When I established this farm based business in late 2017 I reviewed the business model and the Farm-To-Salad product with the King William County Commissioner of Revenue's office. After a lengthy review I was not directed to collect a meals tax on this product, due in part to the fact that this business is not a restaurant or food truck serving custom meals and manufacturing businesses are clearly exempt from the Food and Beverage Tax.
After my business was up and running for 18+ months, the Commissioner then decided the Farm-To-Salad product should be charged an additional Meals Tax. I disagreed and asked for evidence to support this change in position. Based upon my review of the Food and Beverage tax law, as well as other lawyers and associations that have reviewed my case, we do not believe it is a valid tax on the Farm-To-Salad product.
The meals tax in question is not a tax that is charged to a business, it is one that is charged to the end customer, just like a retail or food tax. Since starting my business I have been collecting and submitting the food tax on every product I sell. I do not question the validity of the food tax.
It would be simple to just charge my customers this additional meals tax, and King William County has used this reasoning to try and resolve the matter. Rather than just roll over and accept their argument without any evidence, I am standing up in defense of my customers.
Sally Pearson, the King William County Commissioner of Revenue has provided multiple justifications for the tax and each time I was able to dismiss them with little effort. If it can be shown to me how my product, and the structure of my business, qualifies for the tax then I will comply.
This is a complex matter, and one that cannot be glossed over with assumptions. I will stand my ground in defense of my customers and what I feel is right.
As the issue and the criticism of the unjust ruling became public, the staff of the King William County Commissioner of Revenue's office thought it was appropriate to mock this county farm and dressed as a Salad at the 2019 County Administration Halloween Office Party.
Read the story from the Tidewater Review press here :
In order to be taxable, a salad must meet the following definition as set forth in the State Code of Virginia § 58.1-3833 and is also provided in the King William Code of Ordinances Sec. 70-325.
"prepackaged single-serving salads consisting primarily of an assortment of vegetables"
The first part of this definition describes this product as a "single-serving". Serving size is clearly established by federal dietary guidelines (FDA) and is not the same as an amount one chooses to eat at one time. These differences are described in this article.
"Serving size is a standardized amount of food. It may be used to quantify recommended amounts, as is the case with the MyPlate food groups, or represent quantities that people typically consume on a Nutrition Facts label. Portion size is the amount of a food you choose to eat — which may be more or less than a serving."
The salads I prepare typically weigh 15-17 ounces and most of my customers get multiple portions from the salad I deliver to them once a week. Do some eat them in a single sitting? Sure they do! However that does not make them a "single serving".
For example, a single serving of raw leafy greens is the equivalent of 1 cup. (reference) These salads typically have 4 cups of greens in addition to all of the other ingredients.
I even received an email from the King William Commissioner of Revenue on Aug 8, 2019 that said, “My salad last night was delicious! My husband and I split it for dinner and we couldn’t eat it all Wish I could eat that clean every day.”
The second part of the description also exempts my product from the definition. These salads always contain ingredients that are not "vegetables". Including but not limited to, farm-made dressings, grains, seeds, nuts, cheese, and in some cases fruits or an egg.
By net weight, these salads do not consist "primarily of an assortment of vegetables".