The Green Thumbs Are Coming: Sales Tax Rules for Nurseries and Greenhouses
- Jun 3, 2016 | Jaimy Ford
In most areas in the US, we’re officially reaching the last frost date. And that means people will be hitting their local nurseries and greenhouses to stock up on seeds, plants, trees, and more.
If you run such a business, this can be one of your most profitable times of the year. But when it comes to collecting sales taxes on the items you sell, the rules vary depending on where you live.
Generally speaking, if you sell the following directly to customers, you must collect sales tax from them:
- Plants, including flowers, vegetables, trees, shrubs, ornamental grasses, and the like
- Seeds and bulbs
- Hay, grain, and straw
- Soil, sod, turf, and gravel
- Ornamental crops, such as gourds and Christmas trees
- Fertilizer, sprays, and insecticides
- Gardening supplies
Again, generally speaking, if you sell the items to a reseller, you do not collect sales, because the reseller will eventually collect the sales tax from customers. In that case, you simply need to file a resale certificate.
Additionally, farmers are typically exempt from sales tax, because at some point down the road, whether they sell their crops to a reseller or directly to customers, a tax will be collected from someone at some point.
Now, while those are general guidelines, the rules in each state or locality are rather nuanced. For example, in Pennsylvania vegetable seeds and plants and fruit trees are taxable, unless the customer purchases them with food stamps. In Colorado, you’ll collect a sales tax on all trees, except orchard trees. And in Arizona, if an individual is buying seeds or plants in order to grow food that they will eat, you don’t collect a sales tax at all.
What it all boils down to is that you have to know the rules at both the state and local level that apply to you to ensure that costly penalties and interest don't eat into your profits.