The Taxation of Candy and Car Washes

Submitted by rkoreto on Thu, 02/23/2012 - 14:56

The New York State sales tax rules and regulations may be complicated, but the Department of Taxation and Finance is on top of the situation with a long list of industry- and topic-specific bulletins.

 
For example, the owners of car washes might not think that the tax situation of getting a car cleaned is complex—but it is. The typical modern car wash in which a conveyor belt pulls a car through an automated system, after an employee pre-wash, provides a taxable service.
 
However, continues the guide, customers who drive up to a car wash selection box; select a wash package; insert coins, currency, or tokens into a coin box to begin the wash process; and drive forward into a bay where the automated car wash takes place, do not purchase a taxable service.
 
The state provides taxpayers and preparers with a guide to sandwiches as well. Sandwiches are subject to sales tax and, the guide clarifies, include club sandwiches as well as sandwiches served on bagels. Paninis are sandwiches. So are hot dogs.
 
"When a sandwich that has been taxed is subsequently resold, the seller must collect tax from the purchaser on the selling price. However, the seller may take a credit on its sales tax return for the actual amount of tax that it originally paid," notes the bulletin.
 
And, of course, there's a candy and confectionary guide. Candy is usually taxable and includes chocolate-covered marshmallows, fudge and honey-roasted nuts. Candied apples are candy, but chocolate chips typically used for baking are not.
 
The department makes its decision in part on how the product is labeled and advertised. Advises the guide: "Pure maple sugar products are exempt as food unless displayed, labeled, or advertised as candy or confectionery. They are not candy merely because they are molded in the shape of a maple leaf or sold in individual quantities."

 

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