What's the deal on California food taxes?

July 2, 2009 3:19 PM

I've noticed when I buy food in California at different restaurants, sometimes there's sales tax and sometimes there's not. What's the deal?

This is something I noticed at the quiznos the other day. I got charged sales tax on my meal. But, the next day, at Subway, NO sales tax. Both were takeout. One, arguably, with the toasted bun, was hot. But otherwise I have no idea why one meal gets sales tax and the other doesn't. I know if you go to a sit down restaurant there's always sales tax on the bill but does that become more arbitrary when it's fast food?

Ideas?

posted by rileyray3000 to law & government (13 comments total)

Could it be a local tax? Were they in different counties or cities? I know here in Indiana, some counties have added a restaurant tax on top of the state tax, so the tax may be different depending on where the restaurant is.

Another possibility is that the price advertised at Subway is a "tax included" price, so when you order a $5 footlong (how I hate those commercials), your total is $5, but technically their price is $4.xx, whatever it takes to make it come out to $5 with tax.
posted by DevilsAdvocate at 3:34 PM on July 2

My understanding is that tax is applied when you order "to go".
posted by ohyouknow at 3:35 PM on July 2

Some relevant information is here.
posted by harmfulray at 3:37 PM on July 2

This may explain it:

http://patterico.com/2007/06/21/tax-tip-of-the-day-always-order-your-coffee-to-go-in-california/

(why can't I get links to work anymore?)
posted by dinger at 3:42 PM on July 2

My local Subway cashier explained that they charge tax on hot food. I've noticed the difference even at a single Subway restaurant.
posted by kidbritish at 3:44 PM on July 2

My understanding is that tax is applied when you order "to go".

That's wrong. Tax is applied when you eat on the premises or when the food is "hot prepared food" (whether or not you eat on the premises). By "hot prepared food", I mean, per harmfulray's link:

For example, the sale of a toasted sandwich intended to be in a heated condition when sold, such as a fried ham sandwich on toast, is a sale of a hot prepared food product even though it may have cooled due to delay. On the other hand, the sale of a toasted sandwich which is not intended to be in a heated condition when sold, such as a cold tuna sandwich on toast, is not a sale of a hot prepared food product.
posted by mr_roboto at 4:14 PM on July 2

mr_roboto: That's wrong. Tax is applied when you eat on the premises or when the food is "hot prepared food" (whether or not you eat on the premises). By "hot prepared food", I mean, per harmfulray's link:

For example, the sale of a toasted sandwich intended to be in a heated condition when sold, such as a fried ham sandwich on toast, is a sale of a hot prepared food product even though it may have cooled due to delay. On the other hand, the sale of a toasted sandwich which is not intended to be in a heated condition when sold, such as a cold tuna sandwich on toast, is not a sale of a hot prepared food product.

But you're wrong: harmfulray's link says exactly that

Tax applies to all sales of hot prepared food products unless otherwise exempt. [emphasis mine]

…and, since CA sales tax law is ridiculously complicated (just like every other realm of CA law) there are exemptions.

Sincerely, this is one of the most hideously complex state regulatory codes I've ever read (and I've read at least a few.) I'm going to go over it a bit and maybe I'll be able to say something about it, but as it is, it keeps saying things like

(b) “DRIVE-INS.” Tax applies to sales of food products ordinarily sold for immediate consumption on or near a location at which parking facilities are provided primarily for the use of patrons in consuming the products purchased at the “drive-in” establishment, even though such products are sold on a “take out” or “to go” order and are actually packaged or wrapped and taken from the premises of the retailer. Food products when sold in bulk, i.e., in quantities or in a form not suitable for consumption on the retailer’s premises, are not regarded as ordinarily sold for immediate consumption on or near the location at which parking facilities are provided by the retailer. Accordingly, with the exception of sales of hot prepared food products (see (e) below) and sales of cold food under the 80-80 rule (see (c) below), sales of ice cream, doughnuts, and other individual food items in quantities obviously not intended for consumption on the retailer’s premises, without eating utensils, trays or dishes and not consumed on the retailer’s premises, are exempt from tax. Any retailer claiming a deduction on account of food sales of this type must support the deduction by complete and detailed records.

so there's some sort of distinction in taxation between dine-in and take-out, but the state seems to desire the obnoxious complication of distinguishing places where people will eat in their car from places where people will drive home to eat.
posted by koeselitz at 9:21 PM on July 2 [1 favorite has favorites]

In terms of hot drinks (lattes, coffee, etc) "to go" drinks are never taxed, and "for here" drinks should always be taxed (though often the store doesn't ask and assumes that it's to go, and thus untaxed).

I believe prepared cold foods work the same way, but prepared hot foods are taxed regardless.
posted by insectosaurus at 9:27 PM on July 2

I swear, California laws always sound like they were written by somebody who's been sealed in a bubble for the last fifty years and has absolutely no experience of how human beings on Earth actually live. I mean, sub-subsection (c).(2).(b). goes to certain lengths to explain that different locations are considered separately, so that if I get takeout food at a Kentucky Fried Chicken and drive down the street to another Kentucky Fried Chicken, park in the parking lot, and eat the damned chicken, I'm in the clear on tax, since the other KFC doesn't count as the same restaurant at the first KFC. Good god.
posted by koeselitz at 9:34 PM on July 2

I mean, I'm sorry, but how can this not be hilarious?

(f) A passenger’s seat aboard a train, or a spectator’s seat at a game, show, or similar event is not a “chair” within the meaning of this regulation.
posted by koeselitz at 9:42 PM on July 2 [1 favorite has favorites]

Koeselitz, all you have to do is figure out the intention of the law, and then who would try to bend the rules (successfully or not), then all the ridiculous stuff becomes clear.

Say the government says "we should tax food." "but wait, what about poor people who can barely afford food as it is?" "okay, tell you what: if they buy groceries, no tax. if they're eating at a restaurant, tax." "okay, write it up." This gets written into law.

Then people start filing for exemptions for their take-out orders; after all, they're not eating at the restaurant!" So the government says "well, when you're ordering take-out from a restaurant, it's already cooked, so let's just tax the cooked food. That way, people can still buy groceries without tax."

Then restaurants start opening that serve cold food for takeout. Meanwhile, grocery stores start moving upscale and serving hot prepared food. "sonofabitch!" "i know, right?" "now what do we do?" "i dunno, i'm still trying to figure out the whole drive-in/carhop thing. maybe if the food is brought to them in their cars by a carhop, it's still a restaurant, so they still have to pay tax, but if they're just grabbing food from a window and moving on, it's not -- otherwise people parking at grocery stores to pick up food will get caught up."

Then the baseball stadium gets in on the act, because they want an exemption to keep concession prices low, and they've got some power so they get it -- "besides, poor people go to those games and buy cheap hotdogs for their kids." "yeah, and we really going to tax people who buy a snack on the train? poor people take trains, wealthy people drive."

You know, you're right; it's still hilarious.
posted by davejay at 1:13 AM on July 3 [5 favorites has favorites]

If it's hot or toasted, it's taxed, whether for here or to go. That means if you toast your turkey sandwich, or get a meatball, pastrami, philly, chicken teriyaki or oven-roasted chicken, since those proteins are already hot and/or microwaved, they are taxed. If you eat in, also taxed.

Not that I am condoning it, but either don't toast your sandwich, or when they ask, tell them it's to go. Once you're charged, if you sit down to eat, what are they gonna do?

Also, carbonated beverages are taxed, while juices and waters are not. Something I just learned.
posted by buzzkillington at 11:11 AM on July 3

Okay, so it's something like this:

Heated food, which does not include baked goods or hot beverages (unless said baked goods or hot beverages are sold from a vending machine) is generally taxed (1603.e.1) unless otherwise exempt. Furthermore (and quite confusingly) regardless of whether it is heated, food that is intended for consumption on the premises is taxed while “to-go” food is not (1603.f). Accordingly, the only way I can think of to interpret this law is to say that you pay tax on heated food which is intended for consumption on the premises (unless it's a baked good or a heated drink)—meaning you're provided with a tray, utensils, etc.—and you also pay tax on any cold food that's intended for consumption on the premises (the law mentions for example sandwiches or ice cream).

If you purchase, say, a party cheese tray, which you probably wouldn't eat on the premises but would bring home for a party, you aren't taxed; if you purchase a slice or chunk of cheese on a plate, you are taxed. The law says that if you purchase a pound or more of candy, you aren't expected to eat it on the premises and are therefore untaxed. (This part made me want to go to California, buy two pounds of candy, and eat it right on the spot just to defy the CA legislature.) Other foods which the legislature of CA considers ‘unsuitable to be consumed on the seller's premises’ and therefore untaxed:

More than a single slice of pie at a time (since this would require slicing, thus invalidating the injunction that foods suitable for consumption on the premises must not require further preparation)—so, if you plan on eating more than one piece of pie, make sure they just cut you off a big chunk so that it's not taxed.

More than a pint of ice cream, milk, or other “cold food product”—“excluding milk shakes and similar milk products.” Apparently, the California legislature has determined that a Californian cannot consume more than a pint of milk in one sitting, whereas she can consume an indeterminate amount of milkshake or malt. This actually makes a lot of sense, at least to me. I know that I fit this designation.

“A whole cold chicken.” Suddenly my idea of starting a restaurant in San Francisco that serves nothing but whole cold chickens is sounding good after all.

posted by koeselitz at 12:49 PM on July 3