Alabama Amends Rule on Restaurant Purchases

Feb 6th, 2015

The Alabama Department of Revenue ("Department") has amended the rule for non-taxable restaurant purchases to conform with recent case law.

Effective March 5, 2015, the Department has amended Rule 810-6-1-.69 - Containers, Components of Containers, Labels, Pallets, and Shipping Supplies. Last June, the Alabama Court of Appeals ruled that critical elements of food and drink items sold by fast-food restaurants were nontaxable sales by wholesalers. Critical elements included straws, stirrers, napkins, moist towelettes, wood skewers, and plastic utensils that were sold as part of a sale of food or drink and were not reusable.

Effective March 5, 2015, the rule will state that items purchased by food and beverage servers are non-taxable if the items purchased are (1) later sold in connection with a sale of food or drink and (2) not reusable. For example, coffee stirrers and napkins that will be sold with cups of coffee are non-taxable when purchased by the restaurant.