Purpose

The bill changes how Minnesota defines “prepared food” for sales and use tax. By updating the definition in the state tax statute, it clarifies which foods are taxed as prepared food and which are not.

Main Provisions

• Amends Minnesota Statutes 2024 section 297A.61 subdivision 31 to redefine “Prepared food.”
• New definition conditions:
  • Food is prepared if it is sold with eating utensils provided by the seller (such as plates, knives, forks, spoons, glasses, cups, napkins, or straws) or
  • Food is sold in a heated state or heated by the seller, or two or more ingredients are mixed or combined by the seller for sale as a single item.
• Exceptions (foods not treated as prepared food under the new definition):
  • i) Bakery items, including items like bread rolls, buns, biscuits, bagels, croissants, pastries, donuts, Danish pastries, cakes, tortes, pies, tarts, muffins, bars, cookies, tortillas, and related baked goods.
  • ii) Ready-to-eat meat and seafood in an unheated state sold by weight.
  • iii) Eggs, fish, meat, poultry, and foods containing these raw animal foods that require cooking by the consumer as recommended by the FDA Food Code (Chapter 1, Part 401.11) to prevent foodborne illnesses.
  • iv) Food that is only sliced, repackaged, or pasteurized by the seller.
  • v) Food sold by a seller whose primary NAICS classification is manufacturing in sector 311, except subsector 3118.
• References and concepts included in the definition:
  • Food code guidance from the FDA (specifically 401.11) for handling certain foods.
  • NAICS (North American Industry Classification System) classification, particularly sector 311.

Effects and Significance

• The bill adjusts which foods are considered prepared food for purposes of the sales tax. This can change the tax treatment of certain items by clarifying when they are taxed as prepared food versus non-prepared food.
• It preserves specific carve-outs for bakery items and certain unheated or minimally prepared foods, while tying some categories to federal guidance and industry classification.

Significant Changes to Existing Law

• Replaces or refines the previous definition of prepared food with a more detailed set of criteria and exceptions, impacting how many common food items are taxed under the sales tax.

Relevant Terms - prepared food - Minnesota Statutes 2024 section 297A.61 subdivision 31 - sales and use tax - eating utensils provided by the seller - heated state - mixed or combined by the seller - bakery items - ready-to-eat meat and seafood - unheated state - eggs, fish, meat, poultry - FDA Food Code 401.11 - sliced, repackaged, or pasteurized - NAICS - sector 311 - subsector 3118