Remembering the DECEASED Iowa Pumpkin Tax

October 31, 2012

One website estimates that more than 750 million pumpkins are carved into jack o' lanterns each October. While the practice brings joy to many, it created heartburn for Iowa tax officials four years ago, who were dismayed that so many people were decorating their pumpkins.

You see, Iowa (like most states) taxes retail sales but exempts groceries. Pumpkins used for decoration should have been taxed but were slipping by because they were also food. So in 2007 they sent a bulletin to retailers, reminding them to quiz customers on whether they were buying the pumpkin to eat (not taxable) or decorate (taxable):

Pumpkins: Pies and jack-o'-lanterns

The Department recently refined its position on whether pumpkins are subject to Iowa sales tax to more closely match what we believe to be their predominant use.

In the past, pumpkins were exempt from sales tax as a food (edible squash), even if they were to be later made into jack-o'-lanterns or used as decorations.

Our position now is that pumpkins are taxable if:

1. They are advertised to be used as jack-o'-lanterns/decorations, or

2. It is understood that they will be used as jack-o'-lanterns/decorations

Pumpkins are exempt in the following circumstances:

* The buyer completes a sales tax exemption certificate stating they will be used as food, or

* The pumpkins are a specific variety used to make pumpkin pies and are advertised in that way, or

* They are purchased with Food Stamps.

Retailers who sell pumpkins should keep these guidelines in mind and make any necessary changes to their tax treatment of pumpkin sales.

We shed some light on the silly Iowa rule, noting: "It's a weird tax system that taxes the same item differently depending on the buyer's intent. I'm sure Iowa pumpkin patches have better things to do than quiz their customers on future pumpkin uses."

The blogosphere picked up on our post, which led to local news coverage, and finally Iowa officials rescinded the pumpkin tax a few days later. One less silly tax thanks to our blog readers!

Subscribe to the Tax Foundation Newsletter

Follow Us

About the Tax Policy Blog

Subscribe to Tax Foundation - Tax Foundation's Tax Policy Blog The Tax Policy Blog is the official weblog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.

Monthly Archive