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New York Ponders Taxability of Edible Gummy Drinking Cups

  • Nov 15, 2012 | Gail Cole

Have you ever wondered how edible gummy drinking cups should be taxed? Are they food or are they cups? Even the people who make them don't know, which is why the issue was brought before the New York Department of Taxation and Finance earlier this year. A manufacturer of edible gummy drinks asked the New York Department of Taxation and Finance if the edible cups are subject to the state sales tax and use tax. Now, at last, there is an answer.

What is an Edible Gummy Cup?

The product is vegan, made of evaporated cane sugar, pectin, all natural flavors and colors. It comes in five flavors: salty - lime, sour - lemon, bitter - bitters, sweet - vanilla, and spicy - pepper. It has a shelf life of one week, must be consumed within that week, and must be kept in its original packaging until consumption. Refrigeration is not necessary, but it should be kept away from heat. As you can imagine.

Taxable or Exempt?

According to New York Tax Law, "[t]he receipts from every retail sale of tangible personal property except as otherwise provided in this article…" is subject to the state sales tax. (1105(a)).

Yet according to another section of the Tax Law, "[r]eceipts from the following shall be exempt from the tax on retail sales … food, food products, … but not including …(i) candy and confectionary… ." (Emphasis mine). "[F]ood and food products" are defined as "edible commodities, whether prepared, processed, cooked, raw, canned or in any other form generally regarded as food."

Not everyone would consider a gummy cup to be food, but the New York Department of Taxation decided that "[t]he primary focus in determining taxable status should be on what the product is (i.e., what it consists of)… ." In other words, whether or not you or I or anyone else would actually eat a gummy cup is beside the point.

In New York, if a food item is "labeled, packaged, advertised, displayed and sold" as a confection, it's a confection and should be taxed as such. (TB-ST-103).On the manufacturer's website, the edible gummy cups are advertised as "all natural pectin confections." Given that moniker and the ingredients, the Department of Taxation determined that "it is not exempt as a food product … and is therefore subject to sales and use taxes."

The short answer is, edible gummy cups are subject to sales and use taxes in New York. So now you know.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.