200612897L




December 12, 2006

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Re:  Food Manufacturing Equipment and Supplies

Dear **************:
You asked that we update a list of food manufacturing items and their 
taxability for Texas sales tax.  A third party prepared the 2003 list that you 
sent to Viki Smith in our office.  I apologize for the delay in your request.  
It has taken additional time to research the lengthy list of items.

I've provided you with some background information and updated the original 
list that you provided below.

Background

Texas Tax Code Section 151.318 provides a sales tax exemption for manufacturing 
equipment that directly makes or causes a chemical or physical change to a 
product held for sale.  Equipment used in storage or transportation activities, 
however, is not exempt.  

Items that are necessary and essential to a quality control process that tests 
the product being manufactured for ultimate sale also are exempt.  Comptroller 
Rule 3.300(d)(9) on manufacturing exemptions specifically restricts the quality 
control activity to the actual manufacturing process.  In other words, if the 
quality control activity occurs prior to actual production or after the final 
wrapping and packaging, the items are not exempt.

Packaging equipment, including wrappers, code dates, labelers and tapers, are 
exempt from sales tax when purchased by manufacturers for use as a part of the 
completion of the manufacturing process, as provided in Rule 3.300(d)(15).

Note that some items are taxable or exempt depending on the item's use.  For 
example, paper towels used by a restaurant in the kitchen and in public areas 
are taxable, i.e. paper towels used in cleaning tables and counters do not 
qualify for exemption.  Paper towels, however, that are furnished to customers 
with food or beverages may be purchased tax-free with either a resale or 
exemption certificate.  But, paper towels used solely by food processing 
employees who must wash their hands to meet public health regulatory 
requirements will qualify for tax exemption.  

With dual-purpose items, such as paper towels, a restaurant must keep clear and 
convincing records regarding use in a manner that qualifies for exemption.  The 
restaurant will be responsible for remitting the applicable use tax on any 
paper towels or similar items purchased tax-free that are subsequently used in 
a taxable manner.  

You can find Rule 3.300 and Publication 94-124, Manufacturing Exemptions, on 
the Comptroller's Web site at http://www.window.state.tx.us/taxinfo/sales .

With this in mind, here is the update of the list that you provided:

Items Not Tax Exempt

The general classification of items that are clearly not tax exempt include:

-- items that hold, warm, cool, freeze, serve and/or display food; 
-- items that don't contact food;
-- non-powered utensils or hand tools;
-- items that are used to prepare food to be given away;
-- clothing, aprons and certain gloves not required by law or for public health 
requirements; or
-- equipment and services used to operate a restaurant and not directly used to 
prepare food or beverages for sale. 

The following items are taxable:

Aprons – cloth
Aprons – disposable
Chairs
Chef Hats – cloth or paper
Chopper – manual
Clothing – uniforms, pants, shirts, jackets
Colanders – not used in food processing
Crock Pot – for storing food in heated state
Cutting Boards
Dishes – reusable
Dough Roller – manual
Egg Beater – manual
Flatware – silverware
Food Chopper/Slicer/Dicer/Mixer – manual
Food Prep Tables
Fajita Skillet and Underliner – for serving
Filter (Grease) Machine
Foil Pans – used to serve or hold food
Garlic Press – manual
Grease Filter
Glasses/Tumblers/Cups –reusable
Gloves Latex – serving and cleaning
Grill Bricks/Screens
Guest Checks
Heat Lamps
Hot Cup – plastic holders
Icing Grate – used to thaw/cool/drain
Knives – manual
Lettuce Dryer – manual or electric
Mayo Whip – manual tool
Measuring Cup
Menus – reusable
Mixer – manual
Mixing Glass – manual
Napkins – cloth
Nacho Cheese Merchandiser – chips fresh/warm
Office Equipment and Supplies
Onion Soup Bowl – reusable serving bowl
Paper Towels (See clarification in Background.)
Pastry Tube Bags and Tips
Patty Paper – used for storage
Pepper Mill – manual
Pizza Prep Stand
Placemats – reusable
Plastic Bags – used for storing
Plate Scraper
Popcorn Popper – giveaway popcorn
Refrigerator Equipment
Salad Bar
Salad Bowls
Safety Mats
Sandwich Units (refrigerated, used for storing ingredients to make sandwiches)
Serving Utensils
Scour Pads
Shakers – manual
Silverware – reusable
Skimmers
Slicer – manual
Sno-cone machines – giveaway sno-cones
Soaps/Paper Towels/Toilet Paper – for customers
Soup Warmers/Holder
Squeeze Dispenser
Stainless Steel Pans – for warming or cooling
Sterno
Tables
Table Cloths – reusable
Thermometer – shelf type for refrigeration
Trays – reusable
Turner/Spatula
Utensils – manual
Vent Hoods – not for cooking equipment
Warming Unit
Whip Wire

