Is pizza sold unheated for takeout taxable, or does it fall under the exception for unheated food commonly sold in food stores?

Plain-English summary

Robert H. Matheis, doing business as Pizza Oven Baking Co., sells pizza — both ordered and unordered — only for off-premises consumption. After baking, the pizza is not kept heated; he says it is a specialty, the same as unheated pizza sold in some bakeries, and he sells it by the slice and as whole pizzas. He asked whether the unheated pizza is subject to sales tax.

The Department said the pizza is taxable unless the food-store exception is proven.

• The rule. Section 1105(d)(i) taxes food sold by restaurants and similar establishments for off-premises consumption, except where food (other than sandwiches) is (A) sold in an unheated state and (B) of a type commonly sold for off-premises consumption, in the same form, condition, quantities and packaging, in food stores that are not principally engaged in selling ready-to-eat food.
• What counts as a food store. A food store is an establishment principally selling food not prepared and ready to eat — supermarkets, grocery stores, fish markets, produce markets, bakeries and meat markets. Unheated food is not taxed when commonly sold in such stores in bulk by weight, by the dozen, or by volume for off-premises consumption (20 NYCRR 527.8(e)(2)).
• The burden — and "commonly sold." Because Matheis sells only unheated for takeout, the issue is prong (B). He must show the pizza is regularly sold in a large number of food stores like bakeries; one or a few stores is not enough.
• Each method separately. Since he sells both by the slice and as whole pizzas, he must establish qualification for each selling method separately.
• Hot pizza is always taxable. Whenever pizza (whole or by portion) is kept hot (warmer than surrounding air) or reheated for pick-up, the sale is taxable.

A later modified advisory opinion to the same petitioner, TSB-A-85(60.1)S, added that cooking pizza to order does not by itself make it "sold in a heated state" when it is sold at room temperature.

What this means for you

Unheated takeout food isn't automatically tax-free. New York exempts it only when it matches what ordinary food stores like bakeries commonly sell, in the same form and packaging. Selling it cold is necessary but not sufficient.

"Commonly sold" is a real evidentiary bar. You have to show the item is regularly sold across a large number of food stores — not that a handful of bakeries happen to carry it. Keep evidence of that widespread food-store practice.

Different formats need separate proof. By-the-slice and whole-pizza sales are evaluated separately. A whole unheated pizza might match a bakery's offerings while a single reheated slice does not.

Heating or reheating flips the result. Any food you keep hot or reheat for pickup is taxable, regardless of the food-store exception.

Common questions

Q: My pizza is sold cold for takeout. Is it exempt?
A: Only if you can show it is of a type commonly sold, in the same form and packaging, in a large number of food stores such as bakeries. Selling it unheated alone does not make it exempt.

Q: Is it enough that a few bakeries sell unheated pizza?
A: No. "Commonly sold" means regularly sold in a large number of food stores. One or a few does not establish it.

Q: Do slices and whole pizzas get the same treatment?
A: Not automatically. You must establish qualification separately for each selling method — by the slice and as whole pizzas.

Q: What if I keep the pizza warm or reheat it?
A: Then it is taxable. Any pizza kept hot or reheated for pick-up is a taxable sale, whatever the food-store exception would otherwise allow.

Citations and references

Statute:

• Tax Law § 1105(d)(i) — taxes food and drink sold by restaurants and similar establishments, with an exception for unheated food commonly sold in the same form in ordinary food stores

Regulation:

• 20 NYCRR 527.8(e)(2) — defines "food store" and treats unheated food as non-taxable when commonly sold in food stores in bulk, by the dozen, or by volume for off-premises consumption

Related opinion:

• TSB-A-85(60.1)S — a later modified advisory opinion to the same petitioner adding that cook-to-order pizza sold at room temperature is not "sold in a heated state"

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1985.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a85_60s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-85(60)S
Sales Tax
December 4, 1985

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S841115B

On November 15, 1984, a Petition for Advisory Opinion was received from Robert H.
Matheis DBA Pizza Oven Baking Co., 54 Vine Street, Lockport, New York 14094.
The issue raised is whether Petitioner's pizza, sold in an unheated state for off premise
consumption, is subject to the Sales and Use Tax imposed under Article 28 of the Tax Law.
Petitioner is a pizza vendor and sells both ordered and unordered pizza. The food is only sold
for consumption off the premises. After baking, the pizza is not maintained in a heated state.
Petitioner states that this unheated pizza is a speciality and is the same as unheated pizza sold in
some bakeries. Petitioner sells this unheated pizza by the slice and as whole pizzas.
Section 1105(d)(i) of the Tax Law imposes a tax on "The receipts from every sale of. . .food
and drink of any nature or of food alone, when sold in or by restaurants, taverns or other
establishments in this state,. . .(3) where the sale is for consumption off the premises of the vendor,
except where food (other than sandwiches) or drink or both are (A) sold in an unheated state and,
(B) are of a type commonly sold for consumption off the premises and in the same form and
condition, quantities and packaging, in establishments which are food stores other than those
principally engaged in selling foods prepared and ready to be eaten."
Petitioner states in his petition that his product is sold solely in an unheated state for off
premises consumption. Thus the issue turns on whether this pizza is of a type commonly sold for off
premises consumption in the same form, condition, quantity and packaging as in food stores other
than those principally engaged in selling foods prepared and ready to be eaten.
Regulations define a food store as "any establishment which is principally engaged in selling
food or drink which is not prepared and ready to be eaten." Examples of food stores include
supermarkets, grocery stores, fish markets, produce markets, bakeries and meat markets.
Regulations state that "Food sold in an unheated state is not subject to tax when commonly sold in
food stores in bulk by weight, by the dozen (or part thereof) or by volume (gallon, quart, etc.) for off
premises consumption." (20 NYCRR 527.8(e)(2)(i) and (iii)).
Accordingly, if Petitioner can establish that the unheated pizza sold in his establishment for
off premises consumption is of a type commonly sold for consumption off the premises and in the
same form and condition, quantity and packaging in food stores such as bakeries, then such unheated
pizza will not be subject to tax. It should be noted that since Petitioner sells unheated pizza by the
slice and by the whole pizza, Petitioner must establish each method's qualification for exemption
separately.
RODERICK G. W. CHU, COMMISSIONER
TP-8 (3/83)

GABRIEL B. DiCERBO, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

-2­
TSB-A-85(60)S
Sales Tax
December 4, 1985

In order to establish that such pizza is commonly sold in food stores, Petitioner must establish
that the pizza is regularly sold in a large number of food stores. The fact that one or a few food stores
sell such pizza does not establish that such pizza is commonly sold by food stores.
Finally, whenever pizza, whole or in portions, is kept hot (i.e. warmer than the surrounding
air temperature) or reheated for pick-up, the sale of such food by any establishment is a taxable
transaction.

DATED: November 4, 1985

s/FRANK J. PUCCIA
Director
Technical Services Bureau

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth herein.