Resale Certificate for Food Trucks and Restaurants

Running a food truck, restaurant, or catering business means dealing with unique sales tax rules. The good news? You can use a resale certificate to purchase ingredients and supplies tax-free. The tricky part? Food service tax laws vary significantly by state.

This guide will help you understand how resale certificates work in the food service industry.

Food Truck

The Basics for Food Service Businesses

As a food service business, you're buying ingredients and supplies to create meals you sell to customers. That makes you eligible for a resale certificate.

How It Works

What Food Businesses Can Buy Tax-Free

Food Ingredients

All ingredients that become part of your menu items qualify:

Examples:

• Produce (vegetables, fruits)
• Meats and proteins
• Dairy products
• Grains and bread
• Spices and seasonings
• Cooking oils
• Beverages you sell
• Condiments provided to customers

Packaging and Disposables

Items that transfer to the customer with their purchase:

Resale Items

Products you sell without modification:

• Bottled beverages
• Pre-packaged snacks
• Merchandise (t-shirts, sauces you sell)

What You CANNOT Buy Tax-Free

Kitchen Equipment and Supplies

Items used in your operations but not transferred to customers:

• Cooking equipment (grills, fryers, ovens)
• Refrigerators and freezers
• Food prep equipment
• Pots, pans, and utensils you use
• Cleaning supplies
• Dish soap and sanitizers
• Kitchen smallwares

Operating Supplies

• Paper towels
• Cleaning chemicals
• Uniforms/aprons
• Office supplies
• Register equipment
• Furniture and fixtures

Food You Consume

• Employee meals (unless proper records kept)
• Samples (in some states)
• Food that spoils before sale

State-Specific Food Tax Rules

Food taxation is notoriously complex because states treat prepared food differently than groceries.

States That Tax Prepared Food

Most states tax prepared food (restaurant meals, food truck fare) at the standard sales tax rate or higher.

States With Food Exemptions

Some states exempt certain food items:

However: Prepared food (meals you serve) is almost always taxable, even in these states.

The Prepared vs. Unprepared Distinction

This matters for what you sell (not buy):

Usually Exempt (grocery):

• Raw produce
• Uncooked meats
• Bakery items (varies)
• Cold sandwiches (some states)

Usually Taxable (prepared):

• Cooked/heated food
• Meals served for consumption
• Combination meals
• Food sold with utensils

Food Trucks: Special Considerations

Food trucks face unique challenges because they're mobile and may operate in multiple jurisdictions.

Multiple Locations

If your food truck operates in different cities or counties:

1. Different tax rates may apply at each location
2. Register with your state for sales tax
3. Track sales by location for proper reporting
4. Some cities require separate permits

Event Sales

Selling at festivals, fairs, and events:

Commissary Purchases

Many food trucks use commissaries:

• You can use your resale certificate at commissaries
• Ingredient purchases are tax-exempt
• Keep records of what goes into resale items

Restaurant-Specific Considerations

Dine-In vs. Takeout

Tax treatment may differ:

Tips and Service Charges

• Voluntary tips: Not taxable
• Mandatory service charges: May be taxable (varies by state)

Gift Cards

• Purchase of gift card: Not taxable
• Redemption: Tax charged on actual sale

Catering Business Considerations

Caterers have additional complexity:

On-Site vs. Off-Site

Service Charges

Many caterers add service charges—these may be:

• Part of the taxable amount
• Separately stated (varies by state)
• Subject to different rules

Equipment Rentals

If you rent tables, chairs, linens:

• Rental income is usually taxable
• Different from food sales

Using Your Certificate With Suppliers

Restaurant Supply Companies

Major suppliers like:

• Sysco
• US Foods
• Performance Food Group
• Restaurant Depot

How to set up:

1. Open a business account
2. Provide your resale certificate
3. Certificate stays on file
4. All qualifying purchases are tax-exempt

Grocery Stores

You can use your certificate at regular grocery stores for business purchases:

At Costco Business Center:

• Business membership available
• Tax exemption with certificate
• Designed for food service businesses

At regular grocers:

• May need to request manager
• Provide certificate at checkout
• Keep receipt for records

Farmers Markets and Local Suppliers

• Provide certificate to vendors
• Good for produce, meats, specialty items
• Build relationships for regular tax-free purchasing

Record Keeping for Food Businesses

The IRS and state auditors pay close attention to food businesses. Keep thorough records.

What to Track

Common Audit Triggers

• High ratio of tax-exempt purchases to taxable sales
• Inconsistent gross margins
• Missing documentation
• Large inventory write-offs

Best Practices

1. Keep all invoices organized by month
2. Track waste and spoilage with documentation
3. Document employee meals if using inventory
4. Maintain inventory counts periodically
5. Use POS system that tracks taxable vs. exempt sales

Getting Started

Step 1: Register Your Business

Ensure your food truck or restaurant is properly registered:

• Business license
• Food service permits
• Health department approval

Step 2: Get Your Resale Certificate

Register for a sales tax permit to receive your certificate.

Step 3: Set Up Supplier Accounts

Provide your certificate to:

• Food distributors
• Equipment suppliers (for resale items)
• Packaging suppliers
• Beverage distributors

Step 4: Configure Tax Collection

Set up your POS to properly:

• Collect sales tax on taxable items
• Exempt any non-taxable items
• Track sales for reporting

Frequently Asked Questions

"Is food I give as samples tax-exempt?"

It depends on the state. Some states consider samples as promotional (taxable) while others allow exemption if given to potential customers.

"What about coffee shops—is coffee taxable?"

Hot coffee is usually taxable (prepared food). Cold beverages vary by state.

"Do I charge tax on catering for a nonprofit?"

Usually yes, unless the nonprofit provides you with a valid exemption certificate.

"What about food delivery apps?"

You may still need to collect tax. Some apps handle it; others don't. Verify your setup.

Get Your Certificate Today

Start saving on your ingredient and supply purchases. Get your resale certificate and buy tax-free.

Apply for Your Resale Certificate →

Have questions about food service tax rules? Contact our team for guidance.