Prepared Foods and Sales Tax

 

One of the most complicated areas of sales taxability is prepared foods. What’s taxable and what is not can depend on specific ingredients, where an item is eaten, or small details of preparation. For instance, bagels that aren’t sliced are non-taxable in some states, even though it’s possible you could consume it in the store as soon as the cashier checks you out. Looking at the details of this category of goods reminds us that there are some things about Sales Tax that are always true.

Sales Taxability Isn’t Logical: While there is “logic” behind each sales tax designation, the application of the law isn’t always logical. For instance, take a Twix bar. It’s clearly candy to any consumer—they buy it because it’s made of chocolate and sugar and satisfies their sweet tooth. But in some states, Twix is considered non-taxable because it contains flour. The idea is that flour designates products that are important to our diets, like bread products. But when a candy bar uses flour, that blanket law pulls in things that don’t really make sense when you look at the intention of the law. When you’re looking at sales taxability of products, applying laws can be tricky. You can always ask for assistance from your state entity that regulates sales tax if you need guidance — and you can’t always rely on common sense.

Sales Tax Has Exceptions, No matter what you’re selling and to whom you’re selling, at some point you’re bound to run into an exception. There are whole categories of products that are exempt from sales tax as well as individual products, people, and businesses that are exempt. It’s important that your business keep track of these exemptions and document them well to keep auditors at bay. Exemptions are tricky to manage if you don’t have the right plan in place. Organization is often one of the hardest tasks when it comes to sales tax but it’s imperative you have an organized system to guide you through your sales tax obligations. Sales Tax changes frequently. While you might not make changes in your products or your target markets, sales tax changes constantly and you need to keep up with the changes. Automated solutions like Sales Tax DataLINK help relieve the burden of remembering to keep up with sales tax but you’ll still need to stay abreast of what’s going on. Florida, for instance, is getting three new sales tax holidays that most retailers need to know about. No matter what your business or who your customers are, sales tax needs to be on your radar. We can help you manage sales tax filings if sales tax is an important part of your business processes.

Latest Articles

Sales Taxes and Sin Taxes

Sales Taxes and Sin Taxes

Sin tax A sin tax is a type of sales tax intended to discourage people from buying a particular item. An extra tax on the purchase of cigarettes, soda, or alcohol may be intended to keep consumers from buying as much if these sinful items -- oral least...

read more
The GAO on Remote Sales Tax Requirements

The GAO on Remote Sales Tax Requirements

The GAO speaks up on remote seller sales taxes The Government Accountability Office is responsible for providing important facts to Congress so they can make the best legislative decisions. They have just released a report on the question of sales tax...

read more