Restaurants where the public is invited to eat on the premises or to purchase prepared food and carry it out for consumption elsewhere are consumers of items such as paper napkins, drinking straws, and plastic tableware furnished to patrons. Retailers selling items of this nature to restaurants and similar establishments are subject to sales tax on the gross receipts from the sale of such items.

Containers for food or beverages such as paper cups, drinking glass covers, disposable food trays, wrappers, and plastic bowls which hold tangible personal property whose sales are subject to sales tax are considered a part of the taxable sale. Persons selling these containers to retailers are not liable for sales tax on these items.

Source: 7 SDR 80, effective February 22, 1981; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 15 SDR 58, effective October 19, 1988; 16 SDR 76, effective November 1, 1989; 21 SDR 219, effective July 1, 1995.

General Authority: SDCL 10-45-47.1.

Law Implemented: SDCL 10-45-2 , 10-45-14.5.