Take and Bake Tax Debate

Did you know that in 24 of the 50 states, a Hershey bar is considered candy, but Twix is not. The reason behind this difference in classification is that Twix contains flour. In those 24 states, candy is by definition, flour-free. Because groceries are not taxed, consumers are charged tax for the Hershey bar, but there is not tax on Twix.

This type of discrepancy can also be seen in the take-and-bake pizza world. In some states, these pizzas are considered groceries, but some are debating whether or not  they should be taxed.

Patty’s Pizza sells take-and-bake primarily to grocery stores and hotels on a wholesale basis. On the other hand, they also sell directly to customers who would like to buy just one or two pizzas. These individual sales do not include any tax.

While some might not think that the tax vs. non-tax debate is a big deal, it does add up to a lot when one considers that there are 3 billion pizzas sold in the United States each year. Another consideration, those who have food stamps are only allowed to use them on items where sales tax is not charged. This can be a lot of money for pizza stores.

Papa Murphy’s has locations in 37 states. In most of those states, their pizza is not taxed. The company has long been known for its low prices and its ability to accept food stamps. When the question came up for a Wisconsin franchise as to whether pizza was taxable the question went all the way to the Streamlined Sales Governing Tax Board which deals with sales tax codes for Wisconsin and other states.

As more foods walk the fine line between taxable and not, tax boards struggle with making a clear definition for those involved.  The tax board decision regarding pizza should be coming soon.

 

 

 

Posted on June 4, 2014 at 10:00 AM