Life lessons from lemonade stands – Wacky Tax Wednesday
With daffodils and tree blossoms in full bloom, it’s about time for entrepreneurial kids in my neighborhood to get to work. I love it when they haul tables to the corner to hawk everything from shells to lemonade. Some seem born to sell; others quickly tire of the tedium. But none, as far as I know, has ever registered with the Washington Department of Revenue or collected sales tax.
Washington requires these budding capitalists obtain a sales tax permit — even if they’re under 18 and the stand is operated infrequently or irregularly. Children selling home-grown fruit or homemade lemonade have been approached by tax officials in both Idaho and Washington and told they needed to get a permit and collect and remit sales tax.
A representative from the Idaho State Tax Commission once described such visits as educational. “What the youngster is doing is selling tangible products. The tax code defines what a retailer is. Our mission is to advance fairness in collection. Some people don’t know they’re retailers.”
Some people don’t see tax officials in their nightmares, either, but I suspect at least a couple of growing children now do. Of course, it could be worse: Kids in Colorado and Texas have had lemonade stands shut down by the police for not having the proper permit.
To prevent such uncomfortable, if educational, situations from happening again, a couple of lawmakers in Washington have introduced bills that would allow kids to operate lemonade stands without first jumping through the proverbial bureaucratic hoops.
Senate Bill 6320 would prohibit local boards of health from regulating or restricting occasional lemonade or other nonalcoholic beverage businesses by any person 15 years of age or younger. Bill sponsor Senator Steve O’Ban says, “It would exempt lemonade stands run by kids ages 14 and under from health department and Washington State Department of Revenue requirements that sometimes result in the long arm of the law coming down on kids who are trying to earn a little extra money.”
House Bill 2232 would prohibit local governments from regulating the occasional sale of non-alcoholic beverages from a stand on private property by anyone under the age of 18. The measure specifically prohibits “requiring a license, permit, or fee.” However, it doesn’t appear to prevent the state from taxing such sales.
Washington isn’t the only state to reconsider its treatment of lemonade stands. Last year, both Colorado and Texas made it legal for youths to sell lemonade and other nonalcoholic drinks, without a permit, from stands on private property. Texas Governor Greg Abbot said he had to pass it “because police shut down a lemonade stand here in Texas.”
Now that’s wacky.
Interested in following the lemonade issue more closely? Check out Country Time’s Legalize Lemonade website.
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.