Ezel / Tax Rulings / TX
TX 9104L1106C13 Sales and/or Use Tax (State,Local,MTA) 1991-04-26

Was a basket of cookies taxable when the package contained both exempt food and a taxable basket?

Short answer: It depended on value. No tax was due if the basket was not the package's primary component, but the whole package was taxable if the basket was worth more than the cookies.

Apply this to your situation

This page answers the general question as of 1991. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1991
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The requester sold baskets of cookies. Under the Comptroller's application of Rule 3.293, the sales-tax result depended on which component was primary by value.

If the basket was not the primary component of the cookie bouquet, no sales tax was due. If the taxable basket had greater value than the cookies, the entire package was subject to sales tax.

The Comptroller also repeated an operational warning: if the business began furnishing seating, tables, or utensils, it would have to begin charging sales tax.

What this means for you

For a mixed package of food and a taxable container, this letter focused on the relative value of the components. It did not say every gift basket was exempt; it made the result turn on whether the food or the basket was primary.

Common questions

Was every basket of cookies taxable? No. Tax was not due when the basket was not the primary component.

When was the entire package taxable? When the taxable basket was worth more than the cookies.

Did store amenities matter? Yes. The letter said furnishing seating, tables, or utensils would require the business to begin charging sales tax.

Citations and references

  • 34 Tex. Admin. Code Rule 3.293 — food sales

Source

Original ruling text

April 26, 1991

Dear ***:

This is in response to your recent letter regarding the sales tax statute
as it applies to your business.

Previous correspondence with **** indicates your business sells
baskets of cookies.

Comptroller Rule 3.293 on food sales has not changed since October 6,
1989. If the baskets are not the primary component of the cookie bouquet,
sales tax is not due. If the basket, a taxable items, is of greater value than
the cookies, the entire package will be subject to sales tax.

Again, as *** has previously stated, if you should change your
method of operation and begin furnishing seating, tables, or utensils it would
require that you begin charging sales tax.

This opinion is based on facts as presented. Different facts, though
similar, may result in a different opinion.

If you have any questions or need additional information, you may call
toll free at 1-800-252-5555. The regular number is 512/463-4600, or write Tax
Administration Division.

Sincerely,

Bettie U. Peterson
Tax Administration Division

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