Percentage of Prepared Food Sold Determines Taxability of Non-Prepared Food Sales in Washington

Tuesday, October 29th, 2013


The Washington Department of Revenue recently released a special notice on food sales. Sales of prepared food are subject to sales tax in Washington. Prepared foods include heated foods, combined foods (two or more ingredients), and foods sold with utensils provided. Whether a taxpayer's sales of non-prepared food are taxable generally depends on the percentage of the taxpayer's prepared food sales relative to their sales of non-prepared food. The notice states that retailers whose prepared food sales account for more than 75% of their total sales are required to collect sales tax on sales of non-prepared food, with one exception: food and food ingredients that contain four or more servings sold as a single item are not taxable even if the retailer exceeds the 75% threshold. Things like loaves of bread and ground coffee are examples of four-serving foods sold as a single item. Four-serving foods are never taxable unless it is the seller's customary practice to physically hand, or deliver, a utensil to the customer as part of the transaction.

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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.

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