Generally items sold by bakeries (see Bakery Items, below) are exempt from retail sales tax; unless the item is sold with a utensil. However the charges for the nontaxable bakery items must be properly segregated from the charge for any taxable items, such as a cup of coffee. Otherwise, the entire un-segregated charge is subject to retail sales tax.
Bakeries must report their entire gross income under the retailing classification for Business and Occupation (B&O) tax purposes. Additionally bakeries should report their full gross income under the retail sales tax classification and take a deduction for “exempt food sales” (0122).
Bakery items are exempt from retail sales tax unless the item is sold with eating utensils provided by the seller.
Bakery Items include bread, rolls, buns, biscuits, bagels, croissants, pastries, donuts, Danishes, cakes, tortes, pies, tarts, muffins, bars, cookies, and tortillas. Exempt bakery items tend to be sweet, and may include items filled with jelly, cream, fruit, or other sweet filling.
Bakery items that do not qualify for the exemption tend to be savory items, and may include meat, cheese, and/or vegetable filled foods such as pizzas, calzones, quiches, piroshkies, sandwiches, or other baked goods consumed as a meal.
Utensils include plates, knives, forks, spoons, glasses, cups, napkins, and straws. Utensils do not include bags, boxes, and other containers or packaging used to transport bakery items.