Section R15-5-1862. Restaurant food sales

A.      Restaurants are generally not qualified retailers, and therefore cannot sell food tax free, but are taxable upon all of their gross income or gross proceeds of sale.

B.       If a qualified retailer also operates a restaurant, the gross income or gross receipts of a sale from the two (2) activities must be kept separate. The gross receipts or gross income from the operation of the restaurant shall always be taxable, as will the income from all sales of taxable food and nonfood items. Except for items which may be exempt under some other pro- vision, only tax-exempt foods sold by a qualified retailer not in connection with its restaurant operation shall be exempt.

C.      To the extent that a delicatessen may sell taxable food, such as hot or cold sandwiches, such delicatessen will be required to report under this classification. Since a delicatessen business may constitute a qualified retailer, such business may still be eligible to sell tax exempt food, if such sales are separately accounted for.

Historical Note

Adopted as an emergency effective June 30, 1980, pursu- ant to A.R.S. § 41-1003, valid for only 90 days (Supp. 80- 3). Former emergency adoption now amended and adopted effective October 15, 1980 (Supp. 80-5).