Does A Sliced Bagel Count As "Prepared Food"?

It’s generally understood among bagel buyers in New York that you won’t be charged tax on a sliced, untoasted bagel with no butter, cream cheese or any other sort of spread. But with the state desperately trying to deal with budget shortfalls, it is now expecting bagel sellers to charge taxes on these often-untaxed items.

According to the state, the mere act of slicing a bagel changes it from an untaxed grocery item to a prepared food item subject to an 8.875% tax. The tax should also apply for any bagel — sliced or not — that is eaten inside the store or restaurant.

“I don’t think it’s fair,” a cashier at one bagel joint told the NY Post. “Why would I put tax on a sliced bagel when you don’t want nothing on it?”

The Post went to several bagel stores in NYC and weren’t charged the tax on the plain, sliced bagels. But even if the cashiers aren’t ringing it up, the tax man is still coming. Just ask the owner of the Bruegger’s chain of bagel shops, who was recently hit for a “significant” amount of money when the state found out the stores hadn’t been charging the tax to customers.

Where do you come down on this debate — Is the state splitting hairs just to wring some extra cash out of consumers? Or is the act of slicing a bagel sufficient for considering it as a prepared food item?

NY’s cut of bagel ‘dough’ [NY Post]