Is an edible gummy drinking cup exempt as food, or taxable as candy/confectionery?

Plain-English summary

The petitioner makes an edible gummy drinking cup (five flavors; vegan; pectin, evaporated cane sugar, natural flavors and colors; one-week shelf life). It asked whether the product is exempt as food or taxable.

The Office of Counsel concluded it is taxable candy/confectionery. NY exempts food and food products (Tax Law 1115(a)(1)), but candy and confectionery are not exempt (1115(a)(1)(i)). The regulation defines candy/confectionery broadly -- "candy of all types... and any similar product regarded as candy or confectionery based on its normal use or as indicated on the label or in advertising" (20 NYCRR 528.2(a)(4)). The focus is on what the product consists of and how it fits the scheme (TSB-A-09(38)S), with factors including how it is labeled, packaged, advertised, displayed, and sold (TB-ST-103). Here the ingredients (evaporated cane sugar, pectin) and the petitioner's own advertising of the product as an "all natural pectin confection" lead to the conclusion that it is confectionery -- not exempt food -- so it is subject to sales and use tax.

What this means for you

Food, candy, and novelty-food makers and sellers

The food exemption does not cover candy and confectionery. Whether a sweet item is taxable turns on what it is (sugar-based confection?) and how you present it -- your own labeling and advertising matter. Calling your product a "confection" (as here) is strong evidence it's taxable candy. If a product is genuinely a food rather than a confection, document that; but a sugar/pectin gummy marketed as a confection will be taxed.

Common questions

Q: It's edible -- isn't it exempt food?
A: Not if it's candy or confectionery. Those are carved out of the food exemption and are taxable.

Q: Why did our product count as confectionery?
A: Its ingredients (cane sugar, pectin) and your advertising of it as an "all natural pectin confection" indicate it's confectionery.

Q: Does how we label/advertise it really matter?
A: Yes. Labeling, packaging, advertising, display, and how it's sold are all factors in deciding candy vs. food.

Citations and references

• Tax Law section 1105(a) (sales tax on tangible personal property)
• Tax Law section 1115(a)(1) (exemption for food and food products)
• Tax Law section 1115(a)(1)(i) (candy and confectionery are taxable)
• 20 NYCRR section 528.2(a)(4) (definition of candy and confectionery)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2012.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a12_29s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Counsel
Advisory Opinion Unit

TSB-A-12(29)S
Sales Tax
October 24, 2012

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S120620B

The Department of Taxation and Finance received a Petition for Advisory Opinion from
name and address redacted, through their representative, name redacted. Petitioner asks if,
edible gummy drinking cups known as product name redacted are subject to sales and use tax
pursuant to 1105(a) and 1110(a) of the Tax Law.
We conclude that the exemption from sales and use tax as provided in section 1115(a)(1)
of the Tax Law does not apply to the sale of product name redacted on the ground that it is a
confection.
Facts
Petitioner produces an edible gummy drinking cup known as product name redacted. The
product is available in five flavors in accordance with the five tastes: salty – lime, sour – lemon,
bitter – bitters, sweet – vanilla, and spicy – pepper. The product is vegan and composed of
pectin, evaporated cane sugar, plus all natural flavors, and colors.
The shelf life for the product is one week and the product must be consumed within that
time. The product does not need to be refrigerated, but it should not be stored in hot
temperatures. The product must be kept in its packaging (a heat sealed bag) until right before
serving/consuming. The product is currently only sold in New York City.
Analysis
Tax Law section 1105(a) imposes sales tax on the receipts from every retail sale of
tangible personal property, except as otherwise provided. Tax Law section 1115(a)(1)exempts
from sales tax food and food products. Section 528.2(a)(2) of the Sales and Use Tax Regulations
provides that “food and food products” means edible commodities whether prepared, processed,
cooked, raw, canned or in any other form generally regarded as food.
Candy and confectionery are not exempt from sales and use tax. See Tax Law §
1115(a)(1)(i). Regulation section 528.2(a)(4) provides that “[c]andy and confectionery include,
without limitation, candy of all types: chocolate (plain or mixed with other products); glazed or
sugar-coated fruits, nuts, peanuts, popcorn, or other products; chewing gum; mints; lollypops;
fruit flavored sticks; fruit drops; licorice; pastilles; cotton candy; marzipan; halvah and any
similar product regarded as candy or confectionery based on its normal use or as indicated on the
label or in advertising thereof.” The primary focus in determining taxable status should be on

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TSB-A-12(29)S
Sales Tax
October 24, 2012

what the product is (i.e., what it consists of) and how the product fits within the statutory and
regulatory scheme. See TSB-A-09(38)S.
As set forth in a Department of Taxation and Finance issued Tax Bulletin, TB-ST-103, a
number of factors are considered in determining if something is candy/confectionery or a food
product including: how the product is labeled, packaged, advertised, displayed and sold.
Petitioner’s product is advertised on its website as, “all natural pectin confections.” Based on the
product’s ingredients (e.g. evaporated cane sugar, pectin) and the fact that Petitioner advertises
the product as a confection, we conclude that it is not exempt as a food product pursuant to Tax
Law section 1115(a)(1), and is therefore subject to sales and use taxes.

DATED: October 24, 2012

NOTE:

/S/
DEBORAH R. LIEBMAN
Deputy Counsel

An Advisory Opinion is issued at the request of a person or entity. It is limited to the
facts set forth therein and is binding on the Department only with respect to the
person or entity to whom it is issued and only if the person or entity fully and
accurately describes all relevant facts. An Advisory Opinion is based on the law,
regulations, and Department policies in effect as of the date the Opinion is issued or
for the specific time period at issue in the Opinion. The information provided in this
document does not cover every situation and is not intended to replace the law or
change its meaning.