360° Coverage : Tax Pet Food? Even Amazon Can't Define It

1 Updates
Tax Pet Food? Even Amazon Can't Define It
Photo Credit: Forbes Business

Tax Pet Food? Even Amazon Can't Define It

Jan 2 2014, 8:38am CST | by

New Year’s Day launched the 16% pet food tax in Mexico. Half of Mexican households have pets, and low income earners are expected to be hit especially hard. Food for horses, a pet of the elite, isn’...

Filed under: news

 
 
 

34 weeks ago

Tax Pet Food? Even Amazon Can't Define It

Jan 2 2014, 8:38am CST | by

New Year’s Day launched the 16% pet food tax in Mexico. Half of Mexican households have pets, and low income earners are expected to be hit especially hard. Food for horses, a pet of the elite, isn’t taxed, though that’s ostensibly because they are classed as livestock by the new law.

Americans have been taxing pet food for years, though in most states, sales tax doesn’t apply to human food. Pet food is taxed in America, but not uncooked human food. Restaurant meals and prepared takeout? Usually taxed. Keeping track of many arcane rules about what’s taxed and what isn’t can be daunting (one argument against Amazon taxes online) and leads to scary disputes.

In California, one mom and pop wholesale produce seller sold only produce. Strictly wholesale, the company delivered fruits and vegetables to city schools, hospitals, and the zoo. Aha, the zoo is a problem, said sales tax auditors. They slapped the produce seller with a crippling bill for back taxes on produce delivered to the zoo.

This produce was consumed by animals and that made the sales taxable, the state said. What’s more, because this produce company never filed sales tax returns (selling only nontaxable produce, why would it?), 8 years of taxes were due. Only 3 years would have been fair game if the company had been filing returns.

One possible way out was that the zoo had snack bars and cafeterias where produce was eaten by humans. But the wholesaler couldn’t show which carrots and bananas were consumed by people and which by animals. How could it when it just delivered the produce? So the state said it was all taxable.

Eight years of taxes, penalties and interest would wipe out the family business. So after efforts to compromise with auditors failed—this was in California after all—they went to a formal hearing before California’s five member Board of Equalization. Given the human (and animal?) interest, the produce seller invited the press.

Did you know that if you tell a supermarket checker you’re buying broccoli for your dog, the store has no way to charge you sales tax? Plus, if an animal is suitable for human consumption, the food it eats isn’t taxable. So, produce eaten by primates was taxable, but not produce eaten by goats and sheep?

Hey, some people eat snake, turtle, and game animals. Was this law cultural discrimination? “I’ve eaten snake,” admitted one of the five judges. Examples showed the law to be riven by contradictions.

That made the state’s position seem arbitrary. The press thought so too. As for the five-member Board, it looked increasingly uncomfortable about putting this mom and pop produce seller out of business. It lead to a speedy verdict for mom and pop.

Some pet owners take on the tax man too. One big pet tax victory was the Oakland, California Cat Lady who beat the IRS in a cat fight. Her tax decision said she could claim the cost of vet bills and cat food as charitable contribution deductions. Some people focus on business deductions instead.

In Seawright v. Commissioner, a married couple running a junkyard put out food to attract wild cats. The feral cats they attracted dealt with snakes and rats on the property. They made for a safer junkyard for customers, and that made cat food a business expense.

Sometimes, tax law seems to be going to the dogs.

You can reach me at Wood@WoodLLP.com. This discussion is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.

Source: Forbes Business

 
Update
1

18 hours ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

13 die of Ebola in DRC
Kinshasa, Aug 29 (IANS) A total of 13 people, including five doctors, died of Ebola virus disease in the Democratic Republic of Congo (DRC), the country's Minister of Public Health Felix Kabange told Xinhua Friday.
 
 
How birds learnt to fly
New York, Aug 29 (IANS) Birds have an innate ability to maneuver in mid-air, a talent that could have helped their ancestors learn to fly rather than fall from a perch, says a study.
 
 
Millions of mites crawling on your face right now!
New York, Aug 29 (IANS) Are you aware that your face is brimming with living mites that feed on the oil our skin secretes and hide in tiny hair follicles? And no, they are not pooping on you as they store up all the excreta until they die!
 
 
New tool maps how drug abuse affects brain
Washington, Aug 29 (IANS) In a first, researchers have developed a laser-based imaging tool to map how drug abuse disrupts blood flow to the brain.
 
 
 

Latest from the Network

Britain raises terror threat level
London, Aug 29 (IANS) British Home Secretary Theresa May Friday announced that Britain's Joint Terrorism Analysis Centre (JTAC) has changed the country's threat level from international terrorism from "substantial" to...
Read more on Politics Balla
 
Jason Segel: mum hated my nude scene
Jason Segel's mum hated his nude scene in 'Forgetting Sarah Marshall'. The 34-year-old actor has revealed that his mother failed to laugh when she first watched the scene where Jason gets naked in front of co-star...
Read more on Movie Balla
 
Filming resumes for Star Wars Episode VII
Filming for 'Star Wars Episode VII' has resumed following Harrison Ford's recovery from injury. The Hollywood icon suffered an accident on set earlier this month, which meant he had to undergo surgery on his leg and led...
Read more on Movie Balla
 
India seeks Kuwait's help over arrested Indians
New Delhi, Aug 29 (IANS) India has sought Kuwait's assistance over the arrest of some Indian nationals following a brawl in that Gulf nation. "I understand that there was a brawl with nationals of some other countries...
Read more on Politics Balla
 
Sindhu in semis at Worlds, Saina ousted (Roundup)
Copenhagen, Aug 29 (IANS) Though Saina Nehwal's campaign once again came to an end in the women's singles quarter-finals, compatriot P.V. Sindhu kept the tricolour flying high and created history by reaching the semi-...
Read more on Sport Balla
 
No facts to substantiate accusations against Russia: Lavrov
Moscow, Aug 29 (IANS/ITAR -TASS) Russian Foreign Minister Sergei Lavrov Friday said accusations against Russia of invading Ukraine have been voiced repeatedly but the US and European countries have failed to...
Read more on Politics Balla
 
Two arrested for Indian man's murder in Singapore
Singapore, Aug 29 (IANS) Two suspects have been arrested in connection with the death of a 26-year-old Indian-origin technician in Singapore's Pandan Loop area, police said Friday. Murugaiya Suresh Kumar was found...
Read more on Politics Balla
 
Britney Spears talks 'sh***y day' after split
Britney Spears has opened up about her ''sh***y day'' following her split from David Lucado. The 32-year-old pop star, who is thought to have dumped her boyfriend yesterday (08.28.14) after a video emerged of him...
Read more on Celebrity Balla
 
Justin Bieber takes Selena Gomez horseback riding
Justin Bieber took Selena Gomez horseback riding in Canada on Wednesday (08.27.14). The 20-year-old pop star - who rekindled his romance with the singer a few weeks ago - proved that their relationship was back on track...
Read more on Celebrity Balla
 
Olivia Palermo to have second wedding ceremony
Olivia Palermo is planning to have a second wedding. The 28-year-old beauty tied the knot with Johannes Huebl in front of their family and two friends at a quiet park in Bedford, New York, in June and now the couple are...
Read more on Celebrity Balla