Pennsylvania
Oh, La La! Pennsylvania Court Rules Perrier Is A Soft Drink—And Taxable
Perrier water
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Sales tax on food and beverages can be complicated. While five states do not have a sales tax (Alaska, Delaware, Montana, New Hampshire, and Oregon), the rules in states that do impose a sales tax can vary. Sometimes, all it takes is an add-on or leaving the premises to cause an item to go from nontaxable to taxable (and vice versa). In a recent Pennsylvania sales tax case, the question came down to carbonation.
Facts
On June 1, 2019, Jennifer Montgomery purchased a single 16-ounce bottle of Perrier from Sheetz.
(For the uninitiated, Sheetz is a chain of convenience stores—most of which also sell gas—owned by the Sheetz family. What started as a one-store operation in western Pennsylvania in the 1950s is now a 700+ store enterprise in several states. Importantly, as a resident of eastern Pennsylvania, it’s incumbent upon me to mention that, for decades, a Sheetz vs. Wawa debate has raged in the Keystone State. That question wasn’t resolved in this court action but has been resolved for many in the court of public opinion.)
On June 14, 2019, Montgomery purchased another bottle of Perrier from Sheetz. Sheetz collected and remitted a total of 24 cents in sales tax each time. Afterward, Montgomery filed refund petitions with the Pennsylvania Department of Revenue Board of Appeals (Department) seeking a refund of sales tax based upon her belief that Perrier is natural mineral water and not subject to sales tax in the Commonwealth.
(Montgomery also initiated a class action complaint against Sheetz in the Court of Common Pleas of Allegheny County, alleging the same. The class action was stayed pending the Department’s decision.)
On October 31, 2019, the Department issued a decision and order denying Montgomery’s refund petitions. The Department concluded that Perrier is carbonated water and subject to sales tax.
Montgomery appealed the decision to the Board, which affirmed the denial of the refund petitions on a different basis.
Law & Guidance
Under Pennsylvania tax law, a six percent sales tax is imposed at retail of tangible personal property.
The tax law also excludes “the sale at retail or use of water” (as a public policy note, water is considered a necessity). The exclusion does not apply to soft drinks. Soft drinks are defined as “[a]ll nonalcoholic beverages, whether carbonated or not, such as soda water, ginger ale, coca cola, lime cola, Pepsi cola, Dr. Pepper, fruit juice when plain or carbonated water, flavoring or syrup is added, carbonated water, orangeade, lemonade, root beer or any and all preparations, commonly referred to as ‘soft drinks.’”
The Department also issues informal guidance, such as statements of policy. One of those statements focused on the taxation on the sale and preparation of food and beverages provides that a soft drink is a “nonalcoholic beverage, in either powder or liquid form, whether or not carbonated, such as soda water, ginger ale, colas, root beer, flavored water, artificially carbonated water, orangeade, lemonade, juice drinks containing less than 25% by volume of natural fruit or vegetable juices, and similar drinks. The term does not include fruit and vegetable juices containing at least 25% by volume of natural fruit or vegetable juice. The term does not include coffee, coffee substitutes, tea, cocoa and milk or non-carbonated drinks made from milk derivatives.”
The guidance also makes clear that soft drinks are subject to sales tax.
Montgomery’s Argument
Montgomery argued that Perrier is excluded from sales tax because it is natural mineral water. She claimed that other guidance, including the statement of policy, is unambiguous that water, including natural mineral water, is not subject to sales tax. She argues that “there is no dispute that Perrier is a sparkling natural mineral water.”
She also claimed that the Department’s informal guidance clarifies that all non-flavored mineral water is exempt from tax and does not distinguish between carbonated and non-carbonated mineral water. She claims that it is well settled that the exclusionary provision must be construed against the Commonwealth and in favor of the taxpayer. That would mean, she argued, that Perrier is sparkling natural mineral water, not carbonated water, and is excluded from sales tax.
Montgomery also argued that Perrier does not qualify for sales tax as a soft drink because it is not artificially carbonated. Noting that the definition in the statement of policy includes “artificially carbonated water,” Montgomery urged the Court to conclude that Perrier contains natural carbonation and is exempt from tax.
Commonwealth’s Arguments
The Commonwealth argued that Perrier is not exempt from tax as water, but is carbonated water. That means, they said, that it falls squarely within the definition of soft drink and is subject to sales tax.
The term “carbonate” means “to combine or infuse with carbon dioxide.” The Commonwealth maintained that Perrier is carbonated water because it is manufactured by combining a specific amount of filtered or scrubbed carbonic gas with still water in an industrial plant setting. The Commonwealth further argued that the process used to carbonate Perrier is the same process used to carbonate Coca-Cola
Coca-Cola
Finally, the Commonwealth alleged that because Montgomery didn’t have statutory support for her argument, she improperly relied on the statement of policy and other sources—none of which, they claim, supports a finding that Perrier is exempt from tax. The statutory language makes no qualifications for naturally or artificially carbonated water. Instead, the tax laws simply provide that carbonated water, whether naturally or artificially carbonated, is subject to sales tax. That means, the Commonwealth says, even if the Court concludes that Perrier is “naturally carbonated water,” it is still not exempt under the plain language of the law.
Discussion
Judge Wolf says the arguments “bubble down to one question”—whether Perrier is water and exempt from sales tax.
The Court agrees that the tax law unambiguously exempts the sale at retail of water from sales tax. However, the Court disagreed that Perrier qualifies as water.
The Court then offered a science—and geography lesson—of its own, finding:
- Perrier is sourced from non-flavored mineral water.
- Perrier comes from underground natural springs near the village of Vergeze in Provence, France.
- The water in the natural springs from which Perrier is collected is naturally carbonated.
- Perrier’s carbonic gas and water are independently harvested from different depths within the same geologic formation.
- The carbonic gas and water in Perrier, collected from natural springs, are combined at the bottling plant.
- Before the combination, the water in Perrier is chilled, all of the air is removed (a process called deaeration,) and any carbonation is stripped out.
- Before carbonation, filters or scrubbers remove natural elements and impurities in the carbonic gas and ensure a consistent carbonation level.
- Similarly, before the combination, impurities are removed from the water.
- The water then goes through one of two processes—either a carbonated tank or an in-line carbonation process—where carbonic gas is added to the water and the carbonation levels are adjusted to reach the desired amount for the product.
- The processes used are the same as those for making soft drinks like Coca-Cola and Pepsi. There is no alternative process for carbonating beverages.
- Following these processes, the product is bottled for sale.
VERGEZE, FRANCE – OCTOBER 27: Perrier bottles move down the automated bottling line at the Perrier factory October 27, 2004 in Vergeze, France. (Photo by Gilles Mingasson/Getty Images)
Getty Images
The Court found that when a consumer purchases a bottle of Perrier, the non-flavored mineral water has carbonation.
A finding that mineral water with carbonation is not carbonated water “flies directly in the face of the plain language of the Code,” which treats water and carbonated water differently for sales tax purposes. Perrier, they ruled, is carbonated water as a matter of law and is subject to sales tax as a soft drink.
The Court also rejects Montgomery’s argument that only artificially carbonated water may be taxed as a soft drink. The definition of soft drink in the Code does not contain any natural or artificial qualifications, so Judge Wolf wrote that the argument “does not hold water in the face of the clear and unambiguous statutory language.”
Conclusion
This sort of analysis is often necessary to parse complicated sales tax laws. The taxability (or not) can often turn on something as simple as it did here: bubbles.
In this case, the Court concluded that Perrier is carbonated water and subject to sales taxation as a soft drink. So, drink up, Pennsylvania—just be prepared to pay tax if you’re craving a Perrier.
(Don’t you feel smarter already?)
The case is Jennifer Montgomery v. Commonwealth of Pennsylvania (No. 336 F.R. 2020).
The war with Iran could start impacting your wallet as soon as today.
Jim Garrity from AAA East Central says oil prices are up.
“They’re hovering around $72. They were pretty consistently around $65, $66 for a while,” he said.
Nationally, AAA said the average for a gallon of regular sits at about $3, up approximately six cents from last week.
In Pennsylvania, it’s around $3.12 a gallon, and in the Pittsburgh region, it’s around $3.24 a gallon. That’s actually down about four cents from last week.
Garrity added that gas prices this time of year would already be increasing, usually because of higher demand for the warmer months and the production of the summer blend of gas used for those months.
The impacts of what’s happening in Iran may not be immediate, which could be part of why our region and the state overall have not seen a spike yet, he said.
“It could be a couple of days later. It could be up to a week later,” Garrity said.
A lot of people are watching what happens with the Strait of Hormuz. Iran borders it to the north, and 20% of the world’s oil goes through it.
Iran is one of the world’s biggest oil producers, and China gets a lot of that oil.
“If there is an impact there, you could see oil start to come in from other parts of the world, which has a downstream effect on [the United States],” Garrity said.
One way you can save on gas if prices increase in our area is by slowing down.
“When you drive faster every five miles, over 50 miles an hour, your fuel efficiency is going down,” Garrity said. “You’re making the car work harder, making the gasoline consumption less effective.”
Garrity added that in 2022, when our area and many others saw some of the highest gas prices ever recorded, people changed their driving habits.
“We saw people make seemingly permanent changes to their driving behaviors, driving less in general, consolidating trips,” he said.
Some Pennsylvania towns make it easy to feel included within a day of arriving. In Lititz, summer concerts at Lititz Springs Park turn into informal reunions, with families setting up lawn chairs side by side and local shop owners joining once they lock their doors for the evening. In Boiling Springs, the path around Children’s Lake doubles as a daily check-in point where walkers greet each other by name before drifting into the cafés along Front Street. And in Ligonier, the Diamond and its bandstand pull residents downtown for markets and community events that rely on volunteers rather than outside organizers. The same pattern carries through the rest of the towns on our list.
Lititz
Lititz is in Lancaster County, about 6 miles north of the city of Lancaster. Founded in 1756, the town was named after a castle in Bohemia and initially served as a Moravian congregation settlement. Lititz is home to the Julius Sturgis Pretzel Bakery, established in 1861 as the first commercial pretzel bakery in the United States.
Lititz Springs Park, a historic community hub since 1756, hosts various yearly events, notably the well-known Lititz Fourth of July Celebration. For dining, the Appalachian Brewing Company provides locally brewed beers and a distinctive menu showcasing regional dishes. The Wilbur Chocolate Factory, a landmark since the late 1800s, includes a museum and shop where visitors can explore chocolate-making processes and buy unique confections.
Boiling Springs
Boiling Springs, in Cumberland County, owes its name to the natural artesian springs that maintain a constant temperature and were crucial to early ironworks in the area. Established in the 18th century, it is also part of the Appalachian Trail community, underscoring its long-standing connection to nature and history. The town’s historic district includes the Iron Furnace, dating to 1760 and a testament to Boiling Springs’ early industrial role.
The town features a variety of attractions for visitors and residents. Allenberry Resort and Playhouse, a historic venue since the mid-20th century, provides entertainment, dining, and lodging options. The Boiling Springs Tavern, founded in 1832, offers classic American cuisine in a historic environment. For outdoor enjoyment, Children’s Lake is perfect for fishing and relaxing walks, and the Appalachian Trail runs through the center of the community, offering great hiking opportunities.
Jim Thorpe
Jim Thorpe sits in the Lehigh Gorge in eastern Pennsylvania, and was originally known as Mauch Chunk and played a pivotal role in the coal and railroad industries. Renamed in 1954 to honor the legendary athlete Jim Thorpe, the town retains a Victorian era charm, with much of its architecture preserved and celebrated. This heritage is evident in attractions such as the Asa Packer Mansion, built in 1861 by a philanthropist and railroad magnate, which now serves as a museum.
Visitors to Jim Thorpe can choose from various recreation and dining options. The Lehigh Gorge Scenic Railway provides a scenic ride through the mountains, perfect for enjoying the area’s natural beauty. Dining choices include Moya, famous for its upscale American dishes, and Stone Row Pub & Eatery, offering a relaxed atmosphere with local ingredients. Outdoor lovers can enjoy boating and hiking at Mauch Chunk Lake Park, making the town an attractive destination.
Ligonier
Ligonier was established in the 1760s and features a rich colonial history highlighted by Fort Ligonier, a British fortification from the French and Indian War. The town square, known as the Diamond, is circled by original structures and a bandstand from the 19th century, reinforcing its historical ambiance.
Fort Ligonier functions as both a museum showcasing 18th-century artifacts and a venue for reenactments and educational activities. The Southern Alleghenies Museum of Art enriches visitors with American art exhibitions. Dining options in Ligonier include the historic Ligonier Tavern, known for its local cuisine, and The Wicked Googly, famous for its vibrant atmosphere and live music. For outdoor leisure, Ligonier Beach offers a distinctive swimming experience with a historic pool from 1925.
Wellsboro
Wellsboro, located in Tioga County, was established in 1806 and acts as the gateway to the Pennsylvania Grand Canyon, also known as Pine Creek Gorge. The town exudes nostalgic charm with its gas-lit streets and historic Victorian buildings, offering a window into its storied history. A prime example of this history is the Penn Wells Hotel, which has been serving visitors since the early 1900s.
For those wanting to explore Wellsboro, the restored 1920s movie theater, The Arcadia Theatre, regularly features films and performances, serving as a cultural center for locals and visitors. The Native Bagel offers a relaxed dining atmosphere with dishes made from locally sourced ingredients. Outdoor lovers can enjoy Leonard Harrison State Park, which offers stunning views of the Pennsylvania Grand Canyon, along with trails and picnic spots. Furthermore, the annual Pennsylvania State Laurel Festival attracts crowds with its parade, arts and crafts, and local food stalls, honoring the area’s cultural traditions.
Foxburg
Foxburg, situated along the Allegheny River in Clarion County, was founded in 1870. It is famous for being home to the oldest golf course still in operation in the United States, the Foxburg Country Club, established in 1887. This historical feature adds to its charming and distinctive character, blending small-town American charm with a deep golf tradition.
The Foxburg Wine Cellars offers tastings of locally produced wines, complemented by a scenic setting. For dining, the Allegheny Grille provides riverfront views alongside a menu featuring regional cuisine, emphasizing the town’s picturesque location. Culture enthusiasts can explore the American Golf Hall of Fame, located within the Foxburg Country Club, which houses a collection of golf memorabilia and artifacts. For outdoor activities, the nearby Allegheny River Trail offers miles of biking and walking paths, making Foxburg a destination with diverse appeal.
Honesdale
Honesdale serves as the county seat for Wayne County and was founded in 1826. It has historical significance as the terminus of the Delaware and Hudson Canal, pivotal in the transport of coal to major markets in the northeast. Notably, Honesdale is credited with being the site of the first commercial steam locomotive run on rails in the United States, the Stourbridge Lion, adding a rich layer to its industrial heritage.
The Wayne County Historical Society presents exhibits on canal and railroad history, shedding light on the town’s growth. For dining, visitors can choose the upscale Hotel Wayne, known for its fine dining and bistro bar, or the more relaxed Trackside Grill, offering views of the historic railroad. Outdoor lovers can visit Honesdale Park, which has walking paths and recreational facilities, serving as a popular venue for community events and gatherings.
Milford
Milford is situated at the crossroads of the Delaware River and the Pocono Mountains’ foothills. Established in 1796, it rapidly gained popularity as a resort in the 19th century, thanks to its scenic landscape and fresh mountain air. The town is also renowned for the Milford Historic District, which features a range of well-preserved buildings that reflect its prosperous history.
The Columns Museum houses the famous Lincoln Flag, believed to be stained with Abraham Lincoln’s blood from the night of his assassination, providing a profound historical experience. For dining, Bar Louis at the Hotel Fauchère offers a contemporary menu in a stylish setting, while the Waterwheel Café provides a rustic atmosphere with live music and local cuisine. Additionally, Grey Towers National Historic Site, the former home of Gifford Pinchot, founder of the U.S. Forest Service, offers guided tours and scenic grounds.
Mount Joy
Mount Joy was founded in 1759 and has a name derived from an old Irish ship, the “Mountjoy,” which played a pivotal role in breaking a siege during the Irish Confederate Wars. This town, nestled among the rich, rolling farmlands of the county, has historically been a hub for agriculture and today melds historic charm with modern vibrancy, evident in its revitalized downtown area.
Bube’s Brewery, an intact historic 19th-century brewery and museum, offers unique dining experiences in its catacombs and regularly hosts murder mystery dinners. The Country Table Restaurant is known for its comfort food and welcoming atmosphere, reflecting the town’s friendly spirit. For outdoor activities, Little Chiques Park provides scenic walking paths and picnic areas, perfect for family outings. Additionally, the annual “Mount Joy Winterfest” brings the community together with craft vendors, food, and entertainment, showcasing the town’s lively community spirit.
Lewisburg
Lewisburg is a vibrant town established in 1785. It is home to Bucknell University, established in 1846, which adds a youthful energy and cultural richness to the town. Lewisburg’s downtown is listed on the National Register of Historic Places, featuring well-preserved 19th-century architecture and a tree-lined main street that enhances its historic charm.
In terms of activities and dining, Lewisburg offers a variety of choices that cater to both residents and visitors. The Campus Theatre, one of the few remaining single-screen art deco movie theaters in the country, offers a unique cinematic experience. For dining, Elizabeth’s American Bistro provides a fine dining experience using local ingredients, while the Bull Run Tap House offers a more casual atmosphere with a comprehensive selection of craft beers. For outdoor enthusiasts, Hufnagle Park offers a green retreat in the heart of the town, complete with walking paths and garden areas, making it a popular gathering place for community events and casual recreation.
As we journey through Pennsylvania’s coziest corners, we discover that these small towns do more than just charm visitors with their picturesque settings and historical backdrops. They invite us into a world where community spirit thrives and every street and alley tells a story. These towns, from Lititz’s pretzel-perfumed air to Lewisburg’s university vibes, showcase the true heart of Pennsylvania through their unyielding warmth and hospitality. Whether you’re seeking a serene retreat or a peek into America’s storied past, these towns offer a refuge where friendliness is the native language.
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