The Colorado Department of Revenue recently issued a private letter ruling (PLR 23-003) for an out-of-state company selling food products for home consumption in Colorado. According to the ruling, these food products are exempt from state sales and use tax.
The exemption is based on the fact that the food requires additional home preparation and is not marketed for immediate consumption. The company’s food products, which are cooked, cooled, packaged, and sent to Colorado buyers by a third party, fall under this exemption. The ruling draws upon the definitions governing the federal Supplemental Nutrition Assistance Program (SNAP) as required under state law. It is also worth noting that the company has no physical presence in Colorado and sells its pre-cooked and packaged food products exclusively through its website.
The ruling applies specifically to the company mentioned in the letter and cannot be relied upon by other taxpayers. Furthermore, the company will need to determine whether state-administered local governments are also adopting this exemption.