Halloween is just around the corner and Tennessee has recently issued an administrative Important Notice No. 17-22 (10/01/2017) to clear up the confusing taxability of candy and food products in the state. Candy is defined by Tennessee law as a preparation of sugar, honey or other natural or artificial sweetener combined with chocolate, fruits, nuts, or other ingredients and formed into a bar, drop, or piece. TN Code Ann. 67-6-102(9). These pieces of candy are taxed at the full 7% state rate (plus applicable local taxes).
“Candy” does not include any products that include flour as a listed ingredient. Id. These glutinous goodies get a benefit of a reduced 4% state rate. TN Code Ann. 67-6-228(a). Likewise if a product must be refrigerated it is not candy under Tennessee law. Even those pieces of candy with cookie in them can be subject to the full 7% rate if bundled up with flour-free delectables as a bundled sale taxable at the general rate. Important Notice No. 17-22 (10/01/2017). Therefore smart shoppers in Tennessee (and other states that impose similar flour based exemptions) can pinch a couple of pennies on their tricks or treats.