Are an out-of-state bakery's pre-packaged brownies, cookies and bars taxable in New York, does a keepsake gift tin change that, and must it file returns even with no taxable sales?

Plain-English summary

An out-of-state bakery sells fully cooked, individually wrapped baked goods (brownies, cookies, bars), ordered online or by phone and shipped unheated by common carrier to New York customers. It has no eating facilities. Brownies come in a cardboard box, or — for an extra $20 — in a keepsake tin. It asked whether the sales are taxable and whether it must file returns. The Department's answers: the baked goods are generally exempt, the keepsake-tin package is fully taxable, and a registered vendor must file returns regardless.

Baked goods = exempt food. Food sold for human consumption is exempt (Tax Law § 1115(a)(1)), and the candy/confectionery exclusion does not cover baked goods like cookies, pastries, brownies, or bars (TB-ST-103; 20 NYCRR 528.2(a)). The restaurant/vending tax (Tax Law § 1105(d)(i)) doesn't apply either, because the bakery isn't a restaurant or vending operation and ships its products unheated. So the plain baked-goods sales are not taxable.

The keepsake tin flips it. When exempt food is sold together with other tangible personal property for a single price, the entire receipt is taxable unless the other property is a de minimis part of the sale (TSB-A-09(54)S; 20 NYCRR 527.1(b)). A $20 keepsake tin is not de minimis relative to the package price, so the bakery must collect tax on the whole brownies-in-a-tin package — not just the tin.

Filing returns. If the bakery is a vendor that must register (New York's economic-nexus test presumes vendor status at over $500,000 in New York sales and more than 100 sales in the prior four quarters — Tax Law § 1101(b)(8)(ii)(B)(iv); it had over $500,000 in 2021), it must file sales tax returns even for periods with no tax due (PUB-750). Whether it actually has nexus is fact-specific and wasn't decided in the opinion.

What this means for you

Bakeries and food sellers shipping into New York

Plain packaged baked goods shipped unheated are exempt — baked goods aren't "candy," and you're not a restaurant just because you sell food. But the moment you bundle the food with a non-trivial non-food item (a tin, mug, basket) for one price, the whole sale can become taxable.

The de minimis line on gift bundles

A small, incidental container stays exempt with the food; a $20 keepsake tin does not. If you sell gift packages, consider separately stating the non-food item, or expect to tax the entire combined charge.

Remote sellers and filing duties

Economic nexus can make you a New York vendor ($500k+ and 100+ sales). Once registered, you must file every period, even when all your sales are exempt and no tax is due. Nexus itself is fact-specific; the Department won't resolve it in an advisory opinion.

Common questions

Q: Are shipped baked goods taxable in New York?
A: Generally no. Pre-packaged baked goods sold unheated for off-premises consumption are exempt food; baked goods are not candy/confectionery and the seller isn't a restaurant.

Q: Why is the keepsake-tin package taxable?
A: Because exempt food sold with other tangible personal property for one price is fully taxable unless the other item is de minimis. A $20 tin isn't de minimis, so the entire package is taxed.

Q: Could I avoid taxing the whole package?
A: The opinion turns on a single combined charge for a non-de-minimis item. Separately stating a meaningfully priced non-food item changes the analysis; consult the cited guidance (TSB-A-09(54)S).

Q: Do I have to file returns if all my sales are exempt?
A: If you're required to register as a New York vendor, yes — you must file returns even when no tax is due.

Q: Can my business rely on this opinion?
A: Not as binding. A TSB-A advisory opinion binds the Department only as to the petitioner and the exact facts described. Use it to understand the reasoning, then check your own facts.

Citations and references

New York Tax Law and regulations:
- Tax Law § 1105(a) — sales tax on retail sales of tangible personal property
- Tax Law § 1115(a)(1) — exemption for food sold for human consumption (baked goods aren't candy/confectionery)
- Tax Law § 1105(d)(i) — tax on food sold by restaurants, taverns, or vending machines
- Tax Law § 1101(b)(8)(ii)(B)(iv) — economic-nexus vendor presumption ($500,000 and 100 sales)
- 20 NYCRR 528.2(a) — candy/confectionery definition; 20 NYCRR 527.1(b) — bundled receipts

Guidance cited:
- TB-ST-103 — baked goods are not candy or confectionery
- TSB-A-09(54)S; TSB-A-02(34)S — exempt food bundled with non-de-minimis property is fully taxable
- PUB-750 — A Guide to Sales Tax in New York State (vendors must file even with no tax due)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao.htm
• Opinion: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales/24-19s.htm
• Printer-friendly PDF: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a24-19s.pdf

Original ruling text

Sales Tax
August 2, 2024
Office of Counsel

The Department of Taxation and Finance received a Petition for Advisory Opinion from [ redacted ] (“Petitioner”). Petitioner asks whether the sale of pre-packaged baked goods sold to New York residents is subject to New York sales and use tax. Petitioner also asks if it is required to file sales tax returns if it sells food products that are exempt from tax.1

We conclude, based on the facts provided, that such pre-packaged food products generally are not subject to sales tax. However, those products sold in keepsake tins are subject to sales tax. Also, persons required to register for sales tax in New York State must file a sales tax return even if there are no taxable sales.

