New Jersey – Wrapping Supplies Sold to Food Service Providers

SALT Report 2964 – The New Jersey Division of Taxation issued a letter ruling regarding the application of sales and use tax to sales of plastic delivery bags, plastic plates, paper and Styrofoam plates, cups, and bowls to restaurants and other food establishments. The Taxpayer is a wholesale supplier of food and food related products and requested a ruling as to whether these items qualify as exempt wrapping supplies when sold to food service establishments.

In its response, the Department stated that restaurants, caterers and other food service establishments are required to pay sales tax on their purchases of taxable items if they are not resold, or they are not otherwise exempt.  For example, purchases of utensils, straws, tablecloths, napkins, placemats, and janitorial supplies by restaurants or food establishments are taxable under N.J.S.A. 54:32B-3(a).

However, the New Jersey provides an exemption for sales of certain products if they are:

  • Non-returnable containers or wrapping supplies, and
  • Used incidental to the delivery of prepared food to the customer

In this particular case, the Taxpayer’s sales of plastic delivery bags, plastic plates, paper plates, Styrofoam plates, cups, and bowls qualify as exempt wrapping supplies because they are non-returnable items used in the delivery of prepared foods to the end consumer.

When making an exempt purchase the customer should provide the Taxpayer with an Exempt Use Certificate, Form ST-4, or a Streamlined Sales and Use Tax Certificate of Exemption, Form ST-SST.  The Taxpayer should keep any certificates associated with these exempt sales in its records for at least 5 years.

For Further Information

New Jersey Division of Taxation – LR: 2013-2-SUT