Regulation 1574 (Continued)
(A) PHOTOCOPIES. Tax applies to the gross receipts from sales of photocopies through coin- or card-
operated copy machines. However, library districts, municipal libraries, county libraries, or any vendor making sales
pursuant to a contract with a library district, municipal library, or county library are consumers of photocopies sold at
retail through a coin-or card-operated copy machine located at a library facility.
(B) SALES BY PARENT-TEACHER ASSOCIATIONS.
Parent-teacher associations or equivalent
associations under Regulation 1597(f) (18 CCR 1597 (f)), are consumers of tangible personal property dispensed
through vending machines and are not required to hold seller's permits by reason of such activities.
(C) SALES BY NONPROFIT, CHARITABLE, OR EDUCATION ORGANIZATIONS. Nonprofit, charitable,
or education organizations dispensing tangible personal property for 15 cents or less through a vending machine are
the consumers of such property and are not required to hold a seller's permit by reason of such activities.
(D) SALES OF WATER. Sales of purified drinking water through vending machines where the water enters
the machine through local supply lines and is dispensed into the customer's own containers are exempt from the tax
under Revenue and Taxation Code Section 6353.
(2) FOOD PRODUCTS.
(A) Effective January 1, 1986, tax applies to the gross receipts from the retail sale of food products,
including candy and confectionery, dispensed through a vending machine at retail for more than 15 cents unless
otherwise exempted as provided below. Since sales through vending machines are presumed to be made on a tax-
included basis, total receipts from the taxable retail sale of food products through vending machines should be
adjusted to compensate for the sales tax included therein. The term "food products" does not include carbonated
beverages. A vending machine operator is a consumer of, and not a retailer of, food products, including candy and
confectionery, dispensed through a vending machine at retail for 15 cents or less, effective January 1, 1986. Tax is
measured by the sale price to the vending machine operator of such items unless otherwise exempt. If the property
sold to the operator is an exempt food product or a nonreturnable container, no tax is payable regardless of the
nature of the product when dispensed through the vending machine, and regardless of whether facilities for
consumption are furnished at locations of the vending machines. For the purposes of this subdivision, the term
"candy and confectionery" includes candy-coated gum products.
(B) Operative January 1, 1988, tax does not apply to the sales, and the vending machine operator is the
consumer, of any food products, including candy and confectionery other than beverages or hot prepared food
products, sold through a coin-operated bulk vending machine if the amount of each sale is twenty-five cents ($0.25)
or less. For purposes of this regulation, "bulk vending machine" means a vending machine containing unsorted food
products, including candy and confectionery, which, upon insertion of a coin, dispenses those products in
approximately equal portions, at random, and without selection by the customer. For the purposes of this subdivision,
the term "candy and confectionery" includes candy-coated gum products.
(C) Beginning January 1, 1988, a partial exemption from the tax is allowed any retailer who receives gross
receipts through vending machines from the sale of cold food products, hot coffee, hot tea and hot chocolate which
are subject to the tax. The following percentages of the gross receipts from the sales of such products are subject to
the tax: 77% for the calendar year 1988, 55% for the calendar year 1989, and 33% thereafter. This partial exemption
does not apply to sales of hot prepared food products (except hot coffee, hot tea and hot chocolate) and receipts from
such sales may not be included in the computation of the exemption.
"Gross receipts from the sale of cold food products, hot coffee, hot tea and hot chocolate" represents total receipts
after adjusting for sales tax included. Therefore, in order to determine taxable receipts, an adjustment must be made
to compensate for sales tax included in total receipts. Following is an example of the computation using the 7 1/4
percent rate:
Total receipts from sales of cold food product,
hot coffee, hot tea and hot chocolate through vending machines
$10,000.00
Factor
32.2289%
Taxable receipts
$3,222.89
Tax rate
7.25%
Tax included
$233.66
Exempt receipts
$6,543.45
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