Sales Tax Articles
Sales Tax State Activity Update - November 2007
Trick or Tax – Iowa Carves into Pumpkin Taxability
The Iowa Department of Revenue first announced in December 2006, and then again in September 2007, that sales of pumpkins would be taxable if they are specifically advertised for use as jack-o-lanterns or decorations, or when this use is understood.
A buyer can only obtain a pumpkin without paying tax if he or she completes a tax exemption certificate stating that the item will be used as food, or if the pumpkin is advertised as a special variety used in making pies, or finally, if the pumpkin is purchased with food stamps.
Iowa policy makers wished to match sales tax law to what they thought was the predominant use of pumpkins; that predominant use being as a seasonal or Halloween decoration. Previously, pumpkins were considered a food item exempt from tax.
On October 31, 2007, the Department of Revenue announced that it is reverting to its prior policy of considering pumpkins an exempt food item. They made this decision after understanding that many vendors were not aware of the change in policy making pumpkins generally taxable. Iowa will continue to study this issue and seek to make any future changes through the proper channels and allowing input from the business community and the Legislative Rules Committee.
Taxpayers who paid sales tax on pumpkin purchases can apply for a refund with the Department of Revenue.
The full text of this Release may be accessed on the Iowa Department of Revenue Website.
(Iowa Department of Revenue, Press Release, 10/31/2007)
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