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Starbucks Coffee in a Can is Exempt from New York Sales Tax

  • Aug 1, 2014 | Gail Cole

 Starbucks: more than just coffee but still coffee.

Starbucks sells hot coffee drinks and cold coffee drinks, blended coffee drinks and energized coffee in a can. Who knew coffee could be so varied? The options are downright dizzying.

Retailers other than Starbucks sell Starbucks® Doubleshot® Energy coffee drinks. They’re found in grocery stores and gas station convenience stores from Washington State to Florida. And they present sales tax challenges for the retailers who sell them.

In Department of Taxation and Finance to determine the taxability of Starbucks® Doubleshot® Energy coffee drinks, which it sells for off-premises consumption.

In order to determine whether the drinks are exempt or subject to sales tax, the department first needed to determine what the drink is. It turns out that it is, in fact coffee. The ingredients, listed in “descending order by predominance of weight,” are as follows:

  • Starbucks® coffee (water, coffee)
  • Reduced fat milk
  • Skim milk
  • Sugar
  • And various other ingredients

The department ruled that the energy drinks are exempt from sales tax because coffee is the first ingredient listed on the energy coffee drinks and coffee is exempt from sales tax “pursuant to §§ 1115(a)(1) and 1110(a) of the Tax Law.” Let's just not dwell on the "various other ingredients."

How do you determine the taxability of the goods and services you sell? Sales tax automation software makes it simple.

photo credit: theimpulsivebuy via photopin cc

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.