Items Possibly Tax Exempt

The following items are tax exempt if used by a food service provider for the 
purpose of manufacturing food or drink for sale.

The manufacturer must conduct its business in the State of Texas to qualify.

This list is based on the Texas Comptroller’s office understanding that each of 
these items:

-- makes or causes a physical or chemical change in the product being 
manufactured for sale;
-- is used in a quality control process;
-- is required by law or regulation for public health; or
-- is a certain type of work clothing or safety apparel.

Here is a list of general items that would meet these provisions to be 
considered tax exempt:

Baking Pans 
Blenders/Margarita Machines and parts
Bread Machine
Breading Machines
Broiler/Brazier
Butter Melter 
Cappuccino Machine
Carbonated Drink Machine – exempt if actually mixes or otherwise processes 
carbonated drinks; taxable if it only dispenses or stores drinks
Coffee/Tea Pots – exempt if a component part of a brewing system; taxable if 
only used to store or serve products
Cheese Melters
Charbroiler and Related Components – plate rails, hoses, stainless steel stands 
and casters
China Cap Strainer – used to strain jellies and soups
Colanders – only if used after the processing has began
Cookie Sheets
Crock pot – exempt if used to cook food; storage of food in heated state is 
taxable divergent use
Deep Fryer
Dough Roller – powered operated
Electric Knife/Slicer/Peeler or any other Powered Utensil – makes direct 
contact with food; including powered grinders, tenderizers, shredders, and 
graters
Food Grinder/Chopper/S1icer/Dicer/Mixer/Tenderizer – power operated
Food Processors
Fryers
Fryer Baskets
Gas Hoses – component part of exempt equipment
Gloves, Rubber – required in processing food, not for cleaning or serving
Grills/GriddIes and Related Components – plate rails, hoses, stainless steel 
stands and casters
Hot Dog Cooker
Hot Fudge Warmer
Ice Maker and Holding Unit for Drinks – exempt if for ice that is sold by 
itself or added to drinks
Ice Cream Machines – equipment that makes ice cream but not only for storage, 
maintenance or dispensing
Induction Cookers
Juicers – power operated
Kettles – power operated
Knives – power operated
Milk Shake Machines
Malt Cups – exempt if an accessory to processing equipment; taxable if only 
used to store or serve products
Margarita Machine
Microwave/Roaster/Convection Ovens
Mixer and Component Mixing Bowls – power operated
Nacho Cheese Warmer – except Nacho Chip Merchandisers to keep chips fresh/warm 
are taxable
Oven Mitts
Pasta Cooker
Pepper Mill – power operated
Pizza Screen
Pizza Trays – if also used for serving, then divergent use is taxable
Popcorn/Sno-Cone Machine - for popcorn and sno-cones held for sale; taxable if 
popcorn/sno-cones are given away (such as free popcorn at a bar)
Pots, Pans and Lids – for food as it is being processed (cooked, proofed, or 
marinated)
Pressure Cooker
Proofers and Bun Pans used in Proofers
Range
Rapid Cool Unit – exempt only if used to cool food during processing for sale 
(i.e. pudding); taxable if used to cool food to maintain or store
Rice Cookers – not warmers
Rotisserie – if used directly in food preparation
Salamander (equipment resembles a broiler, but is placed above a stove. It 
heats from the top and is very hot. It is often used for rapid browning or 
gratin dishes.)
Salad Shooter – power operated
Scales – used to measure component ingredients and for testing quality
Skillets
Soda System/Fountain
Soup Crock – used to cook soup
Spindle Drink Mixers
Stove/oven/range – including stockpot range
Smoker/Steamers – if used directly in food preparation.
Thermometers – but refrigeration thermometers are taxable 
Timers – used in the quality control process
Toaster Bun or Toast
Vent Hoods – located above food processing equipment
Waffle Bakers

