Is a Twix bar food or candy? In 24 states, a Hershey’s bar is candy but a Twix isn’t. That’s because Twix contains flour, and in those states — which all share a sales tax code — candy is defined as being flour free. And since groceries aren’t taxed, you’ll pay taxes for the Hershey’s, but not for the Twix.
Now at stake is take-and-bake pizza. Is it a grocery or a prepared restaurant item? Without a complete overhaul of how sales tax is applied to food, issues like these are just going to keep coming.
1. Explain what the Streamlined Sales Tax Board is.
2. Go to the Streamlined Sales Tax Board’s website at http://www.streamlinedsalestax.org. Download the online taxability matrix for your state or a neighboring state. What product or service surprised you as being tax exempt?
3. What item in the article surprised you the most? Can you think of another product which might be debated?
4. If a company includes 6% sales tax in its service and they charge $50 per service, what journal entry would be made for the sale of 100 services sold?
Bryan, M. (2014). Why Take-And-Bake Pizza Is Giving The Tax Guys A Headache. NPR.org, May 12 (Retrievable online at http://www.npr.org/blogs/thesalt/2014/05/12/310999067/why-take-and-bake-pizza-is-giving-tax-guys-a-headache)