Bagel Tax! New York State Cracks Down

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New York bagel shop window --- Image by © Ashok Sinha/moodboard/Corbis

On a rainy Wednesday morning, straphangers seize their consciousness from a freshly sliced bagel with cream cheese and a cup of piping hot coffee.

But with New York’s budget mired in red territory, the state’s Department of Taxation and Finance is ramping up its audits on a subtle food tax policy. CBS 2 New York breaks down the issue that is threatening to slice one upstate bagel chain’s bank account — what constitutes a prepared food item?

For three years, Bruegger’s Bagels looked past a punch to consumers’ wallets — if an item is handled or eaten in a store, it has a tax attached to it. Now, they’ve hired an attorney to fight off three years of backed-bagel taxes. As the New York Post writes, the slicing fee adds almost 10 percent to a patron’s receipt at any local food oulet. Either the customer takes the hit at the exit, or the business takes the hit for forgetting the charge.

CBS 2 New York dove into some other common situations that may affect your morning rush. Buy a cup of coffee that you pour yourself and it’s tax free. Buy one that’s filled by a store employee behind the counter, and pay that aforementioned tax. Select a whole cake from your local grocery store, and pay a flat rate. Purchase a slice of cake from a pastry shop’s cold case, and serve up a few more pennies.

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