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December 19, 2014

Thomson Reuters Releases 2014's List of Quirky Sales Tax Laws

California's Artificial Snow Tax, Alaska's Space Exemption Among 2014’s Offbeat Codes

New York – The Tax and Accounting business of Thomson Reuters released today its roundup of quirky sales tax laws for 2014.

The report, which is published annually, provides a snapshot of some of the more offbeat tax code regulations that have been passed or implemented over the calendar year.

“Each state’s tax codes are a web of intricacies, and even some of the stranger codes have the potential to affect businesses both large and small,” said Carla Yrjanson, vice president of tax research and content at Thomson Reuters. “Getting a complete picture of the tax landscape is important for all business owners, even if some of these laws seem quirkier than most.”

Sample highlights from the overview report include:

  • Walking in a Taxable Wonderland: If California residents want a white Christmas, it requires artificial snow. But since this is a manmade product, it is subject to tax, unlike the real deal. According to California code, the manufacture of artificial snow at a customer's site is considered a sale of tangible personal property. The true object desired by the customer is the snow, and not the service of making the snow, making it a product subject to sales tax.
  • Space - Alaska’s Untaxable Frontier: Alaska has created a blanket sales and use tax exemption for goods and services related to space flight, as well as any tangible personal property (TPP) that is launched, or intended to be launched, into space, regardless of whether it returns to Earth. Thus, an elegant Alaskan tax dodge involves telling Amazon to ship all your purchases via low-Earth orbit.
  • Washington Denies Marijuana Food and Agriculture Tax Exemption: Even though Washington voters legalized the recreational use of marijuana, recent tax law written by the state’s Department of Revenue intends to remove any economic incentives to buy or cultivate the product. Washington regulators have declared that, for sales tax purposes, marijuana is neither a food ingredient nor an agricultural product. As a food ingredient or agricultural product, it would have enjoyed an exemption from sales tax. Instead, it is subject to not only sales tax, but also a 25 percent excise tax at wholesale and retail.
  • Tax Holidays for Health, But Not for College Meal Plans: In North Carolina, college students are now required to pay sales tax on university meal plans, making the pitfalls of the dreaded “freshman fifteen” even more painful. But if you’re headed back to Washington, DC for winter break, don’t worry. Personal trainers hired by an individual in the District are not subject to tax if separately stated from taxable charges at the time of transaction.

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