Pumpkin patch woes – Wacky Tax Wednesday

The taxability of pumpkins sometimes depends on who grows, sells, and buys them.

The pumpkins in my garden are growing. The vines have long since consumed nearby beds of basil and collards and are slowing creeping toward the house. I’m hoping Halloween arrives before we’re all consumed — although that would make a pretty cool haunted house for the neighbors.

I live in Washington, where a pumpkin is presumed to be an exempt food or food ingredient unless it’s “sold painted or is otherwise clearly for decorative purposes rather than consumption.” Washington law notes that the exemption stands “even though the purchaser may use an undecorated pumpkin for carving and display rather than consumption.”

Similarly, a pumpkin sold in its raw state ("undressed, uncarved or otherwise unadorned") is exempt in Massachusetts. Pumpkins that are already carved or otherwise decorated are taxable. The Massachusetts Department of Revenue advises taxpayers to "trick out your pumpkin at home and save the sales tax.”

For a short time, pumpkin taxability in Iowa depended on consumer intention: pumpkins purchased to be consumed were exempt, while those purchased to be carved, painted, or decoratively placed were taxable. This extremely unpopular policy was rescinded and the Iowa Department of Revenue now states, “Pumpkins are exempt from Iowa sales tax. Inedible decorative gourds are taxable.”

Alabama is different. In Alabama, pumpkins are exempt only when sold by the person or corporation that planted, cultivated, and harvested them (Code of Ala. 1975, §40-23-4(a)(44)). Those sold by a person or entity other than the planter, cultivator and harvester are taxable. In order for an exemption to be claimed, sellers must provide records proving the pumpkins sold were, in fact, planted, cultivated, and harvested by them.

(You might think that all pumpkins found in a pumpkin patch grew where they lie. They’re not. I was crushed the first time I wandered a patch with my tots in tow and realized the pumpkins had been trucked in and placed as though they had sprung from the soil. Disillusionment ran deep. It’s why we now grow our own.)

Alabama’s pumpkin taxability rule was recently highlighted in a case before the Alabama Tax Tribunal. A taxpayer that didn’t collect tax on pumpkins sold to groups of school children could owe tax on those sales unless it can prove the pumpkins were grown on premises. The taxpayer has been given until mid-September to come up with “records showing the number of home grown pumpkins they sold during the period in issue, and the gross receipts derived from those sales.”

The taxpayer didn’t collect tax at the time of sale because it believed the school groups were exempt (schools in Alabama generally are exempt entities). However, since the schools collected money from parents for the pumpkins, the buyers were in fact taxable parents, not exempt schools. Additional details are available in the case decision (Docket No. S. 16-158).

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