new exemption from State sales and use tax on bakery items

I'm a newbie on here and have been jumping through fire hoops to get my cake biz up, running and legal. On doing some research through the IRS, taxes, etc. I find that NC is exempt from States sales and use tax as of 2009 if (IF) you do NOT provide eating utensils when you sale your bakery items! You only have to charge your local taxes! (2% in my area)..Now I know why the local grocery store where I just resigned from as a cake decorator puts a cake server on every cake they sale or spoons taped on every single parfait they sold..MORE money that they can legally charge you the customer without having a clue..and all this time i thought they were just being supernice to their loyal customers..hahaha..should have figured it had something to do with a dollar figure..Anyways..I love this site and will let you guys know how things progress with my storefront that i hope to open in March 2013!!

it makes them NOT exempt from charging full taxes by putting a server on each one..a customer only has to pay 2% tax if no utensils but the full sales tax if they DO have one..i wont be giving utensils when i sell cakes or cookies and can get by with only charging my customers 2% !

i think it is a slick marketing tool. they can use it to their advantage and get by with legally charging more taxes. THEY themselves don't get to pocket any extra so why do they do it wonder?

no accusations at all..i just read about the exemption if you do NOT provide anything and it made a lightbulb go off of why they are so adamant about putting a server on every cake box and a spoon on every parfait..Even had notes posted everywhere to NOT forget?!

you are right jason..looks like a decent price when compared to their competitors! its all about improving sales which is even true with us..but the intensity of making SURE they were placed on each cake in the case makes more since to me now since I read the technical bulletin from the state.

phew! you are probably right again jason. i was reading from this and it was con-fus-ing! either way..i now know what i can charge and that is 2% for my area.

under a. and b. of the definition of prepared food; and (2) food where plates, bowls, glasses, or cups are necessary to receive the food. The denominator includes sales of all food and food ingredients, including prepared food, candy, dietary supplements, and soft drinks. Alcoholic beverages are not included in the numerator or denominator.

The prepared food sales percentage is determined annually for all of the seller’s establishments in the State. The percentage is calculated by the seller for each tax year or business fiscal year, based on the seller’s data from the prior tax year or business fiscal year, as soon as possible after records are available, but not later than 90 days after the beginning of the tax or business fiscal year. A new business should make a good faith estimate for its first year and adjust the estimate after the first three months of operation if actual prepared food sales percentages materially affect the 75% threshold test.

(2)

For sellers with a sales percentage of 75% or less, seller’s customary practice is to physically give the utensil to the purchaser, except that plates, bowls, glasses, or cups necessary for the purchaser to receive the food or food ingredients need only be made available.

(3)

For sellers with a sales percentage greater than 75% who sell items that contain four or more servings packaged as one item for a single price, an item does not become prepared food due to the seller having utensils available. However, if the seller provides utensils for the item as in (2) above, then the item is considered prepared food. Serving sizes are determined based on the label on the item, if available, or based on the seller’s reasonable determination.

its all so confusing to me..i just know im able to charge 2% and it will be right..thanks for your input jason..i'm sure you are more knowledgeable than me.

under a. and b. of the definition of prepared food; and (2) food where plates, bowls, glasses, or cups are necessary to receive the food. The denominator includes sales of all food and food ingredients, including prepared food, candy, dietary supplements, and soft drinks. Alcoholic beverages are not included in the numerator or denominator.

The prepared food sales percentage is determined annually for all of the seller’s establishments in the State. The percentage is calculated by the seller for each tax year or business fiscal year, based on the seller’s data from the prior tax year or business fiscal year, as soon as possible after records are available, but not later than 90 days after the beginning of the tax or business fiscal year. A new business should make a good faith estimate for its first year and adjust the estimate after the first three months of operation if actual prepared food sales percentages materially affect the 75% threshold test.

(2)

For sellers with a sales percentage of 75% or less, seller’s customary practice is to physically give the utensil to the purchaser, except that plates, bowls, glasses, or cups necessary for the purchaser to receive the food or food ingredients need only be made available.

(3)

For sellers with a sales percentage greater than 75% who sell items that contain four or more servings packaged as one item for a single price, an item does not become prepared food due to the seller having utensils available. However, if the seller provides utensils for the item as in (2) above, then the item is considered prepared food. Serving sizes are determined based on the label on the item, if available, or based on the seller’s reasonable determination.

here is what i was reading..i'm sure you are correct again..thanks for letting me know..its very confusing!

under a. and b. of the definition of prepared food; and (2) food where plates, bowls, glasses, or cups are necessary to receive the food. The denominator includes sales of all food and food ingredients, including prepared food, candy, dietary supplements, and soft drinks. Alcoholic beverages are not included in the numerator or denominator.

The prepared food sales percentage is determined annually for all of the seller’s establishments in the State. The percentage is calculated by the seller for each tax year or business fiscal year, based on the seller’s data from the prior tax year or business fiscal year, as soon as possible after records are available, but not later than 90 days after the beginning of the tax or business fiscal year. A new business should make a good faith estimate for its first year and adjust the estimate after the first three months of operation if actual prepared food sales percentages materially affect the 75% threshold test.

(2)

For sellers with a sales percentage of 75% or less, seller’s customary practice is to physically give the utensil to the purchaser, except that plates, bowls, glasses, or cups necessary for the purchaser to receive the food or food ingredients need only be made available.

(3)

For sellers with a sales percentage greater than 75% who sell items that contain four or more servings packaged as one item for a single price, an item does not become prepared food due to the seller having utensils available. However, if the seller provides utensils for the item as in (2) above, then the item is considered prepared food. Serving sizes are determined based on the label on the item, if available, or based on the seller’s reasonable determination.

too confusing for me..i'm sure you are right jason! thanks!

For sellers with a sales percentage of 75% or less, seller’s customary practice is to physically give the utensil to the purchaser, except that plates, bowls, glasses, or cups necessary for the purchaser to receive the food or food ingredients need only be made available.

(3)

For sellers with a sales percentage greater than 75% who sell items that contain four or more servings packaged as one item for a single price, an item does not become prepared food due to the seller having utensils available. However, if the seller provides utensils for the item as in (2) above, then the item is considered prepared food. Serving sizes are determined based on the label on the item, if available, or based on the seller’s reasonable determination.

(4)

If a person other than the seller originally placed the utensil in the package, and that person’s North American Industry Classification System (NAICS) classification code is that of a manufacturer, the seller is not considered to have provided it to the purchaser when the package is transferred to the purchaser unless the seller exceeds the "75% test." (Example: ready-to-eat lunches or snacks containing utensils that were placed in the package by the manufacturer.)