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S.F. No. 789 - Expanding Capital Equipment Exemption; Providing Exemption For Certain Meals and Beverages (as proposed to be amended by the A-3 amendment)
Author: Senator Scott M. Jensen
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
Date: February 22, 2017






Under current law, the capital equipment sales tax exemption applies to machinery and equipment primarily for use in manufacturing, fabricating, mining, or refining tangible personal property to be sold at retail. As proposed to be amended, this section expands the exemption to machinery and equipment used by restaurants and certain retail food handlers (generally, grocery stores, delis, and convenience stores) in the furnishing, preparing, or serving of prepared foods.


Exempts complimentary meals and both alcoholic and nonalcoholic beverages provided by a restaurant to a customer. Under current law, the restaurant owes use tax on these items.


Exempts prepared food and drinks purchased for and served to restaurant employees.

The bill is effective for sales and purchases made after June 30, 2017.


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