Valentine’s Day is here again. This means many Americans will be in the market for chocolates, flower delivery, and fancy meals. In fact, it’s estimated that this year UPS will deliver 88 million flowers to some lucky valentines on the big day, according to USA Today. Surely the question at the front of would-be romantics is: are all these purchases taxable?
If you’re in the market for chocolates for your sweetheart, be aware that some states will impose sales and use taxes on your purchase. While many states with a sales tax exempt food sales from tax, most, like Florida, New Jersey, and New York, still impose tax on candy (perhaps to encourage people to reach for healthy produce instead of chocolates). Georgia takes a different approach and exempts candy from state sales tax, but not local sales and use taxes. Some states exempt candy along with other food products, so if you’re buying truffles for your boo in California, Michigan, or Ohio, you won’t have to pay sales tax on your present.
In addition to being generally taxable, figuring out where flower sales should be sourced adds an extra level of complexity to some Valentine’s Day purchases. Some states impose interesting and complex sourcing rules specific to florists. For example, in Alabama and Florida, if an in-state florist takes an order and then sends instructions to a second florist outside the state for delivery in that other state, the in-state florist who took the order is liable for the tax. This sourcing rule differs from the general rule that tax is owed based on where property is delivered, rather than where property is ordered. Who knew that making a simple order of flowers could be so difficult?!
Many individuals also use Valentine’s Day as an excuse to have a fancy meal. Most states impose sales and use tax on “prepared food” sold by restaurants, so budget a little extra for sales tax if you’re headed out to eat. Other individuals may order in from meal delivery services where they can receive pre-measured ingredients to prepare a specific recipe. Reclusive gourmands are probably wondering whether these are meal delivery services taxable. Not all states have addressed this question, but the Virginia Tax Commissioner has determined that such services qualify for the reduced tax rate that applies to food for home consumption. Conversely, South Carolina taxes meal delivery services at the sales tax rate applicable to prepared food.
Now that I’ve given sufficient thought to the sales tax implications, I just need to figure out what to get my valentine.
Continue the discussion on Bloomberg Tax’s State Tax Group on LinkedIn. How should states source florist deliveries? Are there any other sales tax consequences of Valentine’s Day that you find surprising?
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