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In Defense of the Take-n-Bake Pizza Exemption

  • Oct 1, 2013 | Gail Cole

 Will Papa Murphy take-n-bake pizza be exempt from sales tax in Wisconsin?

Not long ago, the Department of Revenue asked the Streamlined Sales and Use Tax Compliance Review and Interpretations Committee (CRIC) to determine the taxability of take-n-bake pizzas. As an SST state, Wisconsin sought guidance on whether or not take-n-bake pizzas meet the definition of prepared food. Prepared food, or food that is ready to eat, tends to be subject to sales tax; non-prepared grocery items tend to be exempt.

CRIC is accepting public comments on the issue through October 7, 2013. To date, CRIC has received 22 written comments on the Taxing of Take-And-Bake Pizzas. Most comments are in defense of the take-n-bake pizza's exempt status, and most appear to come from people connected to Papa Murphy's, a take-n-bake pizza chain.

Take the letter from Todd Suckow, an area supervisor for Papa Murphy's. It fairly shouts the reason the pizzas should remain exempt from sales tax:

"I realize this decision will not be an easy one for the committee to settle on. With that said, I believe the single and most important reason that this product MUST remain untaxed is that the bulk of our daily, weekly and monthly sales come from single family and low income homes. The decision to tax this raw and unready-to-eat product will appear to those customers as just another tax grab!"

According to the Papa Murphy FAQS, the franchises do accept Electronic Benefits Transfer (EBT) at nearly every store location. EBT is a cash assistance program that distributes food stamps and similar assistance for needy families.

The letter from Marissa Schmitz, a supervisor in the Sales and Use Tax Division of the Minnesota Department of Revenue, stands apart, although it also defends the exemption. Ms. Schmitz explains that take-n-bake pizzas are not taxable in Minnesota because they are only partially cooked at the time of sale and need to be fully cooked in order to be eaten. They are not, therefore, ready-to-eat when purchased.

Will CRIC rule that take-n-bake pizzas are subject to sales tax or exempt? Time will tell.

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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.