Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2016
Sales and Use Tax Annotations
550.0000 TAXABLE SALES OF FOOD PRODUCTS—Regulation 1603
(g) EMPLOYEES', TEACHERS' AND STUDENTS' MEALS
550.1270 Fast Food Chains—Students' Meals. Where the students purchase meals from schools or PTAs and these meals are sold to the schools or PTAs by outside entities such as fast food chains, the sale to the school district or PTA would constitute a sale for resale while the subsequent sale to the students would be considered nontaxable pursuant to section 6363. The school district or PTA must independently contract with outside entity for the purchase of food products. If the outside entity sold the products directly to the students, such sales are not sales by the school and do not fall within the above exemption.
Where the school districts or PTA will be using the fast food products as components of preparing "free" lunches, the school or PTA is the consumer of the property used to prepare the free lunches. However, section 6363 specifically provides that the exemption for school meals applies to sales, use, or other consumption of food products furnished or served to students. Thus, as long as the food products purchased by the schools or PTAs are component of lunches furnished or served to the students, the exemption will apply to purchases of these food products. Under these circumstances, the school or PTA should issue an exemption certificate as provided in Regulation 1667 to the vendor. 8/17/95.