Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2014
 

Sales and Use Tax Annotations


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T

550.0000 TAXABLE SALES OF FOOD PRODUCTS—Regulation 1603

Annotation 550.0348

(b) RESTAURANTS, HOTELS AND BOARDING HOUSES

550.0348 Fish—You Buy, We Fry. Taxpayer is engaged in business as a fish market with no facilities provided for customers to sit and eat the food purchased. Food is sold on a take out basis wrapped and placed in paper bags. As part of the fish market operations, taxpayer made sales of fish under the name "you buy, we fry." The customer would identify a fish filet on display, taxpayer's employee would fry the fish and taxpayer would then hand deliver it to the customer. The customer would be given one sales receipt indicating a separate charge for the cold fish and another separate charge for the frying.

Pursuant to Uniform Commercial Code—Sales, section 2401(2) and Regulation 1628(b)(3)(D), the sale occurs (i.e., title passes to the purchaser) when the retailer physically delivers the property to the purchaser unless the parties had an explicit agreement to pass title at an earlier time. Since no explicit agreements existed, taxpayer sold each "you buy, we fry" fish item to their customers at the time they hand delivered it to them. In summary, the essence of the "you buy, we fry" transaction is one combined transaction—a sale of a hot prepared food product. Accordingly, as a sale of hot prepared food products, the gross receipts from such sales are subject to sales tax. 2/27/84.