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Saturday, October 8, 2011

Buy Your Fruit Trees, Vegetable Transplants and Seeds in Arizona

Of course this is a bit of tongue-in-cheek for residents outside of Arizona but Arizona's law that allows its residents to buy fruit trees, vegetable transplants and seeds for personal use to be tax exempt makes alot of sense. It is food on your table (hopefully). If you are an Arizona resident, print this out and take it with you the next time you go to buy fruit trees, vegetable transplants or seeds at an Arizona garden center.


ARIZONA DEPARTMENT OF REVENUE
ARIZONA TRANSACTION PRIVILEGE TAX RULING
TPR 93-12
This substantive policy statement is advisory only. A substantive policy statement does not include internal procedural documents that only affect the internal procedures of the agency and does not impose additional requirements or penalties on regulated parties or include confidential information or rules made in accordance with the Arizona administrative procedure act. If you believe that this substantive policy statement does impose additional requirements or penalties on regulated parties you may petition the agency under Arizona Revised Statutes § 41-1033 for a review of the statement.
ISSUE:
Sales of seeds and plants.
APPLICABLE LAW:
Arizona Revised Statutes (A.R.S.) § 42-1310.01.A.35 provides an exemption from the transaction privilege tax under the retail classification for the gross proceeds of sales or gross income from sales of seeds, seedlings, roots, bulbs, cuttings and other propagative material to persons who use those items to commercially produce agricultural, horticultural, viticultural or floricultural crops in this state.
A.R.S. § 42-1310.01.A.15 provides an exemption from the transaction privilege tax under the retail classification for the gross proceeds of sales or gross income from sales of food.
A.R.S. § 42-1381.3 defines "food" to mean any food item intended for human consumption which is intended for home consumption as defined by rules and regulations adopted by the department pursuant to A.R.S. § 42-1387.
A.R.S. § 42-1387.B.3 provides that the department shall include, in the definition of food, seeds and plants used to grow food for personal consumption.
A.R.S. § 42-1301 defines "person" or "company" to include an individual, firm, partnership, joint venture, association, corporation, estate or trust, this state, a county, city, town, district other than a school district, or other political subdivision and any other group or combination acting as a unit, and the plural as well as the singular number.
RULING:
Retail sales of seeds or plants to commercial producers of plants, flowers or food crops in this state are exempt from transaction privilege tax under A.R.S. § 42-1310.01.A.35.
If seeds or plants, which were purchased for commercial production, are taken from inventory and used by the producer for a noncommercial purpose, the seeds or plants are subject to the use tax. For example: seeds are purchased to grow commercial sod. The producer uses a portion of the seed in landscaping the company's own property. The cost of the seed used by the producer is subject to the use tax.
Sales of seeds and plants to individuals to grow food for personal consumption are exempt from tax under A.R.S. § 42-1310.01.A.15. For example, the sale of an orange tree to an individual for growing fruit for his own consumption is exempt under this provision.
Sales of seeds and plants to persons for non-commercial use are subject to transaction privilege tax if the plants or seeds are not used to grow food for personal consumption. For example, the sale of flower seeds and decorative plants to an individual or to a company for home or business landscaping is taxable.
Harold Scott, Acting Director
Signed March 15, 1993


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