Chapter Tax 11

Pepper.

Pickles.

Pie and pie fillings.

Pie crust and mixes.

Popcorn, that is not candy as defined in sub. (3) (a).

Popcorn, unpopped.

Popsicles.

Potato chips, unless chocolate covered and do not contain flour as provided in par. (a).

Potato salad, as explained in sub. (3) (e).

Poultry and poultry products.

Powdered drink mixes, except dietary supplements.

Preserves.

Pretzels.

Puddings.

Raisins, except as provided in par. (a).

Ravioli.

Relishes.

Rice.

Rolls and biscuits.

Salad dressing.

Salt and salt substitutes.

Salted nuts.

Sardines.

Seafood.

Seasonings.

Sherbet.

Shortening.

Soup.

Spaghetti products.

Spices.

Spreads.

Sugar.

Sugar cubes.

Sweeteners.

Syrup.

Tea, bags, leaves or instant.

Tea and ice tea beverages that are not sweetened.

Trail mix.

Turkey.

Vanilla and vanilla extract.

Vegetable juices that contain more than 50% juice by volume.

Vegetables.

Vinegar.

Waffle mix.

Water, carbonated, unsweetened.

Water, flavored, unsweetened.

Water, unsweetened.

Yeast.

Yogurt and yogurt bars, cones and sundaes.

Tax 11.51(3) (3) Explanations of some taxable and exempt sales by grocers. For purposes of sub. (2):

Tax 11.51(3)(a) (a)

Tax 11.51(3)(a)1. 1. “Candy” is defined in s. 77.51 (1fm), Stats., to mean a preparation of sugar, honey, or other natural or artificial sweetener combined with chocolate, fruit, nuts, or other ingredients or flavorings in the form of bars, drops, or pieces. “Candy” does not include a preparation that contains flour or that requires refrigeration.

Tax 11.51(3)(a)2. 2. This definition is intended to be used when a person is trying to determine if a product that is commonly thought of as “candy” is in fact “candy.” The definition is not intended to be applied to every type of food product sold.

Tax 11.51 Note Example: Many products, such as meat products, breakfast cereals, potato chips, and canned fruits and vegetables are not commonly thought of as “candy.” The candy definition is not applicable to products such as these since they are not commonly thought of as candy.

Tax 11.51 Note Note: The definition of candy would be applied in a situation where a person is trying to determine if a product is “candy” as opposed to a cookie.

Tax 11.51 Note Note: A listing that determines whether various products meet the definition of “candy” was prepared by the Streamlined Sales Tax Governing Board (SSTGB) and can be found in the Rules and Procedures of the SSTGB at http://www.streamlinedsalestax.org.

Tax 11.51(3)(a)3. 3. Candy must be a “preparation” that contains certain ingredients, other than flour. A “preparation” is a product that is made by means of heating, coloring, molding, or otherwise processing any of the ingredients listed in the candy definition. For example, reducing maple syrup into pieces and adding coloring to make maple candy is a form of preparation.

Tax 11.51(3)(a)4. 4. Candy must be sold in the form of bars, drops, or pieces.

Tax 11.51(3)(a)4.a. a. A “bar” is a product that is sold in the form of a square, oblong, or similar form.

Tax 11.51 Note Example: Company A sells one pound square blocks of chocolate. The blocks of chocolate are “bars.”

Tax 11.51(3)(a)4.b. b. A “drop” is a product that is sold in a round, oval, pear-shaped, or similar form.

Tax 11.51 Note Example: Company B sells chocolate chips in a bag. Each individual chocolate chip contains all of the ingredients indicated on the label. The chocolate chips are “drops.”

Tax 11.51(3)(a)4.c. c. A “piece” is a portion that has the same make-up as the product as a whole. Individual ingredients and loose mixtures of items that make up the product as a whole are not pieces. Exception: If a loose mixture of different items that make up the product as a whole are all individually considered candy and are sold as one product, that product is also candy.

Tax 11.51 Note Examples: 1) Company C sells jellybeans in a bag. Each jellybean is made up of the ingredients indicated on the label. Each jellybean is a “piece” or “drop.”

Tax 11.51 Note 2) Company D sells trail mix in a bag. The product being sold (e.g., trail mix), is made up of a mixture of carob chips, peanuts, raisins, and sunflower seeds. The individual items that make-up the trail mix are not “pieces,” but instead are the ingredients, which when combined, make up the trail mix. Therefore, the trail mix is not sold in the form of bars, drops, or pieces.

