I recently indulged in a fast food “cone” during a midnight drive. It was chosen in desperation, something to keep me awake as the miles rolled by, and it did its job. But there’s nothing like a soft-serve cone to whet the appetite for some hand-dipped ice cream, so I was delighted to learn that Sunday was National Ice Cream Day. Now, that’s a day I can throw some weight behind — especially since ice cream is subject to some wonderfully whimsical sales tax laws.

Size matters

Many states base the taxability of ice cream on the size of the serving. For example, in California, Florida, and Maryland, a pint of ice cream is considered “a size which ordinarily may be immediately consumed by one person.” As such, pints of ice cream are subject to tax, while a quart, half-gallon, or gallon are not. This is true, in Maryland at least, even if the ice cream is divided up into ice cream sandwiches: A package of a dozen ice cream sandwiches containing more than one pint of ice cream is exempt, but the sale would be taxable if those dozen sandwiches collectively contain less than one pint of ice cream.

This takes me back to the mid-1980s, when Ben & Jerry’s pints of deliciousness first graced the shelves of local grocery stores. My friends and I discovered, to our delight and our parents’ horror, that a pint of ice cream and a spoon made for a perfect lunch.

Illinois also considers “ice cream items in individual sizes” to be “food prepared for immediate consumption” and taxes it at a higher rate (6.25 percent). However, “ice cream packaged in premeasured containers, such as a pint, quart, or gallon, are taxed at the low rate [1 percent].” Does no one tuck into a pint of ice cream in Illinois?

Prepackaged vs. hand-packed

Massachusetts is less concerned with the size than the packaging. It exempts restaurant sales of “a prepackaged pint, quart, half gallon, etc. of ice cream, provided that such foods are commonly sold in the same manner in a retail food store that is not a restaurant,” as well as prepackaged ice cream sold in a store as a snack. On the other hand, hand-packed ice cream is taxable in the Bay State, no matter the size of the serving.

Ice cream makes the list of exempt food products in Texas. However, ice cream served in cones or small cups for immediate consumption is taxable. And under current law, prepackaged boxes containing two or more ice cream sandwiches, cones, or similar items are not taxable; in the past, they were only exempt if the package included six or more items. Whole ice cream cakes are exempt “unless the seller provides plates or other eating utensils” (Grocery and Convenience Stores: Taxable and Nontaxable Sales).

Wisconsin wackiness

As far as I can tell, no state touches Wisconsin when it comes to complexity of ice cream sales tax. The state changed its sales tax laws on ice cream products (and other foods) in October 2009, and later issued “Sales of Ice Cream Cakes and Similar Items” to help clarify the law for taxpayers. The general rule is this: “If a person mixes ice cream and one or more other food items to form an ice cream cake or ice cream bar, the retail sale of the ice cream cake or bar is taxable as the sale of prepared food. If the ice cream cake or bar is prepared by someone other than the retailer, it is not taxable unless it meets one of the other prepared food definition categories (e.g., furnished with utensils).”

The notice contains no fewer than 10 examples. Below are two of my favorite:

Example 9 – Restaurant C purchases various food and food ingredients (eggs, flour, sugar, ice cream, fudge, cookie bits, etc.) to make cakes with an ice cream layer. Restaurant C makes a layer of cake using the eggs, flour, sugar, etc. Once the cake layers are baked and cooled, Restaurant C covers one of the cake layers with a layer of fudge and cookie bits. Restaurant C then places another cake layer over the fudge and cookie bits and covers the second cake layer with a layer of ice cream. Restaurant C decorates the top of the cake according to instructions provided by its customer. This cake is primarily a bakery item which is excluded from the definition of “prepared food” and not subject to Wisconsin sales or use tax.

Example 10 – Restaurant D purchases various food and food ingredients (eggs, flour, sugar, ice cream, fudge, cookie bits, etc.) to make a layered ice cream cake. Restaurant D makes a layer of cake using the eggs, flour, sugar, etc. Once the cake layer is baked and cooled, Restaurant D places the cake layer between two layers of ice cream. Restaurant D decorates the top of the cake according to instructions provided by its customer. This cake is “prepared food” and subject to Wisconsin sales or use tax since Restaurant D mixed or combined 2 or more ingredients to make the cake. The ice cream cake is not primarily a bakery item.

If this notice doesn’t make you hanker for some ice cream — and more wacky sales tax facts — I don’t know what will.

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