Colorado Relies on Product Label to Determine if Item is Exempt Food

Thursday, February 23rd, 2012

 
 
Share
Link
Colorado
General
The Colorado Department of Revenue (DOR) recently released a private letter ruling clarifying the taxability of food and nutritional products. Colo. Priv. Ltr. Rul. No. PLR-11-008 (Dept. of Revenue Dec. 20, 2011). In the ruling, the DOR focused on whether the products bore "Nutrition Facts" or "Supplement Facts" labels, as the product's labeling is one of the keys to determining whether a product qualifies for Colorado's food exemption. The products at issue in the ruling carried "Nutrition Facts" labels, so they were ultimately determined to be exempt "food." At issue in the ruling were four types of nutrition drinks: (1) a complete nutrition shake marketed as a meal substitute; (2) a shake marketed as providing focused nutritional benefits; (3) a line of shakes for people with diabetes; and (4) a drink available in both powder and liquid forms marketed towards athletes. All four products were labeled with a "Nutrition Facts" panel, and none bore a "Supplement Facts" label. Colorado generally exempts food sold for domestic consumption. In the ruling, the DOR explained that Colorado defines "food" by using the same definition as the U.S. Department of Agriculture's Supplemental Nutrition Assistance (SNAP) Program and Women, Infant, and Children (WIC) program. In turn, those programs look to the food label required by the U.S. Food and Drug Administration to determine what products are "food." Thus, food and nutritional products that carry a "Nutrition Facts" label qualify as "food" for purposes of Colorado's food exemption. But, food-like items that bear a "Supplement Facts" label are dietary supplements; they are excluded from the definition of food and, therefore, are taxable. Because the products discussed in the ruling had "Nutrition Facts" labels and not "Supplement Facts" labels, the products are treated as food and qualified for Colorado's food exemption.

About TTR

Transaction (buying or selling things), Tax (the tax on this activity), Resources (our people, our website, our support services) - TTR, Inc.

TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

Please visit TTR on the web at www.ttrus.com or call 866.578.8193.

Texas Exempts Boats and Motors Temporarily Used in the...

Wednesday, June 26th, 2019 -Texas has recently passed a bill creating an exemption for boats and motors purchased for use outside of the s...

Data Survey Services Not Taxable in South Carolina

Monday, June 24th, 2019 -The South Carolina Department of Revenue recently ruled that business data survey services were non-taxable pr...

Senior Center Cafeterias are Taxable in Missouri

Friday, June 21st, 2019 -Missouri's Director of Revenue recently issued a letter ruling taxing the sale of cafeteria food by a 501(c)(3...

Hot-Air Balloon Rides in Missouri are Taxable When...

Wednesday, June 19th, 2019 -Missouri recently released a letter ruling addressing the taxation of hot-air balloon rides. The taxpayer was ...

Nevada Exempts Certain Medical Equipment

Monday, June 17th, 2019 -Effective July 1, 2019, Nevada will exempt durable medical equipment, oxygen delivery equipment, and mobility ...

Participatory Sports are Taxable in New York

Friday, June 14th, 2019 -The New York Division of Tax Appeals recently denied a refund claim made by an instructor-led indoor spin clas...