Missouri Supreme Court: No Tax Loophole for Doughnut Holes

Associated Press

JEFFERSON CITY, Mo. (AP) – Missouri Supreme Court judges have ruled against what some called a tax loophole for doughnut holes.

The high court unanimously ruled Tuesday that the Krispy Kreme doughnut maker doesn’t qualify for a lower sales tax typically applied to grocery stores.

Krispy Kreme Doughnuts Inc. said its fourth-quarter profits rose 94 percent from last year, on stronger sales and helped in part by an additional week in the latest reporting period. The Winston-Salem snack food baker earned $8.3 million, or 14 cents a share, in the three months ended February 3, up from $4.3 million, or eight cents a share, a year ago.

Krispy Kreme original glazed doughnuts are seen during the production process March 15, 2002 at a Krispy Kreme Doughnuts shop in Rosemont, IL. (Photo by Tim Boyle/Getty Images)

Groceries are taxed at 1 percent, while food at restaurants or otherwise made to be immediately eaten is taxed at 4 percent.

Krispy Kreme from 2003-2005 paid the 4 percent tax, but later tried to get a refund for doughnut sales. The company argued the doughnuts should be taxed at 1 percent because it said customers don’t always eat them immediately after purchasing them at Krispy Kreme shops.

Judges said that would allow a tax loophole for the doughnut-hole maker that wasn’t intended by lawmakers who created tax policies.

(Copyright 2016 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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