Pumpkin Sales and Drying Crate Purchases Exempt in Indiana

Monday, June 30th, 2014

 
 
A pumpkin patch.
Share
Link
Indiana
General

The Indiana Department of Revenue ("Department") recently issued a letter ruling holding that a taxpayer's sales of pumpkins and purchases of drying crates were exempt.

The taxpayer was a farm market retailer. The taxpayer sold pumpkins to customers. When sold, the pumpkins were in exactly the same state as they were when they were first picked. A Department audit found that the taxpayer should collect tax on these sales. The taxpayer disagreed. The taxpayer also purchased drying crates. The taxpayer used these crates to dry corn used for animal feed. The crates were open on all sides to allow air flow, provided by drying fans. If the corn did not dry thoroughly before packaging, it would rot in the package. The audit found that the taxpayer owed tax on purchases of the crates. Again, the taxpayer disagreed.

Indiana exempts sales and purchases of food for human consumption. Indiana also exempts sales and purchases of property used directly to produce tangible personal property. To be exempt, the property must be an essential and integral part of an integrated process that produces tangible personal property. The production process includes steps up to and including the packaging process.

The letter ruling held that the taxpayer's pumpkin sales were exempt. Although the Department argued that the pumpkins were decorative items rather than food items, the pumpkins were food. The taxpayer sold the pumpkins just as they were when picked. The taxpayer did nothing to change the pumpkins from food into decorative items. The drying crates were also exempt. Because the corn needed to be dry before being packaged, the crates were necessary and integral to the production process.

http://www.in.gov/legislative/iac/20140625-IR-045140223NRA.xml.html


About TTR

Transaction (buying or selling things), Tax (the tax on this activity), Resources (our people, our website, our support services) - TTR, Inc.

TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

Please visit TTR on the web at www.ttrus.com or call 866.578.8193.

Colorado Waives Penalties for Notice and Reporting...

Monday, February 19th, 2018 -The Colorado Department of Revenue (DOR) released a publication stating that it has agreed to waive penalties ...

Maryland Sales Tax Holiday for Energy Efficient...

Friday, February 16th, 2018 -The Maryland sales tax holiday for energy efficient appliances runs from Saturday, February 17, 2018, at 12:01...

Dental Prostheses Exempt in Michigan

Wednesday, February 14th, 2018 -The Michigan Department of Treasury recently released a publication describing the retroactive exemption for d...

Taxability of Amusement Devices and Video Games in...

Monday, February 12th, 2018 -The Wisconsin Department of Revenue has released guidance addressing the taxability of video games and amuseme...

Video Streaming Subscriptions Taxable in Texas

Friday, February 9th, 2018 -The Texas Comptroller of Public Accounts recently ruled that video streaming and add-on services are taxable a...

Moratorium on Medical Devise Excise Tax Extended Two More...

Wednesday, February 7th, 2018 -The United States Congress extended the moratorium on the Medical Device Excise Tax (MDET) for another two yea...