New York – What’s the tax on a bagel? It depends how you slice it—or in the case of New York, if you slice it.
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State tax officials, under orders from cash-strapped Albany to ramp up their audit and compliance efforts, have begun to enforce one of the more obscure distinctions within the state’s sales tax law.
In New York, the sale of whole bagels isn’t subject to sales tax. But the tax does apply to “sliced or prepared bagels (with cream cheese or other toppings),” according to the state Department of Taxation and Finance. And if the bagel is eaten in the store, even if it’s never been touched by a knife, it’s also taxed.
That was news to one New York bagel-store owner, who found out he was out of compliance with the policy this summer when the state audited his company.
Kenneth Greene, the owner of 33 Bruegger’s Bagel franchises throughout New York, says the state demanded that he start charging taxes on all bagels, except for those that remain intact and are consumed off premises, and forced him to pay a “significant” sum in taxes that the state estimated he owed.
Mr. Greene says the extra charge, about eight cents a bagel, depending on the local rate, filled his customers with boiling rage. “They felt we were nickel-and-diming them. They thought we were charging them to slice a bagel,” he said.
To clear things up, he posted signs at the cashier informing customers that it was Albany, not Bruegger’s, to blame. “We apologize for this change and share in your frustration on this additional tax,” the signs read.
It’s unclear whether the state’s crackdown will spread beyond Bruegger’s, which operates nationally and in upstate New York.
“I hope they don’t come after me for that,” said Florence Wilpon, a founding owner of Ess-a-Bagel in Manhattan.
One source of confusion is that the rule isn’t spelled out in the tax code. And while sliced bagels are subject to sales tax, a sliced loaf of bread at a bakery isn’t, according to tax officials.
A spokesman for the tax department said the state “will provide additional guidance via our Web site and publications in the near future.”
Vote Dem out!!
Oh puleez. This is just another Much Ado About Nothing. Sales tax applies to restaurant and take-out food. It doesn’t apply to grocery items.
Slicing a bagel or eating it in the store fits the logic perfectly.
I’m sorry that Greene didn’t know the law which affects his business. He should consider himself lucky that the state didn’t bill and penalize him for back taxes.
Ignorance is no excuse — especially when there is a solid logic to it. And even more so when it is the business which is your very bread and butter (pun intended).
Pretty smart of Ms. Wilpon to point out to the state that she is non-compliant. Like those signs “kick me”.
what if I put cream cheese on top of the bagel without cutting it to go what is the din?
Maybe its a taku?
I always have them slice it only halfway to save half the tax.
What about a Bialy?
All tax laws have a logic to them, even if that logic is as krum as can be. My client was being audited by sales tax in my office. I asked the auditor if I could take him to lunch and he said yes. Just before we left he asked if I had a stamp. And he gave me 25 cents. I said nah it’s OK and he said no. I can take your lunch because that’s normal business. But taking a stamp which is almost cash is like taking a cash gift which I can’t do. Logical isn’t it?
Paterson & Bloomberg – get your **** hands out of my pocket!
Inquiring minds want to know!!
WHAT if you pay for the bagel before the slice it?????
i have an idea. creAte the bagel without a hole or make em square and call them a different name and bingo, no tax on a sliced (x bagel . can i have 2 sliced x bagels to go
He should hire a good tax lawyer who will teach him how to avoid paying these sales taxes. But, don’t blame the state because nobody likes paying any taxes.
Not a new tax.
I remember 30 years ago when we went to Nosh-n-Good Donuts on Ave J they would charge tax if we ate in the store. So we asked for it “to go” and then walk out with our bagged donuts and then walk back in and eat it in the store.
Andrew, is your last name Cuomo???
Read the article before you go and defend the state (pun intended).
If you read it properly you would see that a loaf of bread sliced at a bakery does NOT get taxed! Why, that makes no sense.
Also, the owner did get fined back taxes “and forced him to pay a “significant” sum in taxes that the state estimated he owed.”
Read before commenting mr liberal.
This has been the law in NY for years. Most bread items that are “prepared”, meaning they are not being sold as a whole baked item are subject to sales tax. It has always been that way. What’s the problem? (other than the obvious problem that taxes are out of control!)