Coffee and taxes

deadXgreg

New member
Oct 3, 2020
20
0
Hey all,

So i know coffee sales are tax free, but can someone point me to the documentation that states it possibly? I'm in CO, and the state has not been helpful nor irs (who would have thought? ).
Thanks!
 

MntnMan62

New member
Nov 15, 2019
445
1
New Jersey
From what I can see, the sale of coffee in Colorado is subject to a 2.9% sales tax. I don't live there but where I live in NJ, a cup of coffee is taxed. However, when I buy my beans the roaster isn't charging me a sales tax. I'm assuming he's paying the sales tax from what i pay him.
 

PinkRose

Super Moderator
Staff member
Feb 28, 2008
5,219
6
Near Philadelphia, PA
Hey all,

So i know coffee sales are tax free, but can someone point me to the documentation that states it possibly? I'm in CO, and the state has not been helpful nor irs (who would have thought? ).
Thanks!

Your state's department of taxation should have a list (on their website) of all the items that are taxable in your state and what are not. It gets a little tricky with some items. In many states, coffee beans and ground coffee are considered food items, and they are not taxed. But if the coffee is prepared for you, it is taxed. If your state doesn't tax food items that you buy at the grocery store, and if you buy those same food items in a restaurant, you have to pay tax for it. (muffins, donuts, etc. for example) In some states, if you buy bottled water at the grocery store, you don't pay tax on it. But if you go to a convenience store and buy the same water and it's chilled in a cooler, it is taxed. The individual states make the rules. If the item is altered in any way such as taken out of the package and served or repackaged for sale, or heated or chilled, etc. it's taxable.

It's best if you can do some exploring and get a list of what's taxed and what's not.

Some stores and coffee shops include the tax in the price of the coffee to round out the numbers. It is easier to charge a straight-up $2.00 for a cup of coffee vs. $1.88 - it makes it easier for the customer and the person at the cash register. But, the shop owners have to do the bookkeeping on their end, and pay the state their tax money every three months.

I hope you will be able to find what you're looking for. You will need to do some exploring on your state's tax website (the section for business owners)

~ Rose
 
Last edited:
OP
D

deadXgreg

New member
Oct 3, 2020
20
0
  • Thread Starter
  • Thread starter
  • #5
Your state's department of taxation should have a list (on their website) of all the items that are taxable in your state and what are not. It gets a little tricky with some items. In many states, coffee beans and ground coffee are considered food items, and they are not taxed. But if the coffee is prepared for you, it is taxed. If your state doesn't tax food items that you buy at the grocery store, and if you buy those same food items in a restaurant, you have to pay tax for it. (muffins, donuts, etc. for example) In some states, if you buy bottled water at the grocery store, you don't pay tax on it. But if you go to a convenience store and buy the same water and it's chilled in a cooler, it is taxed. The individual states make the rules. If the item is altered in any way such as taken out of the package and served or repackaged for sale, or heated or chilled, etc. it's taxable.

It's best if you can do some exploring and get a list of what's taxed and what's not.

Some stores and coffee shops include the tax in the price of the coffee to round out the numbers. It is easier to charge a straight-up $2.00 for a cup of coffee vs. $1.88 - it makes it easier for the customer and the person at the cash register. But, the shop owners have to do the bookkeeping on their end, and pay the state their tax money every three months.

I hope you will be able to find what you're looking for. You will need to do some exploring on your state's tax website (the section for business owners)

~ Rose
Rose,

Thanks for all the feedback! Sorry on late reply. I did look into it as you said and found my answers! Have an awesome week!
 

topher

Super Moderator
Staff member
Aug 14, 2003
3,737
13
Boca Raton
OP
D

deadXgreg

New member
Oct 3, 2020
20
0
  • Thread Starter
  • Thread starter
  • #7
I am no tax expert so I did a quick google search and found this. Colorado groceries are tax exempt. Coffee prepared and served for consumption in store is taxed. I can see how they can charge tax on actual cups of coffee and RTD beverages but not unprepared ground or whole bean coffee. Hope this helped. I would also contact a tax lawyer or the state.
View attachment 11021 View attachment 11022
Right on and thanks Topher!
 
OP
D

deadXgreg

New member
Oct 3, 2020
20
0
  • Thread Starter
  • Thread starter
  • #9
You lose my number? Hope to see you in NOLA! It's been way too long.
Naw man, I got it. Sorry can't have phone at work and usually try to avoid it at home. I messaged you. I'll see what I can swing, that event looks awesome and it would be great to catch up for sure! Stay well bro!
 

annaneves

New member
Jul 23, 2021
1
0
CA
Glad that you've managed to find the answers you were looking for. First of all, more than 80 percent of the seller's retail sales of food products are taxable as provided in BOE Regulation 1603. Also, when hot coffee is sold combined with cold prepared food for one price, the wholesale becomes taxable, even though both are exempt when sold individually. Therefore, the tax does not apply to the sale of hot bakery items, hot coffee, and other hot beverages if they are sold individually and to go. At https://pdfliner.com/form-1099-nec you can find the printable 1099-NEC printable blank form for free usage.
 
Last edited:
Top