Tax 11.51 Note 3) Company E sells a product called “candy lover’s mix.” “Candy lovers mix” is a product that is made up of a loose mixture of jellybeans, toffee, and caramels. Individually, the jellybeans, toffee, and caramels are all candy. The sale of the mixture is the sale of candy since all of the individual items that make up the product are individually considered to be candy.

Tax 11.51(3)(a)5. 5. In order for a product to be treated as containing “flour,” the product label must specifically list the word “flour” as one of the ingredients. There is no requirement that the “flour” be grain-based and it does not matter what the flour is made from.

Tax 11.51 Note Examples: 1) The ingredient list for a breakfast bar lists “flour” as one of the ingredients. This breakfast bar is not “candy” since it contains flour.

Tax 11.51 Note 2) The ingredient list for a breakfast bar lists “peanut flour” as one of the ingredients. This breakfast bar is not candy because it contains flour.

Tax 11.51 Note 3) The ingredient list for a breakfast bar that otherwise meets the definition of “candy” lists “whole grain” as one of the ingredients, but does not specifically list “flour” as one of the ingredients. This breakfast bar is candy because the word “flour” is not included in the ingredient list.

Tax 11.51 Note 4) Company E sells a box of chocolates that are not individually wrapped. The ingredient list on the label for the box of chocolates identifies flour as one of the ingredients. The box of chocolates is not candy since flour is identified as one of the ingredients on the label.

Tax 11.51 Note 5) Company F sells a box of chocolates that are not individually wrapped. The ingredient list on the label for the box of chocolates, which otherwise meets the definition of “candy,” does not identify flour as one of the ingredients. The box of chocolates is candy.

Tax 11.51(3)(a)6. 6. “Other ingredients or flavorings,” as used in this definition, means other ingredients or flavorings that are similar to chocolate, fruits, or nuts. This phrase includes candy coatings such as carob, vanilla, and yogurt, flavorings or extracts such as vanilla, maple, mint, and almond, and seeds and other items similar to the classes of ingredients or flavorings. This phrase does not include meats, spices, seasonings such as barbecue or cheddar flavor, or herbs which are not similar to the classes of ingredients or flavorings associated with chocolate, fruits, or nuts, unless the product otherwise meets the definition of “candy.”

Tax 11.51 Note Examples: 1) Retailer A sells barbecue flavored peanuts. The ingredient label for the barbecue flavored peanuts indicates that the product contains peanuts, sugar, and various other ingredients, including barbecue flavoring. Since the barbecue flavored peanuts contain a combination of sweeteners and nuts, and flour is not listed on the label and the nuts do not require refrigeration, they are candy.

Tax 11.51 Note 2) Retailer B sells barbecue potato chips. Potato chips are potatoes, a vegetable, and are not commonly thought of as candy. The barbecue potato chips are food and food ingredients and not candy. The fact that the ingredient label for the barbecue potato chips indicates that the product contains barbecue seasoning which contains a sweetener does not change the fact that the barbecue potato chips are not commonly thought of as candy.

Tax 11.51(3)(a)7. 7. The term “natural or artificial sweeteners” means an ingredient of a food product that adds a sugary sweetness to the taste of the food product and includes, but is not limited to, corn syrup, dextrose, invert sugar, sucrose, fructose, sucralose, saccharin, aspartame, stevia, fruit juice concentrates, molasses, evaporated cane juice, rice syrup, barley malt, honey, maltitol, agave, and artificial sweeteners.

Tax 11.51(3)(a)8. 8. A product that otherwise meets the definition of “candy” is not “candy” if it requires refrigeration. A product “requires refrigeration” if it must be refrigerated at the time of sale or after being opened. In order for a product to be treated as requiring refrigeration, the product label must indicate that refrigeration is required. If the label on a product that contains multiple servings indicates that it “requires refrigeration,” smaller size packages of the same product are also considered to “require refrigeration.” A product that otherwise meets the definition of “candy” is “candy” if the product is not required to be refrigerated, but is sold refrigerated for the convenience or preference of the customer, retailer, or manufacturer.

Tax 11.51 Note Examples: 1) A grocery store sells candy bars at room temperature or from a refrigerated display case. Unless the candy bar is required to be refrigerated, it is still candy, even if it was refrigerated when sold.

