Pardoned turkeys give sales tax the bird
- Sales and Use Tax
- November 1, 2016 | Kerry Alexander
It’s an annual tradition for the President of the United States to pardon a turkey at Thanksgiving. Which president started the trend is up for debate, but White House history dates the first turkey clemency to 1863, when Abraham Lincoln’s son took a liking to a bird intended for Christmas dinner.
Since then, dozens of turkeys have been given a reprieve by POTUS. But is America really the land of the free fowl? In Lincoln’s case, it’s lucky the First Family was living in the White House at the time of the pardon. The former president’s home state of Illinois requires breeders who sell animals (including livestock) as pets to collect sales tax. California, Tennessee, New Jersey and several other states have similar laws. So the Lincolns could have been on the hook for consumer use tax since they didn’t eat the bird as intended.
Had the Lincoln turkey made it to the White House table, tax would have been a non-issue as the District of Columbia does not charge sales tax on livestock, groceries or chef services. Although 14 states do tax groceries and some, including Washington and California, add retail sales tax to home-cooked meals prepared by professional cooks. Georgia even extended that rule to chefs marketing their home cooking services online, requiring sales tax to be charged on the transaction.
What about the Nixon and Reagan era turkeys that were sent to petting zoos? If they spent their final days on display in Louisiana, Oklahoma, or Maryland, it would cost visitors more to get a glimpse of these fortunate fowl. These states, among others, charge sales tax on admissions to certain entertainment or amusement venues, which can include zoos.
And what about Honest and Abe, the two turkeys plucked from the Twittersphere, flown via Turkey One (seriously) from Foster Farms in Modesto, CA to Washington DC and pardoned by President Obama last year? The duo retired to Turkey Hill in Leesburg, Virginia where they will live out the remainder of their lives. Unless they try to make a run for the border together. Canada is cool with Americans bringing one U.S. turkey into the country, but try and get two past customs and the duty increases by 154 percent!
In addition to Honest and Abe, two other (less fortunate) turkeys, also from Foster Farms, were dressed and delivered to the Obamas in 2015 to donate to a DC-area food bank.
How does all this fly from a sales tax perspective? Foster Farms may have owed use tax on the donated birds because they took them out of their inventory. And possibly on their feeding and care. But if only eight Foster Farms birds made the trip to DC from California in the last six years – four being pardoned (Honest and Abe in 2015; Cider and Apple in 2010) and four being charitable donations – it’s likely that the poultry producer was spared from having to register and collect sales tax in the U.S. capital.
But let’s fan this out a bit for fun. In the 17 weeks it took those turkeys to go from farm to table (or farm to capitol to farm, in this case), a whole flock of sales tax nexus-creating scenarios could have cropped up. What if a third-party trekked those toms from California to the Capital instead of a commercial jet? The gobblers’ Hill staffers (the ones who stayed with them at the Willard Hotel, toured them around the Rose Garden and drove their motorcade to the White House) could have considered remote employees (a nexus triggering activity). And the whole social media campaign, complete with plush turkey toys? Well there’s some click-through nexus for you right there.
Having a hard time stuffing all this into your brain? We don’t blame you. Multi-state sales tax nexus is a lot to have on your plate.
While there is no tradition where state auditors grant clemency to companies for tax compliance, here are 10 tips from 4 (former) state tax auditors that could help. And, thankfully, there’s Avalara sales tax automation software to make the job easier.