And a partridge in a tax-exempt tree – Wacky Tax Wednesday
It took us ten minutes to get our Christmas tree this year. I don’t mean ten minutes of tromping around the lot, or ten minutes of discussing the merits of Noble and Douglas firs, or even ten minutes of driving time. I mean ten minutes from “Okay, let’s do this” to putting our newly purchased tree in the stand. It was all the time we had, I’m sorry to say. But you know what? It’s the perfect tree.
Given our truncated time frame, we opted to dash over to where a local Boy Scout troop had established a pop-up tree lot. We selected the tallest tree in the lot — a whopping 7-footer — and paid $56 for it. Once back home, I realized that no sales tax had been charged.
Under Washington law, “retail sales of plantation Christmas trees by farmers are subject to retailing B&O and retail sales taxes.” For general retailers like grocery and hardware stores, Christmas trees are taxable tangible personal property, just like a poinsettia or decorative rosemary shrubs. However, most Boy Scouts troops are nonprofit organizations, and most fundraising activities by qualifying nonprofits are exempt from Washington sales tax. So it’s lucky for us that we were short on time, otherwise we would have gone elsewhere and paid tax on our tree.
I appreciate tax exemptions when I come across them, but I don’t mind paying sales tax, and taxability doesn’t usually influence my buying habits. Yet for some people, I suppose it does. There are certainly a number of lawmakers who seem to think that Christmas trees should be exempt.
Lawmakers in action
Last year, New York Senator Rich Funke worked to create a sales tax holiday for New York-grown Christmas trees. He initially sought a weekend-long tax-free period for fresh-cut evergreen trees and products, but Senate Bill 6232 was later amended to exempt fresh cut evergreen trees for the entire months of November and December. His intention: support local tree farms by encouraging consumption of locally grown trees and discouraging consumption of artificial trees or those grown out-of-state. The legislation went dark in June after entering the Ways and Means Committee.
Pennsylvania Representative Seth Grove also fought the tax on Christmas trees last year, to no avail. On Monday, he announced his intention to reintroduce his “Don’t be a Scrooge” bill, which would make Christmas trees sold by tree farms exempt from sales tax.
His goal isn’t to stimulate the local Christmas tree industry or level the tree farm, like Sen. Funke. According to Rep. Grove, “Christmas trees are one of the few agricultural products not exempt from sales tax.” The aptly named legislator hopes to reduce red tape for producers and save a few dollars for consumers:
“This bill would produce some savings for families who buy Christmas trees at a time when most are counting pennies to afford presents to sit under those trees. Removing the trees from the list of taxed items also cuts down on work Christmas tree farms put toward managing the books.”
The Pennsylvania lawmaker may have more luck this time around. But for now, Christmas trees sold in both Pennsylvania and New York remain subject to sales tax.
That’s not the case in Mississippi, where certain Christmas trees are newly exempt this year. To qualify for the exemption created by House Bill 1677, a Christmas tree must be grown in Mississippi and be “cut, severed, or otherwise removed from the farm, grove, garden or other place of production and first sold from such place of production in the original state or condition of preparation for sale.”
Why legislators in one state exempt Christmas trees while those in another do not has more to do with politics than the Christmas spirit. But retailers don’t need to know why what they sell is or isn’t exempt, they just need to get sales tax right.
Stay up-to-date on sales tax news by signing up for our newsletter. Happy holidays.
The 2021 sales tax changes report: midyear update
Your guide to navigating the complicated world of tax compliance and preparing for the future
Stay up to date
Sign up for our free newsletter and stay up to date with the latest tax news.