First Regular Session Sixty-ninth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 13-0541.01 Jason Gelender x4330 SENATE BILL 13-045 SENATE SPONSORSHIP Hill, HOUSE SPONSORSHIP (None), Senate Committees House Committees State, Veterans, & Military Affairs A BILL FOR AN ACT Concerning the expansion of the sales tax exemption for food to include food that is not prepared for domestic home consumption. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) The bill expands the state sales tax exemption for food, which currently exempts from state sales tax most food for domestic home consumption, by also exempting from state sales tax most food that is not for domestic home consumption and is instead prepared for on-site consumption at a restaurant, grocery store, or other establishment or to be carried out and consumed without additional cooking or other preparation. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Legislative declaration. (1) The general assembly hereby finds and declares that: (a) Following the principle that basic necessities should not be subject to state sales tax, the general assembly has for many years exempted from state sales tax food for domestic home consumption; (b) The general assembly has not exempted from state sales tax food that is not for domestic home consumption because in the past people prepared most of their meals at home and food prepared for on-site consumption away from the home at a restaurant or other business establishment or prepared to be carried out and consumed at home without additional cooking or preparation was considered to be more of a luxury than a basic necessity; (c) As the demands of the modern economy have reduced the amount of time available for regular preparation of meals at home, many people have found it necessary or convenient to regularly consume restaurant, carry out, and other food fully prepared outside the home. (2) The general assembly further finds and declares that it is now necessary, appropriate, and in the best interest of all Coloradans to view food prepared for on-site consumption away from the home at a restaurant or other business establishment or prepared to be carried out and consumed at home without additional cooking or preparation as a basic necessity rather than a luxury and to exempt such food from state sales tax. SECTION 2. In Colorado Revised Statutes, 39-26-102, amend (4.5) as follows: 39-26-102. Definitions. As used in this article, unless the context otherwise requires: (4.5) (a) "Food" means all food intended solely or primarily for domestic home consumption as defined in 7 U.S.C. sec. 2012 (k), as amended, for purposes of the federal food stamp program, or any successor program, as defined in 7 U.S.C. sec. 2012 (l), as amended human consumption; except that "food" does not include carbonated water marketed in containers; alcoholic beverages; chewing gum; or seeds and plants to grow foods. prepared salads and salad bars; packaged and unpackaged cold sandwiches; deli trays; and hot or cold beverages served in unsealed containers or cups that are vended by or through machines or non-coin-operated coin-collecting food and snack devices on behalf of a vendor. (b) In determining whether a food product is for domestic home consumption, unless the vendor is described in section 39-26-104 (1) (e), no inference shall be drawn from the type of vendor selling the product, the location of the product within a store, or the manner in which the product is marketed. SECTION 3. In Colorado Revised Statutes, 39-26-104, amend (1) (e) as follows: 39-26-104. Property and services taxed. (1) There is levied and there shall be collected and paid a tax in the amount stated in section 39-26-106 as follows: (e) Upon the amount paid for food or drink or other fare that is not food and that is served or furnished in or by restaurants, cafes, lunch counters, cafeterias, hotels, social clubs, nightclubs, cabarets, resorts, snack bars, caterers, carryout shops, and other like places of business at which prepared food or drink is regularly sold, including sales from pushcarts, motor vehicles, and other mobile facilities. Cover charges shall be are included as part of the amount paid for such food or drink. However, meals drink or other fare that is not food provided to employees of the places mentioned in this paragraph (e) at no charge or at a reduced charge shall be is exempt from taxation under the provisions of this part 1. SECTION 4. In Colorado Revised Statutes, 39-26-707, amend (1), (2) introductory portion, (2) (a), (2) (b), and (2) (c) as follows: 39-26-707. Food, meals, and beverages - definitions. (1) The following shall be are exempt from taxation under the provisions of part 1 of this article: (a) All sales of food; purchased with food stamps. For the purposes of this paragraph (a), "food" shall have the same meaning as provided in 7 U.S.C. sec. 2012 (g), as such section exists on October 1, 1987, or is thereafter amended. (b) All sales of food purchased with funds provided by the special supplemental food program for women, infants, and children, as provided for in 42 U.S.C. sec. 1786. For the purposes of this paragraph (b), "food" shall have the same meaning as provided in 42 U.S.C. sec. 1786, as such section exists on October 1, 1987, or is thereafter amended. (c) Any sale of any article to a retailer or vendor of food, meals, or beverages drink or other fare that is not food, which article is to be furnished to a consumer or user for use with articles of tangible personal property purchased at retail, if a separate charge is not made for the article to the consumer or user, if such article becomes the property of the consumer or user, together with the food, meals, or beverages drink or other fare that is not food purchased, and if a tax is paid on the retail sale as required by section 39-26-104 (1) (a) or (1) (e); except that, on or after March 1, 2010, any such article that is nonessential to the consumer or user, as determined by rules of the department of revenue promulgated in accordance with article 4 of title 24, C.R.S., shall be is subject to state sales taxation; (d) Any sale of any container or bag to a retailer or vendor of food, meals, or beverages drink or other fare that is not food, which container or bag is to be furnished to a consumer or user for the purpose of packaging or bagging articles of tangible personal property purchased at retail, if a separate charge is not made for the container or bag to the consumer or user, if such container or bag becomes the property of the consumer or user, together with the food, meals, or beverages drink or other fare that is not food purchased, and if a tax is paid on the retail sale as required by section 39-26-104 (1) (a) or (1) (e); except that, on and after March 1, 2010, any such container or bag that is nonessential to the consumer or user, as determined by rules of the department of revenue promulgated in accordance with article 4 of title 24, C.R.S., shall be is subject to state sales taxation; and (e) Commencing January 1, 1980, all sales of food. (2) The following shall be are exempt from taxation under the provisions of part 2 of this article: (a) Effective January 1, 1980, The storage, use, or consumption of food or meals that are drink or other fare that is not food that is provided to employees of the places described in section 39-26-104 (1) (e), if such are is provided to such employees at no charge or at a reduced charge; (b) The storage, use, or consumption of any article by a retailer or vendor of food, meals, or beverages drinks or other fare that is not food, which article is to be furnished to a consumer or user for use with articles of tangible personal property purchased at retail, if a separate charge is not made for the article to the consumer or user, if the article becomes the property of the consumer or user, together with the food, meals, or beverages drink or other fare that is not food purchased, and if a tax is paid on the retail sale as required by section 39-26-104 (1) (a) or (1) (e); except that, on and after March 1, 2010, any such article stored, used, or consumed that is nonessential to the end consumer or user, as determined by rules of the department of revenue promulgated in accordance with article 4 of title 24, C.R.S., shall be is subject to state use taxation; (c) The storage, use, or consumption of any container or bag by a retailer or vendor of food, meals, or beverages drinks or other fare that is not food, which container or bag is to be furnished to a consumer or user for the purpose of packaging or bagging articles of tangible personal property purchased at retail, if a separate charge is not made for the container or bag to the consumer or user, if the container or bag becomes the property of the consumer or user, together with the food, meals, or beverages drinks or other fare that is not food purchased, and if a tax is paid on the retail sale as required by section 39-26-104 (1) (a) or (1) (e); except that, on and after March 1, 2010, any such container or bag stored, used, or consumed that is nonessential to the end consumer or user, as determined by rules of the department of revenue promulgated in accordance with article 4 of title 24, C.R.S., shall be is subject to state use taxation; and SECTION 5. Effective date - applicability. This act takes effect July 1, 2013, and applies to sales made on or after said date. SECTION 6. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.