Tax 11.51 Note 2) Company A sells sweetened fruit snacks in a bag that contains multiple servings. The label on the bag indicates that after opening, the sweetened fruit snacks must be refrigerated. The sweetened fruit snacks “require refrigeration” and therefore are not candy.

Tax 11.51 Note 3) Company A sells sweetened fruit snacks in single serving containers. Other than for packaging, the sweetened fruit snacks are identical to the sweetened fruit snacks in Example 2 above. However, since this container of sweetened fruit snacks only contains one serving, it is presumed that it will be used immediately, and the label does not indicate that after opening, the product must be refrigerated. Even though the label does not contain the statement that after opening the sweetened fruit snacks must be refrigerated, these sweetened fruit snacks are considered to “require refrigeration” and therefore are not candy.

Tax 11.51 Note 4) Company A sells chocolate truffles. The label on the truffles indicates to keep the product cool and dry, but does not indicate that the product must be refrigerated. Since the chocolate truffles are not required to be refrigerated, even though the label indicates to keep them cool, the chocolate truffles do not “require refrigeration.”

Tax 11.51(3)(a)9. 9.

Tax 11.51(3)(a)9.a. a. Products that are a combination of items that are defined as “candy” and items that are defined as “food and food ingredients” are “bundled transactions” when the items are distinct and identifiable, sold for one non-itemized price, and more than 50 percent of the items are “candy.” Such “bundled transactions” are subject to tax. For example, the sale of a bag of multiple types of individually wrapped bars of which more than 50 percent of the bars are “candy” that is sold for one non-itemized price is taxable.

Tax 11.51(3)(a)9.b. b. If a package contains individually wrapped bars, drops, or pieces and the product label on the package separately lists the ingredients for each type of bar, drop, or piece included in the package, those bars, drops, or pieces that have “flour” listed as an ingredient are “food and food ingredients” and those bars, drops, or pieces which do not have “flour” listed as an ingredient are “candy.” The determination of whether the package as a whole meets the definition of a “bundled transaction” is based on the percentage of bars, drops, or pieces that meet the definition of “food and food ingredient” as compared to the percentage of bars, drops, or pieces that meet the definition of “candy.” For purposes of this subd. 9. b., the retailer may presume that each bar, drop, or piece contained in the package has the same value and, unless the package clearly indicates otherwise, there is an equal number of each type of product contained in the package.

Tax 11.51 Note Examples: 1) Retailer A sells a package that contains 100 total pieces of food and food ingredients. There are 10 different types of foods and food ingredients in the package. Eight of the types of food and food ingredients included in the package meet the definition of “candy,” while two of the types included do not meet the definition of “candy.” It is a reasonable presumption that 20 (2/10 times 100) of the pieces are not “candy” and 80 (8/10 times 100) of the pieces are “candy.” Therefore, since 80 percent of the product is “candy,” the sales price of the entire package is taxable as a bundled transaction.

Tax 11.51 Note 2) Retailer B sells bulk food and food ingredients by the pound. Each food and food ingredient is in a separate bin or container. Some of the food and food ingredients are “candy” and some of them are not because they contain flour. However, regardless of the items chosen, the retailer charges the customer $3.49 per pound. Customer C selects some items that are candy and some that are not and puts them in a bag. Since some of the items in the bag are “candy,” the retailer shall treat the entire package as a bundled transaction containing primarily “candy,” unless the retailer ascertains that 50 percent or less of the items in the bag are “candy.”

Tax 11.51(3)(a)9.c. c. If a package contains individually wrapped bars, drops, or pieces and all of the ingredients for each of the products included in the package are listed together, as opposed to being listed separately by each product included as explained in subd. 9. b., and even if the ingredient lists “flour” as an ingredient, the product will be treated as “candy,” unless the retailer is able to ascertain that 50 percent or less of the products in the package are “candy.” For purposes of this subd. 9. c., the retailer may presume that each bar, drop, or piece contained in the package has the same value and, unless the package clearly indicates otherwise, there is an equal number of each type of product contained in the package.

Tax 11.51(3)(a)10. 10. Products whose ingredients are a combination of various unwrapped food ingredients that alone are not candy, along with unwrapped food ingredients that alone are “candy,” such as breakfast cereal and trail mix with candy pieces, are considered “food and food ingredients,” but not “candy.” Sales of these products are not “bundled transactions” because there are not two or more distinct and identifiable products being sold. The combination of the ingredients results in a single product.

Tax 11.51(3)(b) (b)