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Last Updated: 2/21/2013

SSUTA Food and Food Ingredients and Candy

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This is a notice to explain the new rule that was adopted by the Streamlined Sales Tax Governing Board meeting on May 18, 2011 along with how it will impact administration of Minnesota sales and use tax law.

 

Definition of Food and Food Ingredients – Candy  

SSUTA Rules and Procedures were modified to adopt a new rule to clarify the definition of “candy.”  The purpose of this new rule is to define terms used in the definition of “candy” and to create consistency among states on whether or not specific items are included in the definition of candy.  This definition is intended to be used in trying to determine if a product that is commonly thought of as “candy” is in fact “candy.”  It is not intended to be applied to every type of food product sold, and it is not applicable to products that are not commonly thought of as candy. The rule includes an appendix that classifies specific items as candy or food and food ingredients. 

The statutory definition of “candy” did not change. “Candy” is defined as a preparation of sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts or other ingredients or flavorings in the form of bars, drops, or pieces. “Candy” shall not include any preparation containing flour and shall require no refrigeration.

The following examples illustrate the new rule:

  • Cotton candy: Cotton candy is not sold in the form of bars, drops, or pieces.  Therefore, it is not considered to meet the “candy” definition.  However, cotton candy is often prepared by the seller and sold as prepared food.  The sale of prepared food is subject to Minnesota sales tax.
  • Breakfast bar: The ingredient list for a breakfast bar that otherwise meets the definition of “candy” lists “whole grain” as one of the ingredients, but “flour” is not specifically listed as one of the ingredients. This breakfast bar is sold in the form of a bar and is “candy” because the word “flour” is not included in the ingredient list.
  • Trail mix: A company sells trail mix with candy in a bag. The trail mix is a mixture of ingredients (i.e. loose products), and each ingredient is only a portion of the whole product. For instance, the product being sold (e.g., trail mix), is made up of a mixture of carob chips, peanuts, raisins, and sunflower seeds. The individual items that make-up the trail mix are not “pieces,” but instead are the ingredients, which when combined, make up the trail mix.  Therefore, the trail mix is not sold in the form of bars, drops, or pieces and is not considered to meet the definition of “candy.”  

“Bundled transaction” is defined as the retail sale of two or more products, except real property and services to real property, where the products are otherwise distinct and identifiable and the products are sold for one non-itemized price.

Products that are a combination of items that are defined as “candy” and items that are defined as “food and food ingredients” are “bundled transactions” when the items are distinct and identifiable and are sold for one non-itemized price. For example, a bag of multiple types of individually wrapped bars that is sold for one price is two or more distinct and identifiable products sold for one non-itemized price.   

Products whose ingredients are a combination of various unwrapped food ingredients that alone are not “candy”, along with unwrapped food ingredients that alone are “candy,” such as trail mix with candy pieces, are considered “food and food ingredients,” but not “candy.” Sales of these products are not “bundled transactions” because there are not two or more distinct and identifiable products being sold. The combination of the ingredients results in a single product.

See Governing Board Rule 327.8 Food and Food Ingredients Definitions – Candy for additional information on bundling as it applies to candy products.

References: Governing Board Rule 327.8 Food and Food Ingredients Definitions – Candy; Governing Board Rules Appendix N Candy Product; and SSUTA Appendix C, Library of Definitions