To Slice or Not to Slice? Taxing NY Bagels

Submitted by Jorina Fontelera on Wed, 08/25/2010 - 16:08

The New York State Department of Taxation and Finance is cracking down on bagel shops slicing bagels for their customers, counting the sliced bagel as a “prepared food” and thus subject to a food tax.

“I just found out today you’re supposed to tax bagels that are cut,” Florence Wilpon, a bagel purveyor, told CBS. “Customers will also be angry they’re purchasing a product that has never been taxed.”

According to New York state’s guidelines, bagels are tax exempt as bakery products if they are kept whole and not eaten in the shop. However, once they’re sliced, they get classified as a prepared meal. Also, if the customer eats the bagel -- sliced or not -- in the shop, it will count as a prepared meal and therefore subject to a tax.

New Yorkers also need to watch out when they’re getting coffee from a deli. If it is poured for the customer, the coffee is subject to a tax. If the customer pours it himself or herself, there’s no tax. Slices of cake are also taxed but whole cakes or other pastries are exempt.

Head spinning yet? Check out these other “wacky” taxes New York places on foods and other goods.

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Submitted by Elliot Schwartz (not verified) on Tue, 08/31/2010 - 09:06.

I am confused.
These are not new rules. They have been around for many years.
Any one who prepares sales tax returns for food establishments knows this.
If the customer thinks that these are new sales taxes its because the seller didn't charge the sales tax all these years. The only thing new is the seller following the law.
Another thing are the many other crazy rules involved with sales tax.
The problem, I believe, is that the lawyers in Albany interpreting the law, write the rules based upon strict legal rules. The practical effect on the taxpayers be damned. If they do not follow their rules, the taxpayers must pay the tax, interest and penalties!
There are better ways of handling this.

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