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Business

NYS Hitting Taxpayers’ Pockets On Bagels, Coffee, Even Cake

Sudden Enforcement Of Confusing Laws Make Residents Irate
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Bagels

Bagels on display at Katz’s Delicatessen on the Lower East Side of Manhattan. (STAN HONDA/AFP/Getty Images)

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NEW YORK (CBS 2 / WCBS 880) — New York State is facing record deficits.

But now officials are finding some creative ways to fill up the tax coffers — like hitting you up at the local bagel shop.

CBS 2 consumer reporter Kirstin Cole found a lot of little ways we’ll all be paying more.

Ess-A-Bagel’s specialty is about to cost more. Not a price hike from them, but from the state, and it all depends on how you slice your bagel.

“It’s almost one-tenth the price of the bagel. It’s going to be hard on people,” one person said.

LISTEN: WCBS 880’s Sean Adams reports from Bronxville

New York State’s Department of Taxation and Finance has started auditing bagel shop owners, saying if you slice it or serve it in store it needs to be taxed. That was news to Florence Wilpon, a bagel maven for 34 years.

“I just found out today you’re supposed tax bagels that are cut,” Wilpon said. “Customers will also be angry they’re purchasing a product that has never been taxed.”

The issue bubbled to the surface with Bruegger’s bagels in upstate New York, which sells 12 million bagels a year. They were just hit with a whopping bill for three years of bagel taxes.

“The bill they sent us for that is exorbitant. We hired an attorney,” owner Kenneth Greene said.

New York State’s only guidelines say that bagels are tax exempt as bakery products. But once they’re handled, they get called prepared meals. Greene said he’s fighting New York’s interpretation that a sliced bagel or a whole bagel eaten in the store should be taxed.

“We’ve been audited three or four times in the last 15 years and never once has this issue been raised,” Greene said.

Here’s where it gets sticky. Buy a bagel at a grocery store and you won’t pay taxes. But have them hand scoop it into a container? This you’re going to pay extra for.

Other ways New York State is putting a hand in your pocket, including hitting you when you order your coffee regular. If you do it from your favorite deli, you get taxed. But if you pour it yourself there’s no tax. If you buy a slice of cake you will get taxed. But you buy a whole cake or any other pastry you won’t get taxed.

Are you confused yet?

“Oh my goodness, that’s terrible,” said Chickie Dioso of Midtown East.

“I don’t see why it should be more in store,” added Beth Codos.

“Gotta stop it. It’s enough already,” said Diana Dell.

It’s a tax that’s leaving a bad taste in many a New Yorkers mouth.

While this is not a new tax law, bagel shop owners Cole talked to said it is a new enforcement of the law. New York State wouldn’t comment except to say it conducts thousands of tax audits annually.

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