Let Them Eat Rice Crispy Treats!

December 1, 2009

Comments Regarding Proposed Amendment to Definition of Candy

The Streamlined Sales Tax Project (SSTP) has already had trouble defining candy and soda and clothing. The SSTP seems to be doing no better with cereal.

Question: Are breakfast cereals and breakfast bars, whose ingredient labeling does not contain a specific listing for flour, “candy” as the term is defined in the Streamlined Sales and Use Tax Agreement?

Proposed Answer:

(1) Breakfast cereals are not candy because they are not sold in the form of bars, drops or pieces.

(2) Natural or artificially sweetened breakfast bars, Carmel Corn, Rice Cakes, and Rice Krispie Treats that do not have ingredient labeling specifying flour and do not require refrigeration are candy. These products are sold in the form of bars and meet the objective test in the definition of candy.

(3) Lightly Salted Rice Cakes that do not contain natural or artificial sweeteners according to the ingredient labeling are food, and food ingredients and are not classified as candy.

My question for the SSTP is what about Rice Krispy Treats Cereal? The SSTP was established with the noble goal of bringing simplicity and uniformity to states’ sales tax codes. Greater uniformity would lower the compliance costs of multi-state organizations. Unfortunately, the SST has drifted from this mission. The only reason for making such definitions is to allow states to engage in discriminatory sales tax practices. Facilitating specific excises taxes is not a viable way to improve any state’s sales tax structure.


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