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ALBANY, N.Y. -- Shoppers jamming supermarket aisles for a bag of large, puffy marshmallows to roast around a campfire or a container of Marshmallow Fluff to make a sandwich are in for a real treat -- both items remain tax-free in New York.
Up until five years ago, big marshmallows were subject to sales tax because they were considered candy. Miniature marshmallows and Marshmallow Fluff, on the other hand, were exempt from sales tax since they were classified as food. In 1998, the state Department of Taxation and Finance sought a more uniform treatment of all types of marshmallows and revised its tax laws to repeal the levy on large marshmallows, the Associated Press reported.
But the issue of whether big marshmallows are candy or food continues to be debated every five years because of an act passed by the state Legislature that requires state agencies to review their regulations within that timeframe.
Food merchant groups welcomed the news but warned about a host of other foods and beverages that still are subject to tax inequity and other anomalies in the state tax law. "There's a long list of inconsistencies that makes consumers and retailers alike scratch their heads," Michael Rosen, a lobbyist with the state Food Industry Alliance, an Albany-based trade group representing 850 wholesalers, convenience store and supermarket chains. "Marshmallow is just one of them, but it's good that at least they're not reverting to prior status."
Marshmallows of all sizes and shapes have varied uses. Campers roast big marshmallows on sticks in the woods, and families flame the spongy dessert over barbecue grills. Mini marshmallows are a favorite topping in hot chocolate drinks, and Marshmallow Fluff remains a staple of many households with kids. For years, merchants have lobbied the state to simplify the sales tax rules that they deemed confusing. For instance, shampoo is considered soap and is taxable except for dandruff shampoo, which is seen as medicine.
Similarly, Rosen said, the way a product is packaged makes a difference to the tax collector. If the chocolate-covered wafer Twix is sold in a multipack, it is a cookie and not taxable, but if it is sold individually, it is a candy and subjected to the state's sales tax.