§ 31.28. Vending machines.
(a) Definitions. The following words and terms, when used in this section, have the following meanings, unless the context clearly indicates otherwise:
Juice beverage—A liquid beverage containing at least 25% by volume natural fruit or vegetable juice.
Meal—A variety of foods prepared for immediate consumption and sold as a single item.
Operator—A person who makes sales of tangible personal property, including food or beverages, primarily through a vending machine.
Selected food and beverage items—Soft drinks; meals; hot or cold sandwiches, including cold meat sandwiches, cheese sandwiches, hoagies, hot dogs, hamburgers and similar sandwiches; brewed coffee; hot beverages such as hot chocolate, hot tea and similar items; food from salad bars; pizza, soup and other food items dispensed from the vending machine in a heated form or which are served in cold form and normally heated in an oven or microwave provided by the operator.
Soft drink—(i) All nonalcoholic beverages, whether carbonated or not, such as soda water; ginger ale; Coca Cola; lime cola; Pepsi Cola; Dr. Pepper; fruit juice when plain or carbonated water, flavoring or syrup is added; carbonated water; orangeade; lemonade; root beer or all preparations, commonly referred to as ‘‘soft drinks’’ of whatsoever kind, and are further designated as including all beverages, commonly referred to as ‘‘soft drinks,’’ which are made with or without the use of any syrup.
(ii) The term does not include a juice beverage.
Vending machine—A device which mechanically dispenses tangible personal property, including food and beverages, for a purchase price.(b) Registration. An operator who sells taxable tangible personal property or selected food and beverage items through a vending machine is required to obtain a Sales, Use and Hotel Occupancy Tax License for the purpose of collecting and remitting tax to the Department. One license is sufficient for any number of machines operated by the same operator.
(c) Identification requirement. A sign or a sticker setting forth the name and address of the operator shall be conspicuously displayed on the vending machine.
(d) Scope.
(1) General. The sale of food or beverages from a vending machine may be taxable or exempt depending upon the type of food or beverage or upon the basis of the location from which the food or beverage is sold. Since a vending machine does not qualify as an eating establishment, only the sale of selected food and beverage items as defined in subsection (a), is taxable when sold from a vending machine. Taxable tangible personal property, other than food and beverages, is also subject to tax when sold from a vending machine.
(2) Sales of taxable tangible personal property, other than selected food and beverage items.
(i) Imposition. The sale of taxable tangible personal property, such as cigarettes, combs, toys, pencils and similar items is subject to tax upon the purchase price of each individual item.
(ii) Collection of tax. The vending machine operator is required to collect tax upon the purchase price of each individual taxable item of property. The amount to be inserted in the machine is presumed to include the amount of tax to be collected for each item. If, however, the Department determines upon audit that the vending machine operator has not reported and remitted tax in accordance with this section and the TRC, the presumption will not apply, and the Department will assess the vending machine operator as though the amount inserted into the machine was the purchase price without the tax.
Example 1: ‘‘A’’ operates a vending machine from which pencils may be purchased. To obtain a pencil, the purchaser is required to insert 35¢ into the machine. The tax is properly reported and remitted as follows: the purchase price is 33¢ and tax is 2¢.
Example 2: ‘‘A’’ operates a vending machine from which pencils may be purchased. To obtain a pencil, the purchaser is required to insert 35¢ into the machine. ‘‘A’’ reports and remits no Sales Tax. When ‘‘A’’ is audited by the Department, he is assessed as follows: purchase price 35¢, tax 3¢.
(3) Sales of selected food and beverage items.
(i) Imposition. The sale of selected food and beverage items, as defined in subsection (a), from a vending machine is subject to tax upon the total receipts from the sale of the items.
(ii) Collection of tax. An operator of a vending machine from which selected food and beverage items are sold is required to collect and remit Sales Tax at the rate of 6% upon the sale of the selected food and beverage items. Sales Tax shall be computed by the following formula: (Total receipts from the sale of selected food and beverage items ÷ 1.06) x .06 = Sales Tax due.
Example:
‘‘A’’ operates a vending machine from which milk, coffee and crackers are sold. ‘‘A’’ removes $100 from the machine representing the following sales: milk—$50, coffee—$25 and crackers—$25. Coffee is a selected food and beverage item. Milk and crackers are not. ‘‘A’’ remits tax in the amount of $1.42 calculated as follows: ($25 ÷ 1.06) x .06 = $1.42.
(4) Sales of food and beverages other than selected food and beverage items.
(i) The sales of food and beverages of the type described in this paragraph are not subject to Sales Tax when sold from a vending machine.
(ii) Examples of exempt food and beverages include:
(A) Baked goods, such as cakes, pies, cookies.
(B) Potato chips.
(C) Corn chips.
(D) Cheese balls.
(E) Pretzels.
(F) Crackers.
(G) Milk products, such as plain milk, chocolate milk, malted milk.
(H) Ice tea and iced coffee.
(I) Juice beverages.
(J) Unflavored water.
(K) Prepackaged ice cream products, such as ice cream cakes and pies, popsicles, sundaes and novelties.
(L) Prepackaged frozen water-based products, such as ice pops, fudge pops, fruit ice, bomb pops and similar items.
(M) Candy and gum.
(N) Other food and beverages not defined as a selected food and beverage item, including cold food for which heating facilities are not provided.
(e) Vending machine sales on school or church property.
(1) Sales of selected food and beverage items dispensed by means of a vending machine located on the premises of a school or church are exempt from tax.
(2) Sales of tangible personal property, other than food or beverages, which are dispensed by means of a vending machine located on the premises of a school or church, are subject to tax.
(f) Remitting tax to the Department. Sales Tax collected by the operator upon the sale of taxable tangible personal property, including selected food and beverage items, shall be reported and remitted to the Department.
(g) Purchase or lease of vending equipment and supplies.
(1) The purchase or lease of vending equipment, including parts, accessories, such as tables, chairs, microwaves, straw and napkin dispensers and other similar items, and supplies, such as straws, napkins, stirrers, eating utensils and similar items, is subject to tax.
(2) Wrapping supplies, such as plastic, paper and styrofoam cups, bowls or similar containers used to wrap property which is sold, are exempt from tax.
Authority The provisions of this § 31.28 amended under section 270 of the Tax Reform Code of 1971 (72 P. S. § 7270).
Source The provisions of this § 31.28 amended September 14, 1984, effective September 15, 1984, 14 Pa.B. 3366; amended March 1, 2002, effective March 2, 2002, 32 Pa.B. 1213. Immediately preceding text appears at serial pages (265200) to (265201).
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