Was ethylene gas used to accelerate fruit ripening exempt from Florida sales and use tax as a pesticide or packaging material?

Plain-English summary

Florida ruled that ethylene gas qualified for the agricultural pesticide exemption if the product was registered as a plant regulator by the Florida Department of Agriculture and Consumer Services. Plant regulators fell within Florida's statutory definition of “pesticide,” and section 212.08(5)(a) exempted pesticides used on crops or groves.

The taxpayer processed bananas and oranges for human consumption by exposing the peel to ethylene gas in an enclosed environment. The gas accelerated ripening and changed the peel's color.

Registration as a plant regulator was the condition

Section 487.021(51) defined a plant regulator as a substance intended, through physiological action, to accelerate or retard growth or maturation or otherwise alter the behavior of crop plants or their produce.

Section 487.021(49) included substances intended for use as plant regulators within the definition of pesticide. The Department relied on information from the Florida Department of Agriculture and Consumer Services that ethylene products registered as plant regulators carried directions for postharvest use on citrus, tomatoes, and other agricultural crops.

Florida therefore made the exemption conditional: if the taxpayer's ethylene product was registered as a plant regulator, it qualified for the pesticide exemption.

Florida did not decide the packaging theory

The taxpayer had asked whether ethylene gas was exempt as packaging material, arguing that fruit peel was part of the product's packaging and was not consumed by the final user.

The revised advisement reached the exemption through the pesticide provisions instead. It expressly stated that it would not address whether ethylene gas was packaging material.

This was a revised advisement

The Department had first issued TAA 04A-031 on April 27, 2004. After further consideration, it replaced that response with revised TAA 04A-031R dated July 30, 2004.

What this means for you

Fruit processors and produce businesses

The ruling turns on the product's official registration, not simply on the fact that ethylene promotes ripening. Confirm that the specific product is registered as a plant regulator and that its labeled use matches the agricultural use being claimed.

Sellers of agricultural chemicals

Keep registration and product-label records supporting plant-regulator status. The advisement did not create a blanket exemption for every ethylene product.

Accountants and tax professionals

Ground the exemption in the pesticide and plant-regulator statutes addressed by the revised ruling. Do not treat TAA 04A-031R as authority that fruit peel or ethylene gas is packaging material; the Department left that question unresolved.

Common questions

Q: Is every purchase of ethylene gas exempt?
A: No. The ruling required the taxpayer's product to be registered by the Florida Department of Agriculture and Consumer Services as a plant regulator.

Q: Why did a ripening agent count as a pesticide?
A: Florida's statutory pesticide definition included substances intended for use as plant regulators.

Q: What is a plant regulator?
A: The cited statute covered substances that physiologically accelerate or retard growth or maturation, or otherwise alter crop plants or their produce, subject to listed exclusions.

Q: Did Florida accept the packaging-material argument?
A: The Department did not decide it.

Citations and references

• Fla. Stat. § 212.08(5)(a) — exemption for pesticides and specified agricultural chemicals used on crops or groves
• Fla. Stat. § 487.021(49) — pesticide definition includes substances intended for use as plant regulators
• Fla. Stat. § 487.021(51) — plant-regulator definition

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 04A-031R

Original ruling text

SUMMARY

QUESTION: Are ethylene gas ripening agents tax exempt?

ANSWER - Based on Facts Below: According to the Florida Department of Agriculture and Consumer Services,

ethylene products registered by it as plant regulators under Chapter 487, Florida Statutes, are labeled with directions
for post harvest use on citrus and tomatoes, as well as a variety of other agricultural crops produced by farmers. Plant

regulators are a subcategory of pesticides, which enjoy an exemption from Florida sales and use tax.

July 30, 2004

Re: Technical Assistance Advisement 04A-031R
Sales and Use Tax - Gas Used in Fruit Processing
Sections: 212.08, 487.021, F.S.

Petitioner: XXX (herein "Taxpayer")

FEI: XXX

Dear :

In response to your petition dated March 9, 2004, the Department issued Technical Assistance Advisement 04A-031,
dated April 27, 2004, pursuant to section 213.22, Florida Statutes, and Chapter 12-11, Florida Administrative Code.
After further consideration, the Department has revised its response to the questions contained in your petition. This

response constitutes Revised Technical Assistance Advisement 04A-031R.

FACTS

Your March 9, 2004, petition set forth the following facts:

[Taxpayer] is...in the business of processing fruit, specifically bananas and oranges, for human consumption. Fruit is
processed by exposing the fruit’s peel to ethylene gas within an enclosed environment, which accelerates the ripening

process and changes the color of the peel, making the product appear more attractive to the customer.

[Taxpayer] is requesting exemption from the taxation of ethylene gas used in the processing of fruit under the
[packaging] exemption as allowed by Florida law, because the peel of the fruit is a part of the product packaging and

not consumed by the final user of the product...

REQUESTED ADVISEMENT

Advice is requested whether the ethylene gas is exempt from tax as packaging material.

DETERMINATION

Section 212.08(5)(a), Florida Statutes, provides an exemption for "disinfectants, fertilizers, insecticides, pesticides,

herbicides, fungicides, and weed killers used for application on crops or groves, including commercial nurseries....'

Section 487.021(49), Florida Statutes, defines the term "pesticide" in pertinent part as follows:

"Pesticide" means any substance or mixture of substances intended for preventing, destroying, repelling, or mitigating
any insects, rodents, nematodes, fungi, weeds, or other forms of plant or animal life or viruses, except viruses,
bacteria, or fungi on or in living humans or other animals, which the department by rule declares to be a pest, and any

substance or mixture of substances intended for use as a plant regulator, defoliant, or desiccant.... (Emphasis

Supplied)

Section 487.021(51), Florida Statutes, defines the term "plant regulator" as follows:

"Plant regulator" means any substance or mixture of substances intended, through physiological action, for
accelerating or retarding the rate of growth or maturation, or for otherwise altering the behavior, of ornamental or crop
plants or the produce thereof; but does not include substances intended as plant nutrients, trace elements, nutritional

chemicals, plant inoculants, or soil