Tax Exempt Food Manufacturing – Disposables

The following items are tax exempt if non-reusable, or ingredients being served 
to the customer with the product being sold, or if they are necessary and 
essential to comply with laws related to public health.  

Bags, plastic or paper – to use for to-go items
Bib – plastic for one time use
Birthday Candles
Cake Circles – used for take-out
Cocktail Umbrella
Containers – styrofoam for to-go items
Cups & Lids – foam/plastic/paper for customer’s use
Bun Pan Liner
Butane Fuel – non re-useable
Butcher Paper
Charcoal/Lava Rock
Cheese Cloth – used for straining
Coffee/Tea Filters
Degreasers – used on qualifying exempt manufacturing and processing equipment 
Disinfectants – used to sanitize product contact surfaces
Doggie Bags – for customer to use for take home
Doily – if given with product being sold; not exempt if used as display
Drink Mixes or Drink Ingredients
Foil – used in cooking (lining pans, wrapping baked potatoes)
Foil Pans – only if given to customers for take out; taxable if used to hold 
food
Hairnets
Menu Tissues – used to line baskets of chips or french fries
Napkins – paper or paper towels used as napkins (See clarifying information in 
Background.)
Paper Caps
Pizza Saver – placed in to go box
Placemats – disposable
Plastic Bags or Plastic Wrap – used to package products for sale or to-go; 
storing food divergent taxable use
Plates - foam/paper/plastic for one time use
Popcorn and Supplies – only if for popcorn is for sale
Propane Cylinder - non re-useable; not taxable when sold with propane 
(returnable container)
Safety Goggles
Soaps and Cleansers – used on exempt equipment
Skewers – metal or wood
Sno-Cone Syrup and Supplies – only if for sale
Soufflι Cups/Lid - paper or plastic
Stainless Steel Cleaners - used on exempt equipment
Steak Marker – for customers
Table Covers – one time use; disposable
Toothpick/Sword Pick/Frill Pick
Tray – foam/paper/plastic if used to contain product sold to customer
Urn Cleaners - used on qualifying exempt manufacturing and processing 
equipment; taxable if used on equipment used for storage or serving.  
Utensils/Forks/Spoons – plastic non-reusable for customers
Wet Nap – for customer to use
Wrapping Paper – to wrap products being sold; storing food is divergent taxable 
use

This opinion is rendered based on the facts presented.  Other facts, though 
similar, may yield different results.

Again, you will find more information about Texas sales tax laws, rules and 
publications on our Web site at http://www.window.state.tx.us/taxinfo/sales. 

I hope this information is helpful.  I'll be glad to help you if you have 
additional questions.  My direct telephone line in Austin is (512) 936-6103.  
The toll-free number is 1-800-531-5441, ext. 6-6103.

Sincerely,


Debbie Wheeler
Tax Policy Division
debbie.wheeler@cpa.state.tx.us




ACCESSION NUMBER: 200612897L
SUPERSEDED: N
DOCUMENT TYPE: L
DATE: 12/12/2006
TAX TYPE: SALES