Bagelers decry New York tax
New York State tax officials are enforcing a sales tax for sliced or prepared bagels (with cream cheese or other toppings), along with whole bagels eaten in the store, according to the state Department of Taxation and Finance.
Whole bagels sold for takeout are not subject to sales tax, but "any handling or preparation at the shop turns it into a taxable event," says Brad Maione, a spokesperson for the DTF.
Although Maione says the sales tax is not a new provision and that the stepped up enforcement is due to better technology, bagel-store owners say the tax was news to them.
Kenneth Green, the owner of 33 Bruegger's Bagel franchises throughout New York, says he never charged patrons the bagel tax and says he found out he owed back taxes this summer when the state audited his company.
"We think it's unfair. They audited us four times in the past 20 years and never raised this before. We are a law abiding company and tax payers. They are requiring us to pay three years worth of taxes we never collected," said Greene.
The tax on a sliced bagel is roughly 8 cents. Greene estimated that because of the audit he'll have to pay thousands in back taxes.
And Greene isn't alone. In 2009 2,732 restaurants were audited state-wide. That year, 646 restaurants were audited for bagel malfeasance in New York City alone. In 2010 that number jumped to 1,077.
Why the spike in bagel audits? Skeptics say it isn't new technology or better methodology, they say it's because New York state is broke.
"I think it's the way the state gets more money. I didn't expect that slicing a bagel would require taxing," said Linda Wilpon, owner of Ess-a-bagel.
This all comes at a bad time for small businesses struggling to hold on during the recession, according to Tad DeHaven, a budget analyst at The Cato Institute.
"Instead of thinking what can be done to encourage small business owners, they are wasting their time and taxpayer money, harassing job creators to fund the state budget," he said.
And the tax code seems unclear. A sliced bagel gets taxed are but sliced bread at a bakery apparently isn't.
AGAINST ORGANIZATIONS THAT DON’T SHARE ADMINISTRATION’S POSITIONS ON ISRAEL
Z STREET, a pro-Israel non-profit corporation, filed a lawsuit in federal court today charging that the IRS violated the organization’s First Amendment rights. The suit was filed after Z STREET was told by an IRS official that its application for tax-exempt status has been delayed because an IRS policy requires consideration of whether a group’s views on Israel differ from those of the current Administration.
“Not only is it patently un-American but it is also a clear violation of the First Amendment for a government agency to penalize an organization because of its political position on Israel or anything else,” said Z STREET president Lori Lowenthal Marcus, a former First Amendment lawyer. “This situation is the same as if the government denied a driver’s license to people because they were Republicans or Democrats. It goes against everything for which our country stands.”
Z STREET filed for tax-exempt status in January of this year and, despite having met all of the requirements for grant of this status, the application has been stalled. An IRS agent told Z STREET’s lawyers that the application was delayed because of a Special Israel Policy that requires more intense scrutiny of organizations which have to do with Israel, in part to determine whether they espouse positions on Israel contrary to those of the current Administration.
Z STREET is a Zionist organization that proudly supports Israel’s right to refuse to negotiate with, make concessions to, or appease terrorists. Z STREET’s positions on Israel and, in particular, on the Middle East “peace process” differ significantly from those espoused by the Obama administration.
If Z STREET had tax-exempt status, its donors would be able to deduct contributions from their taxable income. The IRS's refusal to grant tax-exempt status to Z STREET has inhibited the organization‘s fundraising efforts, and therefore impeded its ability to speak and to educate the public regarding the issues that are the focus and purpose of Z STREET.
The lawsuit, Z STREET v. Shulman, Commissioner of Internal Revenue, was filed today in the United States District Court for the Eastern District of Pennsylvania.
P.O. Box 182
Merion Station, PA 19096