Were plastic-wrapped trays of five or ten dozen mini-donuts and 18 or 36 muffins, marketed as party platters, exempt bakery products for home consumption?

Plain-English summary

The mini-donut and muffin trays were taxable because their “party platter” marketing and plastic-tray packaging made them food ordinarily sold for immediate consumption, not exempt bakery products packaged for later home consumption. The large quantities alone did not control.

The Rhode Island corporation operated 54 bakery stores, including 27 in Rhode Island. It planned to sell mini-donuts in plastic-wrapped trays of five or ten dozen and muffins in trays of 18 or 36. Customers could order ahead or buy available trays in stores.

R.I. Gen. Laws § 44-18-30(J) exempted food products but treated meals and food ordinarily sold for immediate consumption as taxable even when packaged for takeout.

Regulation SU 89-59 gave combination-type businesses a guideline: six or more donuts, muffins, pastries, bagels, or similar bakery products were not treated as a taxable meal when packaged in a box, bag, or other container consistent with home consumption.

The proposed trays met the six-item quantity threshold, but the Division focused on the total presentation. Marketing them as party platters, wrapping them on plastic trays, and often taking advance orders made purchase for party occasions and immediate consumption more likely than later home consumption.

What this means for you

Bakeries and combination food businesses

Package size is only one factor. Marketing language and the type of container can change whether bulk bakery products look like exempt home-consumption food or taxable prepared food.

Caterers and party-platter sellers

Calling a product a party platter supported immediate-consumption treatment even when the items were ordinary donuts or muffins sold in large quantities.

Accountants and tax professionals

Document the product count, packaging, marketing, ordering method, and expected use. The ruling refused to apply the six-item guideline mechanically.

Common questions

Did the trays contain at least six items? Yes. The mini-donut trays held five or ten dozen, and the muffin trays held 18 or 36.

Why did the six-item guideline not make them exempt? The plastic trays and party-platter marketing pointed to immediate consumption at events rather than home consumption later.

Did advance ordering make the trays exempt? No. The order treated advance party-platter orders as part of the immediate-consumption context.

Were individually sold donuts and muffins decided? The order addressed the proposed plastic-wrapped party platters, not a new rule for every individual bakery sale.

What was the final tax result? The mini-donut and muffin party platters were subject to Rhode Island sales and use tax.

Citations and references

• R.I. Gen. Laws § 44-18-30(J) — food exemption and immediate-consumption limitation quoted in the order.
• Rhode Island Regulation SU 89-59 — meal rule and six-item bakery-product guideline for combination-type businesses.

Source

• Landing page: Rhode Island Declaratory Rulings
• Declaratory order: Declaratory Order 1992-05

Original ruling text

Ruling Request No. 92-05

Ruling Request No. 92-05

Re: Request for Sales/Use Tax Ruling Relating to the Sale of "Party Platter Donuts"

Facts

A company (hereinafter "the corporation") is a corporation based in Rhode Island. The corporation is in the business of baking and selling certain food products. Sales are made through a chain of 54 stores, 27 of which are located in Rhode Island

The food items will be ordered in advance or can be purchased directly at any of the stores if quantities are available.

Included in the food products sold are mini-donuts which are currently sold by piece. The corporation intends to begin selling these mini-donuts in plastic-wrapped trays in quantities of 5 dozen or 10 dozen pieces per tray.

Also sold are muffins which are currently sold by piece. The corporation intends to begin selling these muffins in plastic-wrapped trays in quantities of 18 pieces or 36 pieces per tray.

Discussion

R.I.G.L. 44-18-30 reads as follows:

44-18-30. Gross Receipts Exempt from Sales and Use Taxes. -- There are exempted from the taxes imposed by this chapter the following gross receipts:

(J) Food Products. From the sale and the storage, use or other consumption in this state subsequent to March 31, 1948, of food products for human consumption.

The sale of meals and other food products ordinarily sold for immediate consumption on or off the premises of the retailer is a taxable sale even though the products are sold on a "take out" or "to go" order, and are actually packaged or wrapped and taken from the premises.

Regulation SU 89-59 reads in pertinent part as follows:

MEALS

A. Eating Establishments...

Combination-Type Businesses: The sale of meals and other food products ordinarily sold for immediate consumption on or off the premises of the retailer is a taxable sale even though such products are sold on a "take-out" or "to go" order and are actually packaged or wrapped and taken from the premises.

In determining whether bakery products sold by a combination-type business are for home consumption and therefore nontaxable, the following guideline may be used.

The sale of pastry, donuts, muffins, bagels or other like bakery product sold by a combination-type business shall not be considered the sale of a "meal" or other food products "ordinarily sold for immediate consumption" if at the time of sale the products are packaged or wrapped in a box, bag or other container consistent with home consumption and are sold in units of six (6) or more

R.I.G.L. 44-18-30 (J) exempts food products from the sales and use tax but taxes the sale of meals and other food products ordinarily sold for immediate consumption, including products sold on a "take-out" or "to go" order and are actually packaged or wrapped and taken from the premises.

In regard to combination-type businesses, Regulation SU 89-59 states that the sale of donuts, muffins and other like bakery products is not considered the sale of a "meal or other food product" ordinarily sold for immediate consumption when packaged or wrapped in a box, bag, or other container consistent with home consumption and sold in units of six (6) or more.

There is no question that the mini-donuts and mini-muffins will be sold in units of six (6) or more (sometimes as many as ten (10) dozen). However, the corporation's intended sale of these products will be marketed as "party platters" and packaged in plastic trays. In most cases, customers will call up and order these trays in advance.

This method of marketing and packaging would make the intended sales more likely to be bought for immediate consumption, i.e., party occasions than for home consumption at a later time.

Ruling

The sales of mini-donuts and muffins, marketed as "party platters" packaged in plastic-wrapped trays are not sales of bakery products for home consumption and would, therefore, be subject to Rhode Island sales and use tax as other food products ordinarily sold for immediate consumption.

This ruling may be relied upon by the corporation and shall be valid until the applicable statutory provisions are amended in a manner requiring a different result or until the underlying factual presentation changes.

**R. Gary Clark

Tax Administrator

July 14, 1992**