When Iowa tax officials were looking for ways to increase revenue, they figured they would strike right at the heart of massive tax fraud: tax evasion on the sale of pumpkins.

Maybe that’s a bit overstated. But there is a new policy in Iowa this year to tax pumpkins. The decision came after department officials decided that pumpkins are used primarily for Halloween decorations (taxable in Iowa) and not food (not taxable in Iowa).

Iowans planning to eat pumpkins can still get a tax exemption if they fill out a form. That’s right. You have to fill out a form. To eat pumpkins tax-free. Way to go, Iowa! That’s efficient. I’m sure the cost of having an employee process that form wildly offsets the increased revenue from taxing pumpkins.

So how much revenue is the new tax generating? Pumpkins cost about 50 cents/pound on average nationwide. That means that a 10-pound pumpkin costs about $5.00 – the sales tax in Iowa on that pumpkin is 30 cents. If every adult in Iowa bought a 10-pound pumpkin for decoration (highly unlikely) – and not for food – the new tax would have generated $626,238 in revenue. That’s before revenue pays the folks to review those exemption forms.

Seems like a lot of bad PR and extra effort (how very bureaucratic of them) for what is likely a pittance in the Iowan coffers. What’s next? Taxing popcorn garland?

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Author

Kelly Erb is a tax attorney and tax writer.

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