The Wall Street Journal recently reported about an outrageous move by New York to enforce an obscure tax on their favorite breakfast food; bagels. Since then, the blog sphere has been up in arms about this bagel and cream cheese extortion.

To slice or not to slice, that is (there) the question.

Apparently, in New York the sale of whole, unsliced bagels isn’t subject to sales tax. But once a knife touches that bagel and slices it, the tax does apply, no matter if you add cream cheese or not. To make things more complicated, if you eat the bagel in store, no matter if it is sliced or not, it is taxed as well. If you take it to go, you are home free, assuming you bring your own knife and slice it as soon as you get out the door. Confused yet?  While the tax for a sliced bagel can be up to 8 cents, a sliced loaf of bread isn’t taxable.

Don’t laugh just yet, Washington isn’t much better, or did you forget the failed attempt to tax Seattle’s most favorite beverage (lattes) in 2003, as Amy Rolph from the Seattle PI reminded Washingtonians recently. Not surprisingly, people almost rioted (it is sacrilege to touch ones coffee here) and the proposal failed.

While the plight of our fellow Americans in New York had many here in the office snickering (“Hey Guido!  You know you don’t ever slice dem bagels – ya?  And remember, I always eat my bagels outside…  Now hurry up with that cream cheese before one of them auditors comes in here lookin’ like a G-Man and screws everyone’s business up…”), it does bring up a serious concern.

More and more states are starting to enforce obscure laws that have not been enforced in the past and that many businesses don’t know about. As a result, the audit risk increases and many businesses are facing paying back taxes (those bagels add up) and/or fines on top of that.

The answer, you ask? Avoid having to keep up-to-date with these changes yourself by automating your sales tax compliance, relax, and have a bagel…