BoredWithNoSB
08-03-2007, 05:05 PM
This is an article from one of our sales tax software vendors. I found it entertaining and further proof the system is broken.
Snickers, Milky Way, Licorice, Kit Kat—most people would agree these are all likely to end up in a candy bag come Halloween, what people don’t know is some of these items are not even considered to be candy according to sales tax law. The culprit to blame for this strange classification? Flour.
In an effort by the Streamlined Sales Tax Board to simplify state tax laws, an attempt has been made to draw the line between when candy is food—and therefore exempt from tax—and when candy is not—and can be taxed. Originally the distinction between food and candy was the presence of flour in the list of ingredients on the product label. If flour is listed as an ingredient, then the product is considered a food item. If flour is not listed, then the item is considered candy, causing possibly more confusion than before.
The original definition would have taxed a Milky Way Midnight candy bar but not the original Milky Way bar that contained flour. An alternative definition of candy was consequently proposed to just have flour listed as one of the top items in the ingredients list, however, further investigation showed this counter-proposal would still treat some typically uncandy-like snacks as "certain flavors of Pop Tarts" and Twix Crunchy Cookie Bars as candy—but not Snickers Crunchy Cookie Bars. Additionally, Girl Scout Peanut Butter cookies would be candy, but the Thin Mints and Tagalongs would be classified as food. This has proven to be a sticky situation not easily resolved, consequently a final decision has not been reached on a permanent definition.
Does all this talk of candy leave you feeling like it’s about time to visit the dentist for a checkup? Be Fluoride toothpaste is statutorily exempt in Texas as part of an exemption for “over-the-counter” drugs and medicines but sadly, toothbrushes as well as normal toothpaste are taxable in Texas.
Snickers, Milky Way, Licorice, Kit Kat—most people would agree these are all likely to end up in a candy bag come Halloween, what people don’t know is some of these items are not even considered to be candy according to sales tax law. The culprit to blame for this strange classification? Flour.
In an effort by the Streamlined Sales Tax Board to simplify state tax laws, an attempt has been made to draw the line between when candy is food—and therefore exempt from tax—and when candy is not—and can be taxed. Originally the distinction between food and candy was the presence of flour in the list of ingredients on the product label. If flour is listed as an ingredient, then the product is considered a food item. If flour is not listed, then the item is considered candy, causing possibly more confusion than before.
The original definition would have taxed a Milky Way Midnight candy bar but not the original Milky Way bar that contained flour. An alternative definition of candy was consequently proposed to just have flour listed as one of the top items in the ingredients list, however, further investigation showed this counter-proposal would still treat some typically uncandy-like snacks as "certain flavors of Pop Tarts" and Twix Crunchy Cookie Bars as candy—but not Snickers Crunchy Cookie Bars. Additionally, Girl Scout Peanut Butter cookies would be candy, but the Thin Mints and Tagalongs would be classified as food. This has proven to be a sticky situation not easily resolved, consequently a final decision has not been reached on a permanent definition.
Does all this talk of candy leave you feeling like it’s about time to visit the dentist for a checkup? Be Fluoride toothpaste is statutorily exempt in Texas as part of an exemption for “over-the-counter” drugs and medicines but sadly, toothbrushes as well as normal toothpaste are taxable in Texas.