Tax Type
Retail Sales and Use Tax
Description
Application of Food Tax Reduction Program to for-profit nursing home
Topic
Basis of Tax
Rate of Tax
Date Issued
02-20-2001
February 20, 2001
Re: Request for Ruling: Retail Sales and Use Tax
Dear ****
This is in reply to your letter of November 13, 2000, in which you request a ruling regarding the application of the reduced sales tax rate to purchases of food by **** (the "Taxpayer").
FACTS
The Taxpayer is a healthcare management company that manages two for-profit nursing homes. The Taxpayer purchases a variety of food products for use in preparing meals that are fed to patients of the nursing homes. The purchases are made on purchase orders in the name of the for-profit nursing homes. Currently, a number of the Taxpayer's vendors charge the sales tax at the rate of 4.5% on purchases of food for the nursing homes. Others charge the reduced rate of 4.0% on such purchases. The Taxpayer requests clarification on whether the reduced sales tax applies to its purchases of food.
RULING
Under the Food Tax Reduction Program, Virginia applies a reduced sales tax rate to food for home consumption by humans as defined by the federal food stamp program. The federal definition includes most staple grocery food items and cold prepared foods packaged for home consumption.
The food products purchased by the Taxpayer are considered food for home consumption under the federal definition. Therefore, the purchase of such food items by the Taxpayer qualifies for the reduced sales tax rate. The Taxpayer should provide a copy of this letter to each vendor as verification that purchases of the qualifying food items may be made at the reduced sales tax rate of 4.0%.
The Taxpayer is advised that the next level of the sales tax reduction on food for home consumption, scheduled for April 1, 2001, will not take effect. The reduced sales tax rate will remain at its current level of 4%.
I hope the foregoing has responded to your inquiry. If you have additional questions, please contact **** in the Office of Tax Policy at ****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/31704J
Re: Request for Ruling: Retail Sales and Use Tax
Dear ****
This is in reply to your letter of November 13, 2000, in which you request a ruling regarding the application of the reduced sales tax rate to purchases of food by **** (the "Taxpayer").
FACTS
The Taxpayer is a healthcare management company that manages two for-profit nursing homes. The Taxpayer purchases a variety of food products for use in preparing meals that are fed to patients of the nursing homes. The purchases are made on purchase orders in the name of the for-profit nursing homes. Currently, a number of the Taxpayer's vendors charge the sales tax at the rate of 4.5% on purchases of food for the nursing homes. Others charge the reduced rate of 4.0% on such purchases. The Taxpayer requests clarification on whether the reduced sales tax applies to its purchases of food.
RULING
Under the Food Tax Reduction Program, Virginia applies a reduced sales tax rate to food for home consumption by humans as defined by the federal food stamp program. The federal definition includes most staple grocery food items and cold prepared foods packaged for home consumption.
The food products purchased by the Taxpayer are considered food for home consumption under the federal definition. Therefore, the purchase of such food items by the Taxpayer qualifies for the reduced sales tax rate. The Taxpayer should provide a copy of this letter to each vendor as verification that purchases of the qualifying food items may be made at the reduced sales tax rate of 4.0%.
The Taxpayer is advised that the next level of the sales tax reduction on food for home consumption, scheduled for April 1, 2001, will not take effect. The reduced sales tax rate will remain at its current level of 4%.
I hope the foregoing has responded to your inquiry. If you have additional questions, please contact **** in the Office of Tax Policy at ****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/31704J
Rulings of the Tax Commissioner