Items that are not eligible for treatment as a food product include
alcohol, tobacco, vitamins, chewing gum, and water sold in containers.

2.

The food product must be sold by a qualifying establishment. Under La. R.S. 47:305(D)(3),
“Food sales by restaurants, drive-ins, snack bars, candy and nut counters, private clubs, and
sales made by an establishment not specifically exempted elsewhere who furnish facilities
for the consumption of the food on the premises are not exempt from the taxes imposed by
this Chapter.”

3.

The food product is not a prepared food, which is defined as:
a.

heated foods;

Revenue Ruling No. 05-007
Page 2 of 4

b.

food if two or more ingredients are mixed or combined by the seller for sale as a single
item like prepared sandwiches, salads, and snack trays; or

c. food sold with eating utensils provided by the seller, including plates, knives, forks,
spoons, glasses, cups, napkins, or straws. A container or packaging used to transport the
food is not considered a plate.
Advance Sales Tax
Under La. R.S. 47:306(B), retail dealers are required to pay sales tax on tangible personal
property purchased for resale at retail. This tax, commonly known as “advance sales tax,” may
be claimed as a credit on Line 12 of the sales tax return. However, food purchased by grocery
and convenience stores, supermarkets, food marts, and other food retailers is not subject to the
advance sales tax if the final retail sale or consumption of the food is exempt. If a food retailer
purchases certain food items for resale as both exempt and taxable ready to eat meals prepared in
the store, the food items may be purchased for resale without paying the advance tax if more than
half of the retail sales from the food items are exempt. However, if over half of the retail sales
from that food item are taxable ready to eat meals prepared on site, all of the purchases of that
food item are subject to advance tax. This also applies to food products purchased for resale only
in prepared foods, like the carbon dioxide gas and syrup used in fountain drinks. The retailer
would pay the advance sales tax on the purchase and recoup the tax by claiming a credit on Line
12 of the sales tax return.
Exemption Certificates
Retailers should provide exemption certificate Form R-1006 covering purchases of food products
for preparation and consumption in the home to their distributors when purchasing food without
paying the advance sales tax. Remember, items that are purchased specifically for resale as a
prepared food cannot be purchased without paying the advance sales tax, although the retailer
can claim the tax paid on these items as a credit on Line 12 of the sales tax return.
Distributors should request Form R-1006 from their retailers as evidence of the exemption.
Although Louisiana courts have ruled that if a transaction meets the criteria established by a
statute to qualify for exemption, the exemption must be allowed if other credible evidence can
confirm it, obtaining the R-1006 from your customers provides proof of the exemption. During
an audit, the exemption certificate will be honored by the Field Audit Services Division if the
distributor exercised due care in accepting it. Distributors that fail to secure exemption
certificates from their customers will be required to provide independent verification that the
exempt sales are valid.
Of course, wholesale customers may purchase their entire resale inventory without paying the
advance sales tax by providing a “W” number exemption certificate (Form R-1028–LGST 9) to
vendors. Most grocery stores and supermarkets do not qualify for a “W” number. Also,
restaurants and similar establishments who furnish facilities for the consumption of the food on
the premises must pay the advance sales tax unless exempt by another section of law.

Revenue Ruling No. 05-007
Page 3 of 4

Purchases of Food Products by Retailers
1.

Purchases by grocery stores and supermarkets—The purchase of foods to be sold for
home consumption by grocery stores and supermarkets is not subject to advance sales tax
beginning July 1, 2003. Items purchased specifically for resale as prepared food are subject
to four percent advance sales tax.
Foods purchased to be sold “for home consumption” are exempt because these
establishments do not provide facilities for the consumption of the food on the premises.
Bakery and dairy products, soft drinks, fresh fruits and vegetables, and packaged foods
requiring further preparation by the purchaser are specifically identified under La. R.S.
47:305(D)(1)(n-r) as food for home consumption.
Grocery stores and supermarkets may use Form R-1006 to avoid payment of the advance
sales tax on purchases that will be exempt as food for home consumption when sold at retail.
Retailers can claim credit on Line 12 of the Louisiana General Sales Tax return for advance
state sales tax paid on purchases of items for resale where Form R-1006 cannot be used.

