4-2-15 – Tax Department Getting Dangerously Desperate

Posted by Rob Roper

What’s more dangerous? A cornered, wounded animal, a mother protecting her young, a drowning man grasping to stay afloat, or a tax department that’s running out of money to spend? This frightening story from the Burlington Free Press, Vermont Agriculture Businesses Face Audits, Big Tax Bills, helps put some perspective on the question.

The example cited in the story is of Claussesn’s Florist and Greenhouse in Colchester. The shop collected sales tax on the flowers it sold, but apparently didn’t realize they also needed to be collecting USE tax on the dirt the flowers grow in, the plastic the flowers are wrapped in, the green Styrofoam thing the flowers are poked into….

From the article:

“They started digging out invoices and looking at products we use and all of a sudden the language of use tax came up,” Conant said.

Conant learned he would be charged use tax for the soil to grow his plants.

“I don’t understand,” Conant said. “How do you get a use tax on soil you grow your plants in when you can’t grow a plant without the soil and the plant is exempt?”

Conant told the auditors he had never paid use tax on his soil before, but was told that based on the criteria set forth in the state statute, he should have been.

“Plants are exempt, not the soil they’re grow in, not the media they’re grown in,” Conant said.

Conant asked the auditors if they thought that “when our forefathers decided to develop this criteria in Montpelier that plants were tax exempt, do you think they were thinking everything at the soil level down was taxable?”

Not our problem, came the answer, according to Conant. The plants are exempt, the soil isn’t.

As a result, Claussen’s was presented with a $200,000 back tax bill, which they have been fighting to claw down to a reasonable number. (Reasonable would be zero.)

We joke about legislators and bureaucrats riffling through the sofa cushions to find spare change, but this is what that really looks like – tearing apart small businesses through weird technicalities in tax law that cannot be defended. At least a cornered, wounded animal you can put down.

 

{ 6 comments… read them below or add one }

forbes April 2, 2015 at 10:39 pm

“” Ignorance is no exception to the law”” Got to laugh! Here is Lt. gov. Phill Scott running all over the state trying to encourage business and right behind him comes those that would be more than happy to wave good bye to you.. Only in Vermont!

Reply

Pete Gummere April 3, 2015 at 2:45 am

Oh the arrogance of bureaucrats with raw, situational power!

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Jim April 3, 2015 at 12:05 pm

He’s not alone… 13 farm equipment dealers, 2 farm equip auction companies, and several other suppliers to the “ag” & maple industry.. We stand united.. Thanks for bringing this matter to the publics attention..

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Winifred April 4, 2015 at 2:34 pm

The logic of such approaches to what can be taxed would bring us to taxation of the air we breathe, calculated by size, weight, and depth of breath taken by each citizen. If soil is to the business of agriculture then the office space is to the business of legislators: perhaps legislators could tax their office space, their desk, et cetera, as a use charge.

The saturation approach to the search for new sources of revenue through new taxes is astonishing.

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Jan van Eck April 6, 2015 at 7:35 am

The obvious solution to these absurd conflicts is to re-structure State finances to eliminate both the sales tax and the use tax. And that is actually quite a bit easier to do than you might think. If the State has an independent financing stream that sustains the State budget, then you can eliminate the entire State tax bureaucracy (saving big bucks) and all the angst and conflict, freeing the business community to do what they do best – generate new wealth and capital for investment.

Wouldn’t it be nice to live in a society where there are no sales taxes or property taxes? And if you put your mind to it, likely no income taxes either! That leaves you to contend with the federal government; unfortunately, not much hope for re-structuring there. Oh, well.

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Joe Fortner April 6, 2015 at 8:21 pm

“Should five percent appear too small,
Be thankful I don’t tax it all.”

Lennon/McCartney

Reply

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