Eaters are savers, while carvers are payers, Iowa says
Iowa's new policy taxing pumpkins that will be used as decorations is squashing growers' spirits.
By KEN FUSON
Register Staff Writer
October 31, 2007
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."
Other Iowa pumpkin sellers also expressed confusion about the new policy. Some, like Carroll, a former state representative, said they were unaware of it. A few said that they have been charging the tax this Halloween season and that few customers have complained. No one is asking customers to fill out the tax-exemption form.
For the most part, the pumpkin sellers sounded as though they would rather see Freddy Krueger in their backyard tonight than get on the revenue department's bad side by complaining.
"Every pumpkin person I've talked to is really nervous about it," one seller said.
Kautz, who has owned the Buffalo Pumpkin Farm for seven years, said customers would tell him to mind his own business if he asked them what they intended to do with their pumpkins.
He was particularly dismayed with the notion of requiring customers to fill out a form verifying that they planned to eat the pumpkins they were buying.
"It's another crazy, crazy, stupid thing," he said.
Kautz said he learned of the policy change a week before he opened. He said he will estimate how many pumpkins were bought for nonfood purposes and then will send the tax on that amount to the revenue department.
"It gets unfeasible for people to have small businesses," he said.
Chris Friesleben, a spokesman for Hy-Vee, said a memo was sent to stores about three weeks ago, telling managers to collect the sales tax on pumpkins.
"If we advertise that pumpkins are used primarily for decorative purposes, then we have to tax them as such," she said. "If we advertise them as edible products, then we do not have to tax them."
Friesleben said she doubts that any customers have requested - or have been asked - to fill out the tax-exemption form.
Mulvey said department officials don't know how much extra revenue to expect from the pumpkin tax.
Dustin Vande Hoef, communications director for the Iowa Department of Agriculture and Land Stewardship, said 839 acres of pumpkins were harvested, with sales of about $1.4 million, in Iowa in 2000, the last year for which statistics are available. A survey in 2004 found about 250 pumpkin producers in the state.
Nationally, U.S. pumpkin sales in 2006 were valued at $101.3 million, with 90 percent of the country's pumpkins grown within a 90-mile radius of Peoria, Ill.
Mulvey said the revenue department will work with pumpkin growers to answer their questions.
"Whenever you switch gears like this, there's always a learning curve," she said.
In the meantime, pumpkin sales end today at Carroll's Pumpkin Farm, the 17th year the family has operated the business. Danny Carroll sounded as though it would require more than a bag of Halloween candy and popcorn balls to improve his mood.
"The government took another bite out, along with Mother Nature and the insurance companies," he said. "It's discouraging."
Reporter Ken Fuson can be reached at (515) 284-8501 or [email protected]
Iowa's new policy taxing pumpkins that will be used as decorations is squashing growers' spirits.
By KEN FUSON
Register Staff Writer
October 31, 2007
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."
Other Iowa pumpkin sellers also expressed confusion about the new policy. Some, like Carroll, a former state representative, said they were unaware of it. A few said that they have been charging the tax this Halloween season and that few customers have complained. No one is asking customers to fill out the tax-exemption form.
For the most part, the pumpkin sellers sounded as though they would rather see Freddy Krueger in their backyard tonight than get on the revenue department's bad side by complaining.
"Every pumpkin person I've talked to is really nervous about it," one seller said.
Kautz, who has owned the Buffalo Pumpkin Farm for seven years, said customers would tell him to mind his own business if he asked them what they intended to do with their pumpkins.
He was particularly dismayed with the notion of requiring customers to fill out a form verifying that they planned to eat the pumpkins they were buying.
"It's another crazy, crazy, stupid thing," he said.
Kautz said he learned of the policy change a week before he opened. He said he will estimate how many pumpkins were bought for nonfood purposes and then will send the tax on that amount to the revenue department.
"It gets unfeasible for people to have small businesses," he said.
Chris Friesleben, a spokesman for Hy-Vee, said a memo was sent to stores about three weeks ago, telling managers to collect the sales tax on pumpkins.
"If we advertise that pumpkins are used primarily for decorative purposes, then we have to tax them as such," she said. "If we advertise them as edible products, then we do not have to tax them."
Friesleben said she doubts that any customers have requested - or have been asked - to fill out the tax-exemption form.
Mulvey said department officials don't know how much extra revenue to expect from the pumpkin tax.
Dustin Vande Hoef, communications director for the Iowa Department of Agriculture and Land Stewardship, said 839 acres of pumpkins were harvested, with sales of about $1.4 million, in Iowa in 2000, the last year for which statistics are available. A survey in 2004 found about 250 pumpkin producers in the state.
Nationally, U.S. pumpkin sales in 2006 were valued at $101.3 million, with 90 percent of the country's pumpkins grown within a 90-mile radius of Peoria, Ill.
Mulvey said the revenue department will work with pumpkin growers to answer their questions.
"Whenever you switch gears like this, there's always a learning curve," she said.
In the meantime, pumpkin sales end today at Carroll's Pumpkin Farm, the 17th year the family has operated the business. Danny Carroll sounded as though it would require more than a bag of Halloween candy and popcorn balls to improve his mood.
"The government took another bite out, along with Mother Nature and the insurance companies," he said. "It's discouraging."
Reporter Ken Fuson can be reached at (515) 284-8501 or [email protected]
