Little known fact, I love Subway Sandwiches. Like a lot. In law school, there was one on my home and I’d stop in there every night. If you’re in California and have been to a Subway Sandwich, you may have noticed that a hot or toasted sandwich costs more than a cold one, all else being equal. One of the Subways in my neighborhood has this sign on its register:
Now, personally, a hot sandwich sounds disgusting as all get out, but to each their own. This “sales tax on hot sandwiches” things is apparently a big deal as I’ve seen other Subways with signs similar to this, no doubt attempting to placate customers of hot sandwiches angry about the higher price.
I spent some time looking and as best I can tell, the California state law in question is California Revenue and Taxation Code section 6359. It is a bit long to cut and paste for you, but the basic idea is this:
- Those of us who have gone grocery shopping in California know that you don’t pay sales tax on most grocery items. That is the general rule that, essentially, described in section 6359(a). Section 6359(b) defines in very broad strokes what groceries are exempt from sales tax under Section 6359(a). Section 6359(c) defines some grocery categories that you definitely have to pay sales tax on.
- As usual, though, there are exceptions to the general rule in section 6359(a). Section 6359(d) defines seven categories of items on which you have to pay sales tax. Number 7 (i.e. Section 6359(d)(7)) is products sold as “hot food products”.
“Hot food products” is itself defined in section 6359(e) as: (emphasis added)
"'Hot prepared food products,' for the purposes of paragraph (7) of subdivision (d), include a combination of hot and cold food items or components where a single price has been established for the combination and the food products are sold in combination, such as a hot meal, a hot specialty dish or serving, a hot sandwich, or a hot pizza, including any cold components or side items. Paragraph (7) of subdivision (d) does not apply to a sale for a separate price of bakery goods or beverages (other than bouillon, consommé, or soup), or where the food product is purchased cold or frozen; "hot prepared food products" means those products, items, or components that have been prepared for sale in a heated condition and that are sold at any temperature that is higher than the air temperature of the room or place where they are sold."
I’ve also noticed that Subway charges sales tax for when you have your food for here instead of to go. This looks to be under section 6359(d)(2).
Latest posts by Andy Chen (see all)
- Cost-Benefit Analysis in Forming a Limited Liability Company - July 12, 2023
- Minimizing Tax and Legal Liability When Starting a Business - July 9, 2023
- Law School Help: California Criminal – Robbery - July 4, 2023