NY TSB-A-13(34)S Sales Tax 2013-09-10

Is a bottled puree drink of vegetables, fruits, nuts, and seeds subject to NY sales tax, or is it exempt food?

Short answer: It's exempt. A thick bottled puree of water, vegetables, nuts, fruits, seeds, and spices is exempt food and beverage under the general food exemption. It isn't one of the taxable carve-outs -- it's not a fruit drink with under 70% juice, not a soft drink or soda-fountain beverage, and not alcoholic. As a combination vegetable-and-food-product beverage, it's treated like exempt vegetable juice, so its retail sale (for off-premises consumption) isn't taxed.

Disclaimer: This is an official New York State Department of Taxation and Finance Advisory Opinion (TSB-A), issued by the Office of Counsel at a taxpayer's request. It is limited to the facts set forth in it and binds the Department only with respect to the petitioner to whom it was issued, and only if that petitioner fully and accurately described all relevant facts; another taxpayer cannot rely on it. It reflects the law, regulations, and Department policy in effect when issued and may since have changed. Taxpayer-identifying details are redacted. New York State and local sales taxes are administered centrally by the Department. This summary is informational only and is not legal or tax advice. Consult a licensed New York tax professional about your specific situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked at the bottom of this page, or PDF in the sidebar) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

The petitioner makes a bottled beverage -- a thick puree of water plus soybeans, coconut, almonds, pine nuts, grains (millet, quinoa, amaranth), seeds, corn, many fruits, beets, cactus, sweet potatoes, agave syrup, and spices (a second version adds peanut butter). It's not carbonated, has no refined carbs or cane sugar, must be refrigerated, is sold at retail in 16 oz. bottles, and isn't meant to be consumed where sold. The petitioner asked whether its sale is taxable.

The Office of Counsel concluded it is exempt:

The general food exemption. Food, food products, beverages, dietary foods, and health supplements sold for human consumption are exempt from sales and use tax (Tax Law 1115(a)(1)).
It's not a taxable carve-out. The exemption excludes (i.e., taxes) fruit drinks with under 70% natural juice; soft drinks, sodas, and soda-fountain-type beverages (other than coffee, tea, or cocoa); and alcoholic beverages. The petitioner's beverage isn't a fruit drink, soft drink, or alcoholic drink.
Treated like exempt vegetable juice. The regulations provide that vegetable juices -- single, combined, or combined with another food product -- are exempt beverages (20 NYCRR 528.2(b)(5)). This puree, made from vegetables combined with other food products, is similar to vegetable drinks previously found exempt (TB-ST-525).
Result: the retail sale of the beverage is not subject to sales tax.

What this means for you

Beverage makers and grocers

A whole-food vegetable/fruit puree drink generally falls under the exempt food category -- not the taxable "soft drink" bucket. The taxable lines are carbonated/soda-fountain sodas, sweet fruit drinks under 70% juice, and alcohol. Stay out of those and a juice/puree is exempt for off-premises sale.

Off-premises matters

This exemption is for a bottled product sold to take away. Food and drink sold for on-premises consumption (restaurant-style) is a different, taxable rule.

Common questions

Q: My drink has sugar (agave) -- does that make it a taxable soft drink?
A: No. The taxable carve-outs are sodas/soda-fountain beverages, fruit drinks under 70% juice, and alcohol. A vegetable/fruit puree isn't a soft drink just because it's sweet.

Q: Is vegetable juice taxable in New York?
A: No. Vegetable juices -- alone, combined, or combined with other food products -- are exempt beverages.

Q: Would selling it for on-site consumption change things?
A: Yes -- food and drink sold for on-premises consumption is taxable under different rules. This exemption is for the bottled, take-away product.

Citations and references

Tax Law section 1115(a)(1) (exemption for food, food products and beverages)
20 NYCRR section 528.2(b)(5) (vegetable juices are exempt beverages)

Source

Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2013.htm
Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a13_34s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-13(34)S
Sales Tax
September 10, 2013

Office of Counsel
Advisory Opinion Unit
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S130325A

The Department of Taxation and Finance received a Petition for Advisory Opinion
from name and address redacted. Petitioner asks whether the sale of its beverage is subject
to sales tax.
We conclude that the sale of Petitioner’s beverage is not subject to sales tax.
Facts
Petitioner’s beverage is a proprietary blend of water, vegetables, nuts, fruits, seeds
and spices with the consistency of a thick puree. The beverage contains the following
ingredients, as listed on the product label: water, soybeans, coconut, almonds, pine nuts,
millet, quinoa, amaranth, flaxseeds, pumpkin seeds, maze (white corn and purple corn),
papaya, bananas, mangos, watermelon, plantains, beets, cactus (Napolitos), mamey, yucca,
sweet potatoes, pomegranates, dried figs, agave syrup, flaxseed oil, lecithin, sea moss,
ginger, aloe, cinnamon, sea salt, vanilla extract and nutmeg. A second version of the
beverage will include peanut butter. The beverage is not carbonated and contains no
refined carbohydrates and no cane sugar. It is perishable and must be refrigerated. The
beverage will be sold at retail in 16 oz. bottles and is not intended to be consumed on the
premises where it is sold.
Analysis
Section 1115(a)(1) of the Tax Law generally provides that food, food products,
beverages, dietary foods and health supplements sold for human consumption are exempt
from sales and use taxes. The beverages that are excluded from this exemption, and
therefore taxable, are: fruit drinks which contain less than seventy percent of natural fruit
juice; soft drinks, sodas and beverages such as are ordinarily dispensed at soda fountains or
in connection therewith (other than coffee, tea, or cocoa); and beer, wine or other alcoholic
beverages. Petitioner’s beverage does not appear to be a fruit drink, soft drink, or alcoholic
drink as described in the exclusions to § 1115(a)(1). The Department’s regulations further
provide that, “[v]egetable juices, whether made of a single vegetable, or a combination of
vegetables, or a combination of a vegetable and other food product are exempt beverages.”
See 20 NYCRR § 528.2(b)(5). Petitioner’s beverage is made out of a combination of
vegetables and other food products, and is similar to various vegetable drinks previously

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TSB-A-13(34)S
Sales Tax
September 10, 2013

found to be exempt. See TB-ST-525. Therefore, the retail sale of Petitioner’s beverage is
not subject to sales tax.

DATED: September 10, 2013

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.