Facts

Petitioner is an out-of-state bakery that manufactures and sells food for human consumption. Petitioner only sells fully cooked baked goods, specifically brownies, cookies and bars in various sizes and flavors. All products are individually wrapped and labeled and sold in a non-heated state. Petitioner does not have eating facilities and does not sell its baked goods for on-premises consumption. Petitioner accepts orders via its own website, through Amazon or through telephonic ordering. Once ordered, the products are packaged in non-returnable containers and shipped to the customer or its designee via a common carrier. Customers can purchase brownies in a cardboard box or, for an additional charge of $20, purchase brownies in a keepsake tin. Petitioner advises that it made at least $500,000.00 in sales in 2021.

Analysis

Tax Law § 1105(a) imposes sales tax on retail sales of tangible personal property unless an exemption applies. Food sold for human consumption, not including candy and confectionaries, is exempt from tax. See Tax Law § 1115(a)(1). The category of candy and confectionaries does not include baked goods, such as cupcakes, cookies, pretzels, donuts and pastries or any similar products, such as granola or cereal bars. See TB-ST-103 and 20 NYCRR 528.2(a). Therefore, the retail sale of baked goods, specifically brownies, cookies, and bars, is not subject to sales tax under Tax Law § 1105(a).

Tax Law § 1105(d)(i) imposes sales tax on the sale of food, other than for resale, when sold by restaurants, taverns or similar establishments or through vending machines. Petitioner does not provide eating facilities or sell its products through vending machines. Rather, its products are ordered online or by telephone and shipped in an unheated state to customers or their designees. Therefore, Petitioner’s sales are not subject to tax pursuant to Tax Law § 1105(d)(i), because Petitioner is not a restaurant, tavern, or similar establishment.

However, if the baked goods are sold with other tangible personal property, such as a gift basket, for a single charge, the entire receipt is subject to sales tax unless the other tangible personal property is a de mimimis element of the sale. See TSB-A-09(54)S. In this case, the additional purchase price of $20 for a keepsake tin is not de mimimis to the total sale price of the entire package. Therefore, Petitioner must collect sales tax on the sale of the entire package of brownies delivered in a keepsake tin. See TSB-A-09(54)S; TSB-A-02(34)S; 20 NYCRR 527.1(b).

The Tax Law defines “vendor” to include “A person who regularly or systematically solicits business in this state by the distribution, without regard to the location from which such distribution originated, of catalogs, advertising flyers or letters, or by any other means of solicitation of business, to persons in this state and by reason thereof makes sales to persons within the state of tangible personal property, the use of which is taxed by this article, if such solicitation satisfies the nexus requirement of the United States constitution.” See Section 1101(b)(8)(i)(E).

Furthermore, “…a person shall be presumed to be regularly or systematically soliciting business in this state if, for the immediately preceding four quarterly periods ending on the last day of February, May, August and November, the cumulative total of such person's gross receipts from sales of property delivered in this state exceeds five hundred thousand dollars and such person made more than one hundred sales of property delivered in this state, unless such person can demonstrate, to the satisfaction of the commissioner, that he cannot reasonably be expected to have gross receipts in excess of five hundred thousand dollars or more than one hundred sales of property delivered in this state for the next succeeding four quarterly periods ending on the last day of February, May, August and November.” See Tax Law § 1101(b)(8)(ii)(B)(iv).

Petitioner advised that the sale of baked goods exceeded $500,000.00 in 2021. If Petitioner also made more than one hundred sales of property delivered in the state, it may be considered a vendor for sales tax purposes.

Furthermore, since Petitioner makes taxable sales in the state, if it has nexus with New York, and is considered a vendor, it must register as a vendor and timely file sales and use tax returns even if there is no tax due for the filing period. See PUB-750, A Guide to Sales Tax in New York State (11/15).

DATED: August 2, 2024

Mary Ellen Ladouceur
Principal Attorney

Note: 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.

1 Petitioner also asks whether it is a vendor (i.e. has nexus with New York), which would require it to register for sales tax purposes and collect and remit State and local sales tax. However, because nexus questions are fact dependent, they are not addressed in Advisory Opinions and, therefore, we provide no opinion on this issue.