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California: Who’s Going to Eat That Carrot?

  • Jan 3, 2014 | Gail Cole

 Tax exempt when for human consumption, taxable when for animals.

Hard-core, tax-savvy, bunny-owning Californians might feel compelled to tell supermarket checkers that the carrots they’re purchasing are for their bunnies and should therefore be subject to sales tax. While fresh fruits and vegetables for human consumption are tax-exempt in California (and elsewhere in the United States), the state of California taxes produce for animal consumption.

If average consumers rarely dwell on such complexities, auditors employed by the California State Board of Equalization do. In fact, an auditor handed a mom and pop wholesale produce seller “with a crippling bill for back taxes on produce delivered to the zoo.” Why? Because one of their customers was a zoo and produce consumed by animals is subject to sales tax. And because mom and pop had never filed a sales tax return (thinking that sales tax returns were not required for nontaxable produce).

It’s a sticky wicket, indeed. Assuming that same hard-core, tax-savvy, bunny-owning Californian actually did try to pay sales tax on a bunch of carrots, the supermarket checker wouldn’t be able to do it. Cash registers and point-of-sale systems in California categorize fresh vegetables as tax exempt, end of story. So what’s an audited produce seller to do?

The mom and pop in question pleaded their case before the five members at the top of the California State Board of Equalization. Finding the case interesting, they also invited the press.

I could eat my bunny

When confronted with the complexities of the situation, the board of the BOE considered the facts:

  1. Supermarket checkers have no way to charge tax on sales of carrots, celery, and other rabbit favorites.
  2. Food for animals suitable for human consumption is tax exempt.

Who is to say I don’t plan to eventually eat my bunny, turtle, snake, or fish? Indeed, one of the five judges confessed, “I’ve eaten snake.” A pet snake, perchance?

Contractions abound

At the core of the case is this: California’s sales tax laws are “riven by contradictions.” Seeing this, the California BOE decided in favor of mom and pop (Forbes).

Processed pet food is big industry in the United States, with annual sales reaching more than $20 billion. Food for pets has long been subject to sales tax in many states.

Who handles sales tax for your pets? An automated sales tax solution makes sales tax manageable for all.

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photo credit: Fire Monkey Fish via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.