Staying Healthy and Not Paying Sales Tax If You Don’t Have To

Picture of healthy sandwich with lettuce and tomato

April 2020

From our Sales Tax Defense LLC Family to yours, we hope that everyone is doing well in these trying times. Please stay safe.

With many businesses slowing down or halting operations temporarily, we wanted to provide you with some sales tax information more closely related to your everyday personal life. Specifically, since the only stores you’re probably visiting are restaurants (pick-up or take out) supermarkets, convenience stories and pharmacies, purchases from those types of stores are the most relevant. Only New York State sales tax is discussed below.

The main distinction between taxable food and exempt food is whether it’s “prepared food”. Prepared foods are food that was prepared by the seller and is ready to be eaten. This is why food from your favorite fast food joint is always taxable but frozen chicken from a grocery store is not. Sandwiches are almost always taxable whether they are hot or cold.

As a side note, an official New York State Tax Bulletin discussing the taxability of sandwiches states, “Sandwiches include cold and hot sandwiches of every kind that are prepared and ready to be eaten, whether made on bread, on bagels, on rolls, in pitas, in wraps, or otherwise, and regardless of the filling or number of layers. A sandwich can be as simple as a buttered bagel or roll, or as elaborate as a six-foot, toasted submarine sandwich.” If you ever needed proof that sales tax can be difficult, look no further than a state-issued document saying that a buttered bagel is a sandwich!

Moving on from food, many cosmetics and toiletries are taxable. These items include but are not limited to dental floss, face lotion, hair spray, mascara and shaving cream. However, certain cosmetics and toiletries are exempt if they are for medicinal purposes. For example, shampoo is subject to sales tax unless it’s for medicinal purposes. Also, suntan lotions are taxable unless they contain an SPF factor of 2 or greater.

If you paid sales tax on anything you shouldn’t have, you can request a refund directly from New York State. Obtaining a refund is not often easy so it may not be worth the effort if the refund is too small. However, if you’re entitled to a large refund, it may be worth it.

Covid-19 has put all businesses across the country in situations never imagined that are completely out of our control. If your business has more available time because business is slow or if your business needs a refund to make ends meet while you are waiting on the government to approve assistance loans, now might be a good opportunity to request a sales tax refund. Sales Tax Defense LLC often requests refunds on a contingent basis meaning you don’t need to pay us until you receive the refund money from the government.

If you think you may be entitled to a refund, especially if you believe you might be paying more sales tax than necessary, contact us!