Sticky Question: How Should A Take-And-Bake Pizza Be Taxed?

Earlier this spring, I wrote about the sales and use taxation of candy. As it turns out, 16 states do not treat candy as a grocery. Groceries are generally exempt from sales tax, so if candy is not considered a grocery, it will generally be subject to tax. Of course, what differentiates candy from groceries is not as intuitive as one might think. For example, a Hershey's chocolate bar is candy, which Hershey’s cookies and cream bars are not.

The reason for this, according to the Streamlined Sales Tax agreement, is that a candy does “not include any preparation containing flour and shall require no refrigeration.” So go for the Twix bar or even a Kit Kat and feel good about it because neither is candy.

Definitions like this are often the brunt of jokes, but they are an integral part of the complex world of sales and use taxation. Recently, the Streamlined Sales Tax Governing Board Compliance Review and Interpretations Committee (CRIC) received a request for an interpretive opinion determining whether take-and-bake pizzas meet the definition of prepared food. If they are, they would be subject to sales tax in many jurisdictions.

To read the rest of the story, please go to: Forbes