2.

Purchases by convenience stores, food marts, and other food retailers—The standards
used to determine if food products are exempt for grocery stores and supermarkets also
apply to convenience stores, food marts, and other food retailers. Foods sold for home
consumption are exempt from sales tax but the ingredients for food prepared by the seller,
like fountain drinks, brewed coffee, heated nacho chips and cheese, and hot lunches are not.
Foods that are prepared on site by the seller are considered “prepared foods” and do not
qualify for the exemption. Restaurants and similar establishments that furnish facilities for
the consumption of the food on the premises are required to pay advance sales tax on all
food purchases, even packaged food requiring further preparation by the consumer.

3.

Purchases of bottled water and ingredients used specifically for food that will be
prepared by the seller—Bottled water does not qualify for exemption because it is not
considered a food product. La. R.S. 47:305(D)(1)(c) specifically states, “…mineral water or
carbonated water or any water put in bottles, jugs, or containers…” are not exempt from the
tax. Therefore, advance sales tax must be paid on purchases of bottled water.
Food ingredients purchased specifically for resale as a component of “prepared foods” are
always subject to advance tax. For example, the carbon dioxide gas and syrup used in soda
fountain machines are individual items purchased only for resale as a prepared food since
fountain drinks are prepared on the premises of the seller. Retailers must pay advance sales
tax on these items.

4.

Purchases of plastic and paper containers, plates, cups, lids, forks, straws—Packaging
like plastic and paper containers, wrappers, plates, cups, lids, forks, and straws does not
qualify for the tax exemption as food for home consumption and is subject to advance tax
when sold separately to the retailer. These items are considered part of the food product
when sold with the food.

5.

Purchases of food products for sale through vending machines—La. R.S. 47:301(10)(b)
defines the sale of tangible personal property to a dealer to be resold through coin-operated

Revenue Ruling No. 05-007
Page 4 of 4

vending machines as a “sale at retail.” Food items purchased by vending machine operators
are not considered food for home consumption and operators must pay sales tax when they
buy these items from suppliers. Form R-1006 cannot be used to make these purchases taxfree and advance tax credit may not be claimed on Line 12 of the sales tax return.
Distributors that sell food products through their own vending machines must pay use tax on
the cost of these items if sales tax was not paid on the purchase. Distributors may not claim a
credit on Line 12 of the sales tax return for the tax paid on the purchase of items sold
through their vending machines.
Summary
Food for preparation and consumption in the home is exempt from tax under Article VII, Section
2.2 of the Louisiana Constitution and La. R.S. 47:305(D)(1)(n-r). The purchase of these items for
resale by supermarkets, grocery stores, convenience stores, food marts, and other retailers that do
not provide facilities for the consumption of food is not subject to the advance sales tax imposed
under La. R.S. 47:306(B). A retailer may use Form R-1006 for the purchase of these items only.
Sales of food products to vending machine operators are retail sales and do not qualify for
exemption. Food products sold through a distributor’s own vending machines are subject to use
tax on the distributor’s cost of the items sold. The purchase of ingredients specifically for food
prepared by the seller and packaging materials sold separately does not qualify for exemption
from sales tax regardless of the customer and is subject to the advance sales tax.
For more information regarding this topic, taxpayers should contact the Taxpayer Services
Division at 225.219.7356.
Sincerely,
Cynthia Bridges
Secretary
By:

Donald Barnette
Tax Research Analyst
Policy Services Division

A Revenue Ruling is written to provide guidance to the public and to Department of Revenue employees.
It is issued under LAC 61:III.101.C to apply principles of law to a specific set of facts. A Revenue Ruling
does not have the force and effect of law and is not binding on the public. It is a statement of the
Department's position and is binding on the department until superseded or modified by a subsequent
change in statute, regulation, declaratory ruling, or court decision.