Thursday, August 27, 2015

Musings on Coffee, Libraries & Sales Tax

Photo of coffee beans and letter tiles spelling "coffee"
(Photo of coffee beans courtesy of Pixabay)
More and more public libraries are making coffee, bottled water, and even snacks available to their patrons.   The details and logistics may vary from library to library but the basic concept remains the same - creating a public space that's an inviting, comfortable place to visit.

A question often asked of our Public Library Development Team is whether the sale of beverages and snacks in a library requires the collection of sales tax.  I recently contacted the folks at our Wisconsin Department of Revenue (DOR) to find out.  Here's the (coffee) scoop:

  • A useful resource is DOR's Publication 209: "Sales and Use Tax Information for Wisconsin Counties and Municipalities."
  • According to the DOR, there's a difference between "prepared foods" which require the collection of sales tax and "food and food ingredients and beverages" which do not.
  • If a library sells ready-to-drink coffee or other beverages, those are considered "prepared food" and require the collection of sales tax.  Coffee that the patron makes using a single-serve "pod system" (like a Keurig) is not considered "prepared food" so does not require the collection of sales tax.
  • Pretty much any snack / candy item is considered "prepared food" and will require the collection of sales tax.
  • If a library sells items that are defined as "prepared food" then it will be the library's municipality that applies for the Wisconsin seller's permit and makes the necessary payments to the state.
  • If a library doesn't charge a set price for coffee / beverages / snacks but instead asks for a donation, then it must truly be a donation; payment cannot be required or expected.
  • If a library works with a private vendor to provide vending machines for coffee / beverages / snacks, then that vendor is responsible for collecting sales tax.  The library would not be involved.
  • A helpful overview of this topic - "Sales Tax Issues for Wisconsin Public Libraries" - can be found on our DPI website.

Written by:
Denise Anton Wright, Public Library Development