Texas Letter Ruling 9406L1309F10: Meals/Food To Go — Entrees/Dinners Delivered To Customers In Refrigerated Or Frozen State With No Utensils Provided

Plain-English summary

A taxpayer planned to start a gourmet food delivery business: consumers would order main entrees (meatloaf, chicken casseroles, lasagna, etc.) by phone, with no retail storefront, and the entrees would be delivered refrigerated or frozen for the customer to heat and eat later. The taxpayer asked whether to collect sales tax from customers on these sales.

The Comptroller ruled that no tax is due, so long as two facts hold: the entrees need to be heated before serving, and the seller does not supply eating utensils with the sale. Under these facts, the sale is treated as a sale of food for human consumption rather than a taxable prepared meal or restaurant-style sale.

The letter also addresses the taxpayer's supply side: the taxpayer, as sole owner, would buy the prepared-but-refrigerated-or-frozen entrees from suppliers like restaurants and caterers, then repackage and resell them to end consumers. Because the taxpayer's purchases of those entrees (heated-before-serving, no utensils supplied) are not taxable purchases either, the taxpayer does not need to issue a resale certificate to its suppliers — and since the taxpayer neither issues a resale certificate nor collects sales tax from customers, no Texas sales and use tax permit is required for this specific business activity.

What this means for you

Business owners starting a prepared-food delivery service

If your business sells refrigerated or frozen entrees that customers must heat before eating, and you don't hand out forks, spoons, napkin-wrapped utensils, or similar eating utensils with the order, your sales may fall outside Texas's taxable prepared-food category. This ruling turns on those two specific facts — heat-before-serving and no utensils — so if your model changes (for example, you start delivering ready-to-eat hot meals, or you include disposable utensils), the tax result could be different.

Accountants and tax professionals advising food-delivery clients

When evaluating a client's meal-kit or prepared-entree delivery model against this letter, confirm both facts independently: (1) is the food sold in a state requiring further heating/preparation by the customer, and (2) does the seller supply any eating utensils. This letter treats the combination of "needs heating" plus "no utensils" as taking the sale out of the taxable-prepared-food category and into the food-for-human-consumption exemption. It also confirms that a reseller buying already-prepared frozen/refrigerated entrees from restaurants or caterers under these same facts doesn't need a resale certificate or a sales and use tax permit for that resale activity.

Common questions

Q: Do I need to collect sales tax on frozen or refrigerated entrees I deliver to customers?
A: Under the facts of this letter, no — if the entrees must be heated before serving and you do not provide eating utensils with the sale, no tax is due.

Q: If I include plastic forks or other utensils with the delivery, does that change the answer?
A: The ruling's holding is expressly conditioned on the seller not supplying eating utensils. It does not address what happens if utensils are included, so a business that provides utensils should not rely on this letter's no-tax conclusion without separate confirmation.

Q: I buy prepared entrees from restaurants and caterers and resell them frozen to consumers — do I need a resale certificate or a sales tax permit?
A: Under these same facts (entrees need to be heated before serving, no utensils supplied), the purchase from your supplier is not taxable, so you don't need to issue a resale certificate. And because you're not issuing a resale certificate or collecting sales tax from customers, you're not required to have a Texas sales and use tax permit for this activity.

Q: Does this ruling apply if I sell through a retail storefront instead of by phone order?
A: The letter's facts specifically describe a phone-order, delivery-only business with no retail establishment. It doesn't address storefront sales, so that scenario isn't covered by this ruling.

Citations and references

• Tex. Tax Code § 151.314 (sales tax exemption for food products for human consumption; the letter's heated-before-serving and no-utensils-supplied conditions track this exemption's eating-utensils test, though the specific statutory section is not cited by number in the original letter)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9406L1309F10

Original ruling text

June 29, 1994

Dear**:

I have received your letter regarding the taxability of the
services provided by your new gourmet food service business.

Facts: The service will offer main entrees (e.g., meatloaf,
chicken casseroles, lasagna, etc.) to consumers for
purchase. The consumer will place their order via telephone
(there will be no retail establishment) for a number of
these gourmet entrees that will be delivered to them in a
refrigerated or frozen state to be heated and eaten by the
customer at some later time.

Question: You ask if you should collect sales tax from your
customer.

Response: Presuming these entrees need to be heated before
serving and you are selling the entrees without eating
utensils, no tax is due.

Facts: As the sole owner of this business you will purchase
gourmet entrees from suppliers such as restaurants and
caterers. The entrees you purchase will be sold to you
prepared but refrigerated or frozen. You will then package
and resell the entrees to the end consumer as part of your
gourmet food service.

Question: You ask if you need a Texas sales and use tax
permit so that you can issue a resale certificate to your
supplier.

Response: Your purchase of the refrigerated and frozen
entrees as described above (i.e., entrees need to be heated
before serving, no eating utensils supplied) is not a
taxable purchase. You would not be required to issue a
resale certificate. Since you do not need to issue a resale
certificate nor collect tax from your customer, you are not
required to have a Texas sales and use tax permit.

This opinion is based on the facts as stated above. If there
are additional or different facts, the opinion could change.

You may call me toll free at 1-800-531-5441, Ext. 34663.
The direct line is 512/463-4663. You may also write to Tax
Administration, Comptroller of Public Accounts.

Sincerely,

Joan Hale
Tax Administration Division

NOTE: Previous Accession Number 9406470L