Take-And-Bake Pizza Sales Tax Quandary Shows How Confusing Tax Codes Can Be

Did you know that in some states, 24 to be exact, a Hershey bar is candy but a Twix bar is not, when it comes to taxes? I didn’t either, and it’s just that kind of baffling distinction — the Twix contains flour, and candy is classified as flourless — that’s making it hard for states to decide which foods are taxable under the sales tax code and which aren’t.

In that example, a Hershey bar would cost more because it’s candy, whereas the Twix is considered groceries, so it’s not taxed, explains NPR’s The Salt blog.

That’s the crux of the issue for take-and-bake pizzas, a premade but uncooked pie you pick up and take home to bake later. Hence, the name. In many states, that makes it a grocery item because it isn’t being cooked in the restaurant, making it tax-free.

But that method of classifying foods for sales tax purposes is currently up for debate, after the a franchise owner of take-and-bake megachain Papa Murphy’s in Wisconsin called up a tax lawyer.

“I had a franchisee call up to see if the pizzas were taxable in Wisconsin,” he says, adding that he looked into it but didn’t get a definitive answer.

“We ended up calling the state and discussing it with them,” he explains. The answers ranged from “definitely it’s taxable” to “maybe it’s taxable” to “why are you asking?”

That particular quandary has been handed off to the Streamlined Sales Governing Tax Board, a group that works on sales tax codes for Wisconsin and 23 other states that share it.

Although it might not be so cut and dried in the food world, it’s important to draw that line somewhere, says a law professor at University of California, Los Angeles. Which is why we have the Twix vs. Hershey line.

“In some ways the line that they are being asked to draw is an indefensible line,” he says. “As a result, we get these zany, incomprehensible distinctions.”

The headaches aren’t over, he adds, at least until the entire sales tax system as it applies to food is totally reworked. Which probably won’t be happening anytime soon. So go ahead, tell everyone you know that Twix is not, in fact, candy.

Why Take-And-Bake Pizza Is Giving The Tax Guys A Headache [The Salt]

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  1. webalias says:

    In Minnesota, a 50 cent bag of peanuts is non taxed (food). The 50 cent bag of peanuts hanging on the shelf next to it, but having a honey coating, is taxed (candy). But if a candy-like treat requires refrigeration (like an ice cream bar), it is not taxed. However, if it happens to be sold frozen but wouldn’t have to be (like a frozen Snickers bar), it is taxed. As in the Consumerist example, a Twix or a KitKat, or any “candy” that contains flour, isn’t really candy and isn’t taxed. But if any food item that would otherwise be not taxed is sold from a vending machine, it is taxable.

    It appears that the cash registers at major chains like Walgreens are programmed to properly apply these arcane rules, and know the difference between glazed and non-glazed peanuts. But at most small Mom and Pop stores, they usually have no idea, and no tax is charged for some taxable items. (I’d say it’s a good reason to support Mom and Pop stores, but of course, I’d never want to avoid paying taxes.)