SALT Report 1463 –Maine Revenue Services issued an updated bulletin regarding the taxability of prepared foods. The bulletin provides guidance for restaurants, caterers, street vendors, grocery and convenience stores, exempt meals, purchases for resale, and taxable items.

A retailer may make tax-free purchases of tangible personal property that it intends to resell only if the retailer holds a current valid resale certificate and presents it to the supplier at the time of the purchase.  The broadest category of purchases for resale by food preparers consists of food products that become part of a meal sold to customers.

The following items may be purchased tax free by a food preparer when they become part of the meal being sold.

• Condiments

• Disposable Bibs

• Disposable Utensils

• Disposable Napkins

• Disposable Tablecloths

• Moist Hand Towelettes

• Disposable Placemats

• Salt & Pepper

• Stirrers

• Straws

• Toothpicks Served in Food

• Tray liners

Taxable Purchases

Purchases of tangible personal property made by food preparers are subject to sales tax.  These items include, but are not be limited to the following:

• Dishes

• Cleaning Supplies

• Maintenance Supplies

• Furniture

• Cooking Utensils Appliances

• Linens

• Silverware

• Guest Checks

• Office Supplies

• Menus

• Serving Trays

• Uniforms Safety Products

• Disposable Gloves

In some cases, purchased products may be used for both taxable and exempt purposes, for example plastic wrap, which may be used to wrap products sold to customers but also used to cover and store food.  In this situation, it is the responsibility of the food preparer to account for the tax based on the percentage that is used for taxable purposes and pay the use tax directly to the State.

Additionally, if a food product does not qualify as a “grocery staple”, the food preparer must provide a resale certificate to the supplier in order to purchase these items without paying sales tax.

For Further Information:

Maine Revenue Services – Instructional Bulletin No. 27