Did you get your free doughnut today? You should: it’s National Doughnut Day!

I know what you’re thinking: this is some marketing ploy recently dreamed up by bakers to sell more doughnuts. But you would be wrong. National Doughnut Day is nearly 80 years old: the first National Doughnut Day was celebrated in Chicago in 1938. And it wasn’t dreamed up by bakers or marketers at all but rather by the Salvation Army as a fundraiser. It was considered a way to commemorate the work of the “doughnut girls” or “donut lassies” who fed the treats to American soldiers during World War I (the “doughnut girls” also returned to their baking duties during World War II.)

Here’s how it happened. During wartime, the Salvation Army provided support for U.S. soldiers fighting in France during World War I. About 250 volunteers traveled overseas and set up small huts located near the front lines where they could give soldiers clothes, supplies, and, of course, baked goods. But foodstuffs were limited on battlefields. Doughnuts, however, were relatively easy to make, since they were composed mostly of sugar, water, flour, and lard (shh, that’s the secret). The doughnut girls began frying doughnuts in the field, seven at a time, to save on resources. Eventually, Salvation Army’s Ensign Margaret Sheldon and Adjutant Helen Purviance thought of frying the doughnuts inside of soldiers’ helmets as a space saver, starting a tradition (that’s really using your head!).

And although female Salvation Army volunteers also provided writing supplies, stamps, clothes-mending and home-cooked meals to soldiers on the front lines, serving up those doughnuts was what really resonated with the troops. The memory of the doughnut girls inspired National Doughnut Day: it’s now a tradition on the first Friday of June to down a doughnut in honor of our troops.

Today, many restaurants will celebrate by giving away doughnuts. Here are a few spots where you can get free treats on National Doughnut Day:

  • Cumberland Farms. Receive a FREE donut with purchase of any size Cumberland Farms coffee or Chill Zone beverage. Offer valid from 5 am – 10 am only.
  • Duck Donuts. Duck Donuts will be offering a FREE Donut of your choice with any purchase. Additionally, receipts printed on 6/2 will feature an exclusive BOGO coupon for a “Buy One Get One Free 1/2 Dozen” redeemable Mon thru Wed until Aug. 31.
  • Dunkin’ Donuts. Enjoy a FREE Classic Donut with any beverage purchase.
  • Entenmann’s. Entenmann’s is giving away tens of thousands of donuts today in Times Square. Fans will have the opportunity to sample donuts, take part in fun activities, and be wowed by the world-famous Harlem Globetrotters.  If you can’t make it to New York, you can join in the fun on Entenmann’s Facebook page.
  • Krispy Kreme. Get one free doughnut of your choice, no purchase necessary.
  • LaMar’s Donuts. Celebrate with a FREE donut. Any donut with a hole, no purchase necessary.
  • Shipley Donuts. Stop by today till noon to get your free glazed with purchase, at participating locations.

Of course, you can’t eat just one doughnut, right? If you decide to pick up a dozen (or three) extra doughnuts while you’re in the store, whether you will pay sales tax on those doughnuts depends on what you’re going to do with them… or at least what your state’s revenue department anticipates you’d do with them.

Doughnuts are one of those quirky foods that confound merchants across the country because, in most states, the question of how to tax them rests on whether they are considered a “take out” or “eat-in” food. In most – but not all – states, sales tax is imposed on foods that are to be eaten on the premises while those to be taken away are often exempt.

In North Carolina, where Krispy Kreme first opened its doors in 1937, prepared foods “other than bakery items sold without eating utensils by an artisan bakery” are subject to state and local sales tax.”  And yes, bakery items specifically includes doughnuts, though the NC legislature has come down solidly in favor of the alternative spelling “donut.”

The sales tax compliance experts at Avalara note that utensils also matter in other states: in Utah, if a donut shop sells donuts but doesn’t provide utensils, the donuts are taxed at the reduced rate. If utensils are readily available or offered with the donut, the general rate of sales tax applies.

In Richmond, Virginia, whether a sale is taxable depends on how many doughnuts you order. If you order between one and five doughnuts, that’s considered a meal and is taxable. If you order six or more doughnuts, it’s assumed that you are not eating them as a single serving (apparently, no one on City Council was ever a college freshman). There’s a similar rule in Wyoming – the multiple serving exception – which exempts an item containing four or more servings packaged and sold as one item (like a dozen donuts since you would never, ever eat them all at once, right?).

In New York, doughnuts are generally exempt from sales tax “unless sold under the conditions … that would render them taxable.” Those conditions include heated food; food sold for consumption on the premises; or food which “has been prepared by the seller and is ready to be eaten, whether for on-premises or off-premises consumption.”

When it comes to doughnuts, the warm food rule does have some holes: in Missouri, if a grocery store sells doughnuts in its bakery department, those are taxed at a reduced rate “even though these donuts may still be warm from baking.”
And while some states treat food served at a drive-in as part of a restaurant and therefore, taxable, doughnuts sold at a drive-in in California would be exempt – provided, of course, that the restaurant can substantiate the claim that the doughnuts weren’t intended to be consumed on the premises.

The taxability of doughnuts is just another example of the tricky nature of sales tax systems across the country. From chocolate fondue to pumpkins to Pringles to bagels, companies and taxing authorities have squabbled about the taxable nature of food items. It’s a reminder of exactly how difficult it can be for a retailer to do business in more than one state. As it is, if retailers and taxing authorities can’t easily determine taxability inside one state, how can they easily determine taxability in fifty states? It’s a difficult question and one that isn’t likely agreed upon any time soon. When it comes to doughnuts, however, the thing we can all agree on? They’re delicious. Enjoy the day!

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Kelly Erb is a tax attorney, tax writer and podcaster.

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