Taxed food vs. untaxed food

Seven On Your Side
May 2, 2008 8:34:38 PM PDT
From politicians to consumers, everyone is talking about how high food prices are climbing. But how would you like more than 8 percent extra tax tacked on to your food bill, without you knowing it? That's one happened to one Eyewitness News viewer. The merchant was charging him, and a lot of others, tax on food. So he dialed for take out help and got Tappy Phillips and Seven On His Side.

Most consumers might not notice, but Jeff Rutzky knew the law.

"I'm an alert consumer, and I try to tell everybody I know to be an alert consumer," he said.

Rutzky ordered food online from and he saw something wrong.

"When I saw there was tax on the food items, I knew right away this wasn't right," he said.

So he called

"They said they could not give me back the money because they weren't equipped to do refunds," he said.

So we went undercover to the grocery store Village Farm to see if they were the ones charging tax. We did find labels on food items that indicated tax would be charged, but when we got to the counter, there was no tax.

In New York, most unprepared food cannot be taxed. Prepared food can be. This leads to complicated list of tax exempt items. For example, chocolate covered nuts are taxed, but plain nuts are not. Juice with less than 70 percent fruit juice is taxed, pure fruit juice is not. Soft drinks are taxed. Milk is not.

And if was getting it wrong, Jeff wondered where all the improper tax money was going.

"This adds up to thousands upon thousands of dollars," he said.

Well Seven On Your Side found out. admitted they had gotten it wrong and refunded Jeff's tax.

"My point in pursuing this is to help everybody understand what the fine points of tax on food and whatnot," he said. told us they've been mistakenly charging tax on many exempt items from this grocery for more than a year. And next week they'll start giving the money back to customers. It's more than $13,000.

For a list of taxable and non-taxable groceries, click here.