Sales Tax Slice: How Much Sales Tax Will Your True Love Pay for a Partridge in a Pear Tree?


Smaller Swans!

In honor of the rapidly approaching Yuletide, PNC Bank recently published its annual Christmas Price Index. The index shows the current cost for each of the gifts mentioned in the classic holiday song “The Twelve Days of Christmas.” Thinking about the variation in swan pricing over the last decade left the sales tax nerds at Bloomberg Tax (myself included) wondering how much tax your true love might owe if he or she decided to go all out on a Twelve Days of Christmas-style gift.

The classic list includes a lot of birds: French hens, calling birds, geese (a-laying), turtle doves, swans (a-swimming), and a partridge. In many states, whether or not the purchase of one of these birds is taxable depends on how the bird will be used. In states like Indiana, baby chicks and geese are exempt from sales tax if they are purchased to be used in the direct production of agricultural commodities, but are taxable otherwise. Maine has a similar exemption, and your poultry presents are taxable unless they are sold to produce food. In contrast, California allows a tax exemption for animals whose products ordinarily constitute food for human consumption, regardless of whether they will be directly used in agricultural production. This includes chickens (French hens), geese, and game birds like partridges and doves. However, nonfood animals, such as swans and calling birds, are subject to tax. Other states, like Kentucky, only exempt poultry when sold for use in breeding or in egg production.

Other gifts from the song—dancing ladies, leaping lords, pipers, and drummers—are most equivalent to entertainment or admissions charges for sales and use tax purposes. The taxability of charges for entertainment varies wildly from state to state. Some states, like Colorado, Illinois, and Virginia, do not impose sales tax on admissions charges, as these transactions are not considered to be a sale of tangible personal property. In other jurisdictions, such as D.C. and New York, the taxability of admissions charges depends on what type of entertainment is being presented. In both examples, watching dancing ladies at the ballet is tax-exempt, but gifting tickets to a burlesque show would trigger sales tax. A different approach is taken in Louisiana, North Carolina, and Texas, where admissions charges are generally subject to tax, but admissions charges by nonprofit organizations are exempt. Thus, an evening rocking out to your favorite rock-and-roll drummer would be taxable in those states, but listening to pipers in a nonprofit orchestra would likely be exempt.

Finally, as for the five golden rings, these would be taxable in every state imposing a sales tax. Although some states provide exemptions for sales of precious metals like gold, these exemptions do not apply once the gold has been formed into jewelry sold at retail.

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Does your state provide any tax exemptions that would apply to the gifts in “The Twelve Days of Christmas”?

Get a free trial to Bloomberg BNA Tax & Accounting's State Tax solution, a comprehensive research service that provides deep analysis and time-saving practice tools to help practitioners make well-informed decisions.