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Unkindest Cut: NY Enforces Sliced Bagel Tax

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By Tanya Roth, Esq. on August 27, 2010 12:37 PM

They are world famous, those New York bagels, and for good reason. No one else seems to be able to quite duplicate that chewy interior lovingly encased in a substantially crispy shell. Now the world capital of bagels will be famous for one more thing linked to its greatest all-time nosh: the sliced bagel tax. That is correct, the Empire State is levying a tax on sliced bagels, cream cheesed bagels and even whole bagels, under certain circumstances.

Pay close attention, because not only is the bagle tax amusing, it is quite precise as well. According to CNN Money, a bagel will be taxed if sliced, given any kind of topping or preparation (say a little lox) in the store, even just plain, if eaten on the premises. The only way a hungry customer can ensure his bagels are untaxable is for them to be tossed in a bag and for him to hoof it out of the store as fast as possible.

Let the kind people at the New York Department of Taxation and Finance, break it down for you; any handling or preparation at the shop turns it into a taxable event, Brad Maione, a spokesperson for the DTF, told CNN. The tax amounts to $.08 a bagel. Thanks, Brad.

Now although Mr. Maione claims the sliced bagle tax is not a new provision, and that the surge in enforcement is due to better technology, bagel store owners say the tax was news to them. Kenneth Green, owner of 33 Bruegger Bagel franchises throughout NY, says he never charged his customers a bagel tax. "We think it's unfair. They audited us four times in the past 20 years and never raised this before ... They are requiring us to pay three years worth of taxes we never collected," said Greene. Suddenly, Greene owes quite a bit in back taxes to the state of New York.

And he is not the only one. CNN reports there is a spike in "bagel audits" which doubters do not ascribe to the so-called better technology. Pause: what might that be exactly, a monitoring device on serrated knives? No, skeptics say it is merely because the state is running out of cash and looking to make it up by getting more bread (apologies) from small business owners.

A final note. According to CNN, bakeries selling sliced bread or cake cut on the premises are not subject to the same taxation. Seems a bit unfair. Where is a good tea party (with bagels) when you need one?

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