Sales And Use Tax On Vending Machines Instructions (Page 2 of 5) in pdf

Sales And Use Tax On Vending Machines Instructions Page 2

operator (lessee) and is based on the lease amount.

Real Property Rental

If the machine owner is also the operator and places the machine at another person’s location, the arrangement

between the operator and the location owner is a taxable lease or license to use real property. The tax is collected by

the location owner (lessor) from the machine operator (lessee) and is based on the commission payment to the location

owner (lessor).

What is Exempt?

Churches

Receipts from vending machines operated by churches are not taxable.

Schools

Food and beverages sold or dispensed through vending machines located in a student lunchroom, student dining room,

or other area designated for student dining in schools offering grades K through 12 are exempt. Food and beverages

sold through vending machines in a gymnasium, shop, teacher’s lounge, corridor, or other area accessible to the

general public and not specifically designated for student dining are subject to tax. PTAs and PTOs (in schools

offering grades K through 12 only) that sell food or beverages through vending machines must choose to pay tax to

their suppliers or remit tax on the sales.

Charitable Organizations

Food and drinks sold for 25 cents or less through a coin-operated vending machine sponsored by a charitable

organization qualified under sections 501(c)(3) or 501(c)(4), Internal Revenue Code, are exempt.

How is Tax Calculated?

Tax is calculated by:

1. Dividing the gross receipts from the machine by a divisor (see table) to compute taxable sales.

2. Subtracting taxable sales from gross receipts to arrive at the amount of tax due.

How Sales Tax is Calculated on

Vending Machine Sales

Then your gross receipts divisor

is:

If your sales tax rate

is:

Food and

Other Tangible

Beverages

Items

1.0645

1.0659

6.25%

1.06655

1.0683

Sales And Use Tax On Vending Machines Instructions Page 2