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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’...

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29 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
10

6 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

Cambodia's Famous Battambang Circus
KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan ...
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Update
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6 weeks ago

Gold shop lost almost RM1mil

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6 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

Federal Aviation Administration Bans All US Flights To Israel
KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was reject ...
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Update
7

6 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Min ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

6 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

INDIA-CHINA-DIPLOMACY-TRADE
PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the southern states last ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

Government Weekly Cabinet Meeting
KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2 ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Ser ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

Iskandar Johor Open - Previews
JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving a ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

EurAsia Cup presented by DRB-HICOM - Day One
PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan B ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

7 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Skyway (Kide ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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