“Gifted” flu vaccines and Wisconsin marshmallows without flour are now taxable

SAN RAMON, CA – December 9, 2009 – Sabrix, Inc., a leading provider of transaction tax management for companies of all sizes, today revealed a sampling of 2009 quirky sales and use tax changes, emphasizing the importance of technology and expertise to help navigate the dynamic sales and use tax landscape.

“While some of the changes may seem strange, humorous, and downright confusing, it highlights just how difficult managing the sales and use tax process can be,” said Pam Kostka, Senior Vice President of Corporate Marketing of Sabrix. “In light of the economy, where government is creating an array of new taxes to address budget shortfalls, businesses are finding it especially difficult and costly to achieve compliance with confidence.”

Sabrix MTS™ combines an on-demand version of the Sabrix Application Suite, the same trusted tax platform used by leading global companies, with service from a multidisciplinary team of tax experts and SAS 70 certified processes. Sabrix customers who have deployed either solution benefit from the millions of dollars invested in technology, security, tax content and industry proven best practices and are able to seamlessly comply with tax changes immediately.

A few of the 2009 “quirky” sales and use tax highlights include:

• Marshmallows and yogurt covered raisins in Wisconsin:  Wisconsin recently enacted legislation that states that marshmallows are taxable unless they contain flour. Additionally, the new legislation “clarifies” that while yogurt and raisins are both exempt, yogurt covered raisins are taxable. Wis. Admin. Code Tax 11.51.
• Flu vaccines in Illinois:  Illinois addressed the taxability of free flu administered to individuals without insurance. Although the individuals are not required to pay tax on their free flu shots, Illinois noted that the donor of the “gift” is deemed the end user of the property and is subject to the use tax on that property. Illinois Dept. of Rev. General Information Letter ST 09-0118-GIL.
• The Illinois candy tax:  Illinois changed their tax laws in regards to taxing candy. Chocolate bars, yogurt- or chocolate-covered nuts or fruit, honey-coated nuts, caramel popcorn, lollipops, snack mixes containing yogurt or chocolate, breath mints, and gum are considered candy and taxed at the standard sales tax rate. However, chocolate-covered cookies, yogurt-covered pretzels, “candy” that contains flour, plain dried fruits and nuts with no added sweeteners are not candy and, therefore, are taxed at the lower food rate.  Illinois Dept of Rev. Publications- FY – 2010-01. See:http://www.revenue.state.il.us/Publications/Bulletins/2010/FY-2010-01.pdf
• The yoga tax in Missouri: Missouri became the only state to enforce a four percent sales tax on what many see as a spiritual pursuit: the practice of yoga.  Ruling No. LR 2732.
• Driving service taxable in New York unless in connection with a funeral:  New York changed their laws to tax transportation by livery services, such as limousine or black car. However, New York compassionately provided an exemption for such services if provided in connection with a funeral.; NY TSB-M-09(2)S.
• Streaming digital goods in Washington:  Washington became the first state to specifically tax the streaming of digital products (i.e. music, movies) when they recently enacted legislation under HB 2075. See ESHB 2075.

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