Iowa's complex pumpkin policy

Eaters are savers, while carvers are payers, Iowa says

Excerpt:

The Iowa Department of Revenue, often accused of trying to squeeze blood out of turnips, is now searching for pennies in pumpkins.

A new department policy this year has made Halloween jack-o'-lanterns subject to the state sales tax, and many Iowa pumpkin growers are feeling tricked.

Is there room in the patch for both the Great Pumpkin and the tax man on this Halloween night?

"I don't mind paying taxes, but let's get real here, people," said Bob Kautz, owner of the Buffalo Pumpkin Patch in Buffalo, Ia., about eight miles west of Davenport.

Kautz was one of the few Iowa pumpkin sellers willing to talk publicly Tuesday about the new policy, which was published in the revenue department's September newsletter.

Renee Mulvey, the department's spokeswoman, said officials decided that pumpkins are used primarily for Halloween decorations, not food, and should be taxed. Previously, they had been considered an edible squash and exempted from the tax.

As a result, the department ruled that pumpkins are taxable if they are advertised for use as jack-o'-lanterns or decorations, or if it's understood that they will be used for that purpose.

Iowans planning to eat pumpkins can still get an exemption from the sales tax, if they fill out the "Iowa Sales Tax Exemption Certificate" form. Pumpkins also are exempt if they are of the specific variety used to make pies and are advertised that way. Pumpkins purchased with food stamps also are exempt.

"We made the change because we wanted the sales tax law to match what we thought the predominant use was," Mulvey said. "We thought the predominant use was for decorations or jack-o'-lanterns."

Danny Carroll, who owns Carroll's Pumpkin Farm in Grinnell with his wife, Joy, said he didn't see the newsletter because "we were working day and night to get open," so he was unaware of the policy change.

Carroll said he will have to pay the sales tax out of profits. "Essentially, they just reduced our income by 6 percent," he said. "It's too bad, but it's not surprising."

Comments: If I understand this correctly this means: If you buy it to eat it (not many people do!) it is a food (an edible squash). If you buy it to carve it (or for decoration), it is subject to sales tax. Is the issue the way it is advertised or the intent of the purchaser? One can always fill out the "Iowa Sales Tax Exemption Certificate" form! Carvers who buy with food stamps also are exempt from the tax. (I would think that someone on food stamps would have higher priority items to buy!). This reminds me of the final utility bill my daughter received when she moved from Mankato. The statement balance was $ -.01. I encouraged her to call the utility company and demand a check!