Bagel Tax Pretzel Logic


POSTED: Wednesday, August 25, 2010 - 12:44pm

UPDATED: Thursday, August 26, 2010 - 7:50am

Bagel chain's audit illustrate confusing food tax rules

How would do like your bagel, sliced or whole?

If your choice is sliced and you're in New York, it's costing you a bit extra.

According to the Tax and Finance Department, the sale of whole bagels and a tub of cream cheese isn't taxable, but that changes if the food is handled in anyway.

A plain, unsliced bagel sold "to go" isn't taxed.

A plain, sliced bagel sold "to go" is.

A plain, unsliced bagel sold for consumption inside the store is taxed.

Kenneth Greene, the owner of 33 Bruegger's Bagels franchises, found out the hard way when his business was audited.

The stores hadn't been charging the prepared food tax properly, and now Greene's business is facing a hefty back-tax bill.

"This area of prepared and ready-to-eat foods has been confusing from day one," says Michael Rosen of the Food Industry Alliance.

Rosen says he isn't surprised that business owners and employees are still having trouble with applying the tax correctly, even though it's been in effect for ten years.

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