MADISON, Wis. (AP) - Take-and-bake pizzerias in Wisconsin are now subject to sale tax.
The extra expense for pizza-lovers will be $2.7 million a year as the state collects 5 percent for every sale, the Wisconsin State Journal reported Sunday.
The change results from a ruling by the national Streamlined Sales Tax Governing Board. The Wisconsin Department of Revenue had asked the board whether Papa Murphy's should charge the sales tax on its pizzas, which are assembled at stores but baked at home.
The Westby-based SST is a 24-state organization created to simplify and bring uniformity to sales tax rules.
The board decided that take-and-bake pizzas count as prepared foods, which are not exempt from Wisconsin's sales tax. The pizza-makers had said they didn't because the pizzas aren't ready to eat until they come out of the oven.
The ruling had the potential for a broad impact because states participating in the SST in some cases must adhere to uniform standards, but the board gave the states an option in this case. States that want to tax take-and-bake pizzas "need to pass legislation or adopt some sort of written policy" so businesses know what to do, said Craig Johnson, executive director of the SST.
Proposals at the Legislature to support Papa Murphy's and Kwik-Trip convenience stores by exempting take-and-bake pizzas failed to pass.
Papa Murphy's, which has franchises in 38 states, says it has 91 stores in Wisconsin.
Mark Venditto, who owns eight Papa Murphy's franchises in Wisconsin and Iowa, said traditional ready-to-eat pizza restaurants had long complained about their take-and-bake competitors not charging sales tax. His Wisconsin businesses began collecting the state sales tax March 1.
"To me, it didn't really matter either way," he said. Venditto said it's more of an issue for consumers than it is for him.