IRS Joins FDA in Cereal Crackdown
Mikey Riley is a nine year old treasure hunter. For years the Fourth Grader from Tupelo, Mississippi has filled his breakfast bowl with puffs, pops, and flakes, draining box after box of cereal in hopes of finding the great toys hidden within.
Now Mikey has a problem. And he doesn’t like it.
Mikey is part of a growing number of children being targeted by the IRS for failure to pay taxes on the toy prizes found in their cereal boxes. According to longstanding IRS regulations, all prizes and awards must be included in a taxpayer’s income at their fair market value.
While the market value of a foam dinosaur that expands under water may not seem like much, IRS agent Henry Kottinger says that cereal toys are more valuable than people think. “Given the eventual collectability of these items, the IRS stance is that they carry a very high market value. The individuals receiving these toys should be responsible for the taxes,” said Kottinger.
Too young to work and too old to plead ignorance of tax laws, Mikey is now struggling to find ways to pay off his tax debt – which after penalties and interest amounts to $1,857.32. “Daddy says I’m too young to mow grass,” Mikey explained as he played with a white plastic helicopter he recently found in a box of Cap’n Crunch, “but Mommy said she would help me make a Lemonade Stand.”
Mikey enjoys his cereal prizes, but at what cost?
Despite criticism from parents and taxpayer advocacy groups, the IRS remains contrite. “The cereal boxes plainly read ‘prize inside,’” Kottinger said, “Until the cereal manufacturers change their marketing practices, the IRS must continue to enforce the tax law.”
The recent IRS cereal prize crackdown comes on the heels of an FDA announcement that Cheerios is actually a drug masquerading as a breakfast foodstuff. But unlike the FDA crackdown, which is mainly a General Mills problem, the IRS attack is hitting home for thousands of first-time taxpayers.
“I remember the first time Mommy brought home cereal in a box,” Mikey recalls, referencing the fact that his mother used to purchase generic cereal that came in bags and did not contain toys, “it was awesome.”
“Now I wish I never even heard of Cookie Crisp.”
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