The Missouri Department of Revenue (DOR) recently ruled that food and drink sales by a public school coffee shop were exempt from state and local sales tax. A Missouri public school district purchased property that it used as a coffee shop. The purpose of the coffee shop was to teach students entrepreneurship and general business practices. Students operated the coffee shop and sold coffee, food, and other drink products under the supervision of school district employees. They also took classes in the attached classroom covering subjects such as professional development, market planning, marketing information management, and financial analysis.
The DOR determined that products sold at the coffee shop were not taxable. Missouri law exempts sales made by "elementary and secondary schools operated at public expense in their educational functions and activities." Since the students who operated the coffee shop were learning business skills as part of the school district's career and technology curriculum, the sales were made subject to the district's educational function. As a result, the sales were exempt.