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Roberts Market: Coffee "to go" sales tax...

Original post made by Don Quixote, Woodside: other, on Jul 9, 2010

Over the past several months on three different occasions I have tried to persuade the manager of Roberts Market in Woodside that "to go" coffee should not be subject to sales tax under the 80-80 rule provided in Sale and Use Tax Regulation 1603.

As most people are aware, hot "to go" items are normally taxable, but a provision under section (c)(1)(a) explicitly provides an exception for hot beverages specifically mentioning hot coffee. In fact it even allows "hot bakery goods" to go to be excluded from sales tax.

I have tried to persuade the manager to walk across the street to the Woodside Bakery or go to any Starbucks or Peets in California and note that they do not charge sales tax. However, he says that may be so, but these guys must simply be embedding the tax into their price. I pointed out that would be rather silly of them to do since it would put them at a competitive disadvantage with respect to price, but he just came full circle and said that is why they would not do so.

I tried to encourage him to spend 30 seconds typing "coffee sales tax california" into google, but he made it abundantly clear that my suggestion was not helpful.

I realize that it's quixotic for me to continue with this and I suppose that I should be grateful that by now they must have helped the state with it budget problems in the amount of tens of thousands of dollars of extra tax. Even so I admit to a bit of frustration.

Well, thanks for listening. At least it's off my chest.

Don Quixote

Comments (3)

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Posted by Hmmmm
a resident of Woodside: other
on Jul 20, 2010 at 9:46 am

Are they still doing this? If you go to Bianchini's in PV, they do not charge sales tax on a "takeout" hot ham & cheese croissant, but last time I was at Robert's they charged sales tax on hot baked goods.

The basic rule is that if your establishment is exempt from sales tax on cold foods (based on the 80-80 rule), then you are granted an exemption on hot beverages such as coffee and on hot baked goods but not items like hot sandwiches.

The details of the rule make for some weird taxation cases. If you buy a cold takeout sandwich from Subway, they will not charge sales tax (by the 80-80 rule), but if you buy a cold takeout sandwich from a McDonalds (if they were to sell one), you would be required to pay sales tax. Pretty weird, huh?

What is the 80-80 rule? It is a rule that says if 80% of what you sell is food and 80% of that food is non-taxable, then certain takeout foods that would normally be taxed are exempt from sale tax.

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Posted by Don Quixote
a resident of Woodside: other
on Jun 28, 2011 at 5:22 pm

Well, halelujah, I was just in Robert's and I saw a "No Tax on Hot Beverages" note posted on the registers, so it appears that they somehow finally got the message (a mere year and a half after I first brought it to their attention, and a decade longer than they need to be charging sales tax).

Not that I'll ever see an apology for being treated as some kind of lunatic suggesting that hot take out beverages were exempt in their case anyway.

I wonder if they'll figure out that the exemption also applies to takeout hot bakery items, too. Actually, they probably don't have too many qualifying items here, since microwave or toaster reheating of bakery goods will still make them taxable.

Anyway, I might stop boycotting my coffee purchases from them now that they appear to have figured it out.

Like this comment
Posted by Hmmm
a resident of another community
on Jun 30, 2011 at 12:03 am

Don Quixote, I bet that all that tilting at windmills means more caffeine is necessary! How funny the timing on this - you post this & they change their rule & post the sign. Congrats - & happy tilting!

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