If you work on tax policy for a living, you have to think about a lot of complicated issues. Such as, when a corporation does business here and abroad, how do you know what part of its income is “foreign”? What is the best way to tax returns to capital? And when is an ice cream cake a baked good?
The last question is the subject of a 1,437 word bulletin from the Wisconsin Department of Revenue, which addresses the question of whether restaurants, supermarkets and bakeries should collect sales tax on the sale of ice cream cakes. As with all the best tax policy questions, the answer is, it depends.
The memo goes through ten different examples of cake sales, of which seven are taxable and three are not. Here’s an excerpt:
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