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Sales Tax Secrets: Ode to Convenience Stores

  • Sep 12, 2013 | Christina Lengyel

Oh convenience stores! Wawa, 7-11, Sheetz, and your regional equivalents, you sell the essentials we can’t get anywhere else, whether it’s gas, a midnight cup of coffee or a roll of paper towels to correct an unexpected mishap on the road.

With so many items sold, often in single use counts, dealing with sales tax can be a nightmare, much less dealing with so many customers in a hurry. To the brave souls on the other side of the counter devoting time and energy to sales and their taxes, this one’s for you. The following are tips for staying on top of tax for your wide array of products.

The big three - smokes, drinks, and gas

The big three items I think of when I think convenience stores are alcohol, tobacco, and gasoline.  These items are not only taxed differently across the country, but also the laws regarding how, when, and to whom they can be sold vary greatly and are subject to frequent changes.

  • Gas prices change within hours with the tax already factored into the price you see at the pump.
  • Alcohol sales at convenience stores aren’t legal in all states. States where they are have varying limits on quantities that can be sold and hours during which that can happen.
  • Tobacco, of course, necessitates not only a close eye on the age of the buyer but a close eye on local, state, and federal taxes.

If you’re in charge of sales tax for a multi-state chain, knowing the rules for the big three alone is an admirable feat. To do so, it’s important to keep an eye on new publications from the states in which your stores are located and stay connected to others in the industry.

Snack tax

But the fun doesn’t end with products that necessitate strict regulation. Certain states like Connecticut charge higher rates for simpler convenience store items like single-serving bags of chips, the logic being that such items are generally sold for immediate consumption. Texas recently rolled out a new law (S.B. No. 1151) which exempts certain healthy snacks as “food products” but requires sales tax on single-serving snack items or items without servings listed that contain less than 2.5 ounces. That means if you’re selling a box of granola bars, it’s exempt, but if you’re selling a single granola bar, it is to be taxed.

Unlike Connecticut, baked goods don’t fall under the list of items to be taxed when sold individually. With the new law in place, that means a pretty big overhaul of tax rates for the pretty small snack items in your convenience store, and for that inconvenience, we are sorry. Running the places that keep our world running is a big job indeed, but without your fast and friendly service, we just don’t know how we’d make it through the day.

photo credit: Mike Schmid 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.
Avalara Author
Christina Lengyel
Avalara Author Christina Lengyel
Christina Lengyel is a writer by trade and has found herself in taxes by way of research. As an analyst, she has tracked down thousands of products by UPC in order to determine when and where they are taxed.