Does a vendor selling zeppoles (fried dough) from a mobile trailer at festivals and carnivals have to charge New York sales tax?

Plain-English summary

George Salvi sold zeppoles -- a fried-dough treat made from flour, water, and yeast -- from a mobile trailer at festivals and carnivals. He deep-fried the dough, cooled it on a rack, bagged it (adding powdered sugar on request), and sold it to customers who took it away; there was no seating at the trailer. He asked the Department whether these sales were subject to New York sales tax, and the Department said no.

Two rules pointed the same direction. First, Tax Law § 1115(a)(1) exempts "food, food products, beverages, dietary foods and health supplements sold for human consumption," and the Department found zeppoles "similar to donuts" -- an exempt food product. Second, even food that could otherwise be taxed as restaurant-style fare under § 1105(d) escapes tax when it's sold unheated, for off-premises consumption, and in the same form, condition, quantities, and packaging as similar products sold in ordinary food stores. Because Salvi's zeppoles were cooled (not hot), bagged for takeout, and sold just like similar bakery items at a food store, neither the restaurant-food rule nor any other taxing provision applied.

What this means for you

Mobile food vendors and festival/carnival sellers

If you sell a bakery-style food item -- fried dough, donuts, and similar treats -- cooled and bagged for takeout, with no seating or on-site dining setup, your sales can qualify as exempt food even at a festival, carnival, or fairground stand. The key facts here were: not sold hot, not intended for immediate on-site eating, and packaged the same way a food store would sell it.

Accountants and tax professionals

This ruling applies the same two-step analysis common to food-vendor rulings in this corpus: first check the § 1115(a)(1) food-product exemption, then separately confirm the § 1105(d)/20 NYCRR § 527.8 restaurant-food carve-back doesn't pull it back into tax because of how and where it's sold (hot vs. cold, on-premises vs. off-premises, and packaging comparable to a food store). If a vendor instead sold the item warm or provided tables/seating, the outcome could flip.

Common questions

Q: Are zeppoles taxable when sold at a New York festival?
A: Not in this fact pattern. Sold cooled and bagged for takeout with no seating, they're treated as exempt food, similar to donuts.

Q: Would the answer change if the zeppoles were sold hot?
A: Potentially yes. Food sold hot, kept warm for immediate eating, or served with seating/tableware can be taxed as restaurant-style food under § 1105(d), separate from the general food exemption.

Q: Can another mobile food vendor rely on this ruling?
A: Not directly. This advisory opinion binds the Department only as to the petitioner and the facts described. A vendor with different facts (hot food, on-site seating, different packaging) should not assume the same result applies.

Citations and references

Statutes and rules:

• Tax Law § 1115(a)(1) (food, food products, exemption for human consumption)
• Tax Law § 1105(d) (tax on food and drink sold by restaurants, taverns, and similar establishments)
• 20 NYCRR § 527.8(c), (d), (e) (premises; on-premises and off-premises consumption)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1998.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a98_80s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-98(80)S
Sales Tax
December 2, 1998

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S980713B

On July 13, 1998, the Department of Taxation and Finance received a Petition for Advisory
Opinion from George Salvi, 40 Ave. F, Ronkonkoma, New York 11779.
The issue raised by Petitioner, George Salvi, is whether sales of Zeppoles, which are a type
of food product, are subject to sales tax.
Petitioner submits the following facts as the basis for this Advisory Opinion.
Petitioner owns a mobile trailer from which he sells Zeppoles to customers at different
events, such as festivals or carnivals. Zeppoles are food products consisting of flour, water and
yeast, which are made into dough. After the dough rises, it is deep fried in fat, cooled on a rack and
placed in a bag and sold. Petitioner will put powdered sugar on Zeppoles at the customer’s request.
Customers may buy one Zeppole, or more than one, as they wish. There is no seating at the mobile
trailer. The customer takes the product from the premises.
Applicable Law and Regulations
Section 1115(a)(1) of the Tax Law exempts from the sales tax imposed by Section 1105(a)
of the Tax Law, “Food, food products, beverages, dietary foods and health supplements, sold for
human consumption. . .”
Section 1105 of the Tax Law provides, in part:
Imposition of sales tax.--On and after June first, nineteen hundred seventy­
one, there is hereby imposed and there shall be paid a tax of four percent upon:
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(d)(i) The receipts from every sale of beer, wine or other alcoholic beverages
or any drink of any nature, or 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. . . .
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-2­
TSB-A-98(80)S
Sales Tax
December 2, 1998

(3) in those instances where the sale is made through a coin operated
vending machine (except the sale of drinks in a heated state made through a coin
operated vending machine) or 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.
Section 527.8 of the Sales and Use Tax Regulations provides, in part:
(c) Premises. The term “premises” shall mean, the total space and facilities
in or on which the vendor conducts his business, including but not limited to, parking
areas for the convenience of in-car consumption, counter space, indoor or outdoor
tables, chairs, benches and similar conveniences.
(d) Consumption on premises. The phrase “for consumption on the premises”
shall mean that the food or drink sold may be consumed on the premises where the
vendor conducts his business.
(e) Consumption off premises. The phrase for consumption off the premises
shall mean that the food, including sandwiches, or drink is intended to be consumed
at a place away from the vendor’s premises.
Opinion
Based on the description, Zeppoles are similar to donuts. They constitute a food product
exempt from sales and use tax under Section 1115(a)(1) of the Tax Law. The sale of Zeppoles as
discussed here, where the Zeppoles are cooled on a rack and then placed in a bag and sold to
customers, would also not be subject to tax under Section 1105(d) of the Tax Law. Petitioner does
not sell his Zeppoles in a heated state or sell them for on premises consumption, and the Zeppoles
are sold in the same form and condition, quantities and packaging as similar products commonly sold
by food stores.

DATED: December 2, 1998

NOTE:

/s/
John W. Bartlett
Deputy Director
Technical Services Bureau

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.