Are organic blended fruit-and-vegetable juice drinks taxable, and does selling them with an insulating bag for one price make the charge taxable?

Plain-English summary

A company makes cold organic juice drinks from fresh fruits and vegetables plus water -- blended (not juiced) so the fiber stays in, with no additives. The drinks come in plastic jugs delivered in a thin insulating bag and sold for a single price. The bag is flimsy, tears easily, has handles but isn't durable or meant for reuse, and carries no deposit. It asked whether the drinks are taxable, and whether bundling the bag for one price makes the whole charge taxable.

The Office of Counsel concluded neither is taxable:

• The juice is exempt food. Tax Law section 1115(a)(1) exempts food and food products for human consumption. Fruit and vegetable juices are exempt when they're at least 70% natural fruit or vegetable juice (20 NYCRR 528.2(b)(1)), and these products meet that standard. So they're exempt from State and local sales tax.
• The bag doesn't make the charge taxable. Although the bag is tangible personal property, it's provided at no separate charge, is flimsy/disposable/not for reuse, and has no deposit -- so it's merely incidental to the sale of the exempt juice and isn't treated as a taxable sale of tangible personal property (TSB-A-09(54)S).

What this means for you

Juice / beverage makers

Real fruit/vegetable juice that's at least 70% natural juice is exempt food -- blended "smoothie-style" drinks that retain fiber still qualify. (Watch the 70% line and any added non-food supplements, which can change the answer.)

Packaging that comes "free" with food

A disposable, no-charge carrier (bag, cup, tray) that's incidental to an exempt food sale doesn't drag the sale into tax, even at a single price. A durable, reusable, separately valuable item -- or one with a deposit -- is a different analysis and can be taxable.

Single-price bundles

The Department looks at whether the non-food item is a genuine incidental to the food. Free + flimsy + no deposit = incidental; sturdy/marketed/charged-for = potentially a taxable component.

Common questions

Q: My drink is blended and keeps the pulp -- is it still exempt juice?
A: Yes, if it's at least 70% natural fruit or vegetable juice and sold as food for human consumption.

Q: I include an insulated bag at one price -- do I tax the whole thing?
A: Not if the bag is free, flimsy, non-reusable, and has no deposit -- it's incidental to the exempt juice.

Q: What if I sold a sturdy reusable cooler bag with the juice?
A: That could be a taxable sale of tangible personal property -- this exemption rests on the bag being a flimsy, incidental, no-charge item.

Q: Can I rely on this opinion?
A: It binds the Department only as to the petitioner. Use it as guidance and confirm your own facts.

Citations and references

• Tax Law section 1115(a)(1) (exemption for food and food products for human consumption)
• 20 NYCRR 528.2(b)(1) (vegetable/fruit juices exempt if at least 70% natural juice)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2015.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a15_33s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-15(33)S
Sales Tax
July 20, 2015

Office of Counsel
Advisory Opinion Unit

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE

ADVISORY OPINION

PETITION NO. S141202A

The Department of Taxation and Finance received a Petition for Advisory Opinion from
REDACTED (Petitioner). Petitioner asks whether its organic juice drinks are subject to New
York State and local sales tax. Petitioner also asks if the Department finds the juice drinks not to
be taxable, whether the sale of the juice drink along with an insulated bag for a single price,
would cause the entire charge to be taxable. We conclude that neither the juice drinks
themselves, nor the combination of the juice drink and the bag for a single price, are taxable.
Facts
Petitioner makes and sells cold nutritional and cleansing juice drinks. The drinks are
made with organic fresh fruits and vegetables, without any additional supplements, and are
unpasteurized. The materials are blended, not juiced, so that the fruit and vegetable fiber is
retained. A copy of one of Petitioner’s product labels was included with the petition. The label
lists the contents of the drink, which consists solely of fruits, vegetables and water. The drinks
are packed in plastic jugs, delivered in insulating bags and sold for a single price. Each bag is
black, is approximately 13” x 10” x 15”, and is made from a non-woven fabric filled with an
insulating material approximately 2mm thick. The bags have handles, but are not durable; they
tear easily at the handles and through the bottom of the bag. Petitioner states that the bags are
not intended for reuse.
Analysis
Tax Law §1115(a)(1) specifically exempts “food and food products” from sales and use
tax, provided the food is sold for human consumption. See Tax Law § 1115(a)(1); see also TBST-525. “Vegetable juices, whether made of a single vegetable, or a combination of vegetables,
or a combination of a vegetable and other food product” are exempt from sales tax, provided
they consist of at least 70 percent natural fruit or vegetable juice. See 20 NYCRR §
528.2(b)(1)(i). From the information provided, it appears that Petitioner’s products satisfy this
standard. Therefore, Petitioner’s fruit and vegetable drinks qualify as food or food products and
are exempt from New York State and local sales taxes. See Tax Law § 1115(a)(1).
Petitioner also asks whether the sale of the juice drinks along with an insulating bag for a
single price would cause the entire charge to be subject to tax. Although the bag comes with the
product, it is provided to the customer without charge. The bag is not required to be returned and
no “bag deposit” is imposed. The bag is flimsy, and tears easily. While the bag is tangible

-2-

TSB-A-15(33)S
Sales Tax
July 20, 2015

personal property, because it appears to be merely incidental to the sale of the juice, it is not
considered to be the sale of tangible personal property for purposes of sales tax. See TSB-A09(54)S. Accordingly, the sale of the juice in the insulating bag for a single charge is not
subject to tax.

DATED: July 20, 2015

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.