If you run a bakery, you already know you work hard. You have to ensure your goods are baked and kept fresh for customers. Health code inspections come frequently. Vendors must be timely paid. And then there is the Department of Revenue (“Department”). The Department can (and does) come swooping in all too often and tells you everything you are supposedly doing wrong. And by the way, you have to pay the Department out of your pocket for how much they say you owe. This article will discuss how the Department views various aspects of bakeries for sales and use tax purposes.
When looking at bakeries in the same manner as the Department does, there are a few tax “baskets” the Department categorizes bakeries and the food sold. Food that is to be consumed off the seller’s premises is generally considered to be sales tax exempt when sold in the original sealed container, sliced into smaller portions, or sold frozen and then heated on the seller’s premises by the customer. However, if the food product is sold as a “hot prepared food product” or is ready to be consumed on the premises, then the sale should be subject to sales tax. The Department defines a hot prepared food product as food prepared for sale in a heated condition and sold at any temperature that is higher than the air temperature of the room/place where the products are sold. It includes foods that are kept warm to maintain the heated state. Yet, bakery products that are sold while still warm from the initial baking are not considered a hot prepared food product.
If bakery products, except for those to be consumed off premises, are sold by a bakery that has eating facilities, the sale is most likely subject to Florida sales tax. An eating facility is one in which there is a place at the bakery for the customer to eat the items purchased. On the other hand, if the bakery product, excluding hot prepared food, is sold for consumption off of the premises, then the sale should be sales tax exempt. Unless a bakery can show otherwise, the Department considers a bakery, which has eating facilities, to be required to charge sales tax if: (1) the products are sold in quantities of five or fewer; or (2) regardless of the quantity purchased, the products sold are not packaged in a manner that is consistent with the intention of the customer to consume away from the bakery. Examples of the latter include packaging that is glued, stapled, wrapped, or sealed. If a bakery does not have an eating facility, the sale should be exempt from sales tax, unless the food sold is a hot prepared food product.
Knowing how the Department views bakeries is the key to getting things done with the least amount of heartache. You have to act now before the Department contacts you. If you wait until you receive an audit notice from the Department…then it can be rather expensive educational lesson on how you should have been handling sales tax. What is worse is that you could have been collecting the tax from your customers instead of being liable for the tax of mistakes.
About the author: David Brennan is an associate attorney with Moffa, Sutton, & Donnini, P.A. His primary practice area is multistate tax controversy. David received a B.S. in Accounting and Finance, with a minor in Computer Science, from Florida State University. He worked as an accountant for a CPA firm before attending law school at Regent University. He received his Juris Doctor in 2013 and was licensed to practice law in Florida in the same year. In 2015, David earned his Masters of Laws in Taxation from Boston University. While working for the Florida Department of Revenue as a Senior Attorney, David focused on various sales and use tax issues. You can read his BIO HERE.
At the Law Office of Moffa, Sutton, & Donnini, PA, our primary practice area is Florida taxes, with a very heavy emphasis in Florida sales and use tax. We have defended Florida businesses against the Florida Department of Revenue since 1991 and have over 100 years of cumulative sales tax experience within our firm. Our partners are both CPAs/Accountants and Attorneys, so we understand both the accounting side of the situation as well as the legal side. We represent taxpayers and business owners from the entire state of Florida. Call our offices today for a FREE INITIAL CONSULTATION to confidentially discuss how we can help put this nightmare behind you.
If you are interested in learning more about Florida sales and use tax, then you can find a listing of our up and coming speaking engagements HERE.
AUTHORITY
DR-46NT, Nontaxable Medical Items and General Grocery List.
ADDITIONAL RESOURCES
FL DOR TARGETS RESTAURANTS FOR SALES TAX AUDITS, published December 1, 2019, by Jerry Donnini, Esq.
FLORIDA SALES TAX INFORMAL WRITTEN PROTEST, published November 17, 2018, by James Sutton, C.P.A., Esq.
FLORIDA SALES TAX - VOLUNTARY DISCLOSURE PROGRAM, published April 9, 2018, by Jeanette Moffa, Esq.
FLORIDA USE TAX AUDIT LETTER?, published June 14, 2015, by James Sutton, CPA, Esq. and Jerry Donnini, Esq.
FLORIDA TAX INCENTIVES FOR BUSINESS, published November 10, 2013, by Jerry Donnini, Esq.
GO TO JAIL FOR NOT PAYING FLORIDA SALES TAX?, published November 3, 2013, by James Sutton, CPA, Esq.