Posted on Sunday, 13th December 2009 by admin
Budget shortfalls have forced many states to get creative about raising revenue during an economic recovery. Tax software provider Sabrix, Inc. recently put together a list of some of 2009’s oddest sales and use tax changes:
- The Illinois candy tax: Illinois changed their tax laws in regards to taxing candy. Chocolate bars, yogurt- or chocolate-covered nuts or fruit, honey-coated nuts, caramel popcorn, lollipops, snack mixes containing yogurt or chocolate, breath mints, and gum are considered candy and taxed at the standard sales tax rate. However, chocolate-covered cookies, yogurt-covered pretzels, “candy” that contains flour, plain dried fruits and nuts with no added sweeteners are not candy and, therefore, are taxed at the lower food rate.
- Marshmallows and yogurt covered raisins in Wisconsin: Wisconsin recently enacted legislation that states that marshmallows are taxable unless they contain flour. Additionally, the new legislation “clarifies” that while yogurt and raisins are both exempt, yogurt covered raisins are taxable.
- Flu vaccines in Illinois: Illinois addressed the taxability of free flu vaccines administered to individuals without insurance. Although the individuals are not required to pay tax on their free flu shots, Illinois noted that the donor of the “gift” is deemed the end user of the property and is subject to the use tax on that property.
- The yoga tax in Missouri: Missouri became the only state to enforce a 4% sales tax on what many see as a spiritual pursuit: the practice of yoga.
- Driving service taxable in New York unless in connection with a funeral: New York changed their laws to tax transportation by livery services, such as limousine or black car. However, New York compassionately provided an exemption for such services if provided in connection with a funeral.
- Streaming digital goods in Washington: Washington became the first state to specifically tax the streaming of digital products (i.e. music, movies) when they recently enacted legislation under HB 2075.
“While some of the changes may seem strange, humorous, and downright confusing, it highlights just how difficult managing the sales and use tax process can be,” said Pam Kostka, Senior Vice President of Corporate Marketing of Sabrix. “In light of the economy, where government is creating an array of new taxes to address budget shortfalls, businesses are finding it especially difficult and costly to achieve compliance with confidence.”
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