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Wacky Sales Tax Rules Cover More Than New York Bagels
Image via Wikipedia
The Blogosphere has erupted with news (first reported by the Wall Street Journal here) that New York state is insisting on collecting sales tax on bagels sold sliced, even if they don’t’ get a smear of cream cheese.
Only in New York, you say? Fact is, disputes over what’s taxed take-out and what’s untaxed (or lower taxed) grocery supplies aren’t unique to New York. Missouri, for example, ruled in June that a retail drug store’s self-serve frozen meals, but not its self-serve coffee, would qualify for the state’s lower sales tax rate on food. Why? Food served hot doesn’t qualify for the lower rate. The store staff brews the coffee, which customers get for themselves in Styrofoam cups. But it is left to the customer to pop the frozen lasagna out of the freezer case and into the store’s microwave.
Then there’s Minnesota, which in April published a new set of guidelines on what is taxable prepared food, versus tax-exempt “food and food ingredients” in that state. According to the Minnesota Department of Revenue, prepared food includes not only food sold hot or with eating utensils, but also “food where two or more ingredients were mixed or combined by the seller for sale as a single item.” Bakery goods and ready-to-eat meat sold unheated are specifically exempted from the mixing-ingredients-is-taxable rule. But cheese, alas, doesn’t have a similar exemption in the law. So according to the Minnesota revenuers, in-state dairies which sell their cheese directly to consumers are selling taxable prepared food “since making cheese involves a combination of two or more food ingredients.”
Think cheese as prepared food is silly? Try bottled water as a soft drink. Twenty-three sates (not including New York) have signed on to the Streamlined Sales and Use Tax Agreement, which is supposed to simplify sales taxes enough that Congress will authorize states to require internet sellers to collect their sales taxes. (Good luck on that.) The agreement allows states to choose to exempt food from their sales taxes, while not exempting candy, soft drinks, dietary supplements or prepared foods. But to simplify things, the states have to use uniform definitions of those categories.
Washington State’s Department of Revenue recently informed retailers that since it had adopted the streamlined pact, it had new definitions of taxable “soft drinks”. Retailers must now collect sales tax on bottled drinks that have 50% or less of fruit or vegetable juice—including non-sparkling bottled water. “Carbonation is no longer a factor in determining taxability for sales tax purposes, “ the state notice explained.
Wacky Sales Tax Rules Cover More Than New York Bagels
Image via Wikipedia
The Blogosphere has erupted with news (first reported by the Wall Street Journal here) that New York state is insisting on collecting sales tax on bagels sold sliced, even if they don’t’ get a smear of cream cheese.
Only in New York, you say? Fact is, disputes over what’s taxed take-out and what’s untaxed (or lower taxed) grocery supplies aren’t unique to New York. Missouri, for example, ruled in June that a retail drug store’s self-serve frozen meals, but not its self-serve coffee, would qualify for the state’s lower sales tax rate on food. Why? Food served hot doesn’t qualify for the lower rate. The store staff brews the coffee, which customers get for themselves in Styrofoam cups. But it is left to the customer to pop the frozen lasagna out of the freezer case and into the store’s microwave.
Then there’s Minnesota, which in April published a new set of guidelines on what is taxable prepared food, versus tax-exempt “food and food ingredients” in that state. According to the Minnesota Department of Revenue, prepared food includes not only food sold hot or with eating utensils, but also “food where two or more ingredients were mixed or combined by the seller for sale as a single item.” Bakery goods and ready-to-eat meat sold unheated are specifically exempted from the mixing-ingredients-is-taxable rule. But cheese, alas, doesn’t have a similar exemption in the law. So according to the Minnesota revenuers, in-state dairies which sell their cheese directly to consumers are selling taxable prepared food “since making cheese involves a combination of two or more food ingredients.”
Think cheese as prepared food is silly? Try bottled water as a soft drink. Twenty-three sates (not including New York) have signed on to the Streamlined Sales and Use Tax Agreement, which is supposed to simplify sales taxes enough that Congress will authorize states to require internet sellers to collect their sales taxes. (Good luck on that.) The agreement allows states to choose to exempt food from their sales taxes, while not exempting candy, soft drinks, dietary supplements or prepared foods. But to simplify things, the states have to use uniform definitions of those categories.
Washington State’s Department of Revenue recently informed retailers that since it had adopted the streamlined pact, it had new definitions of taxable “soft drinks”. Retailers must now collect sales tax on bottled drinks that have 50% or less of fruit or vegetable juice—including non-sparkling bottled water. “Carbonation is no longer a factor in determining taxability for sales tax purposes, “ the state notice explained.
US was so different then, I miss that old time. It is so different today, not just that Manhattan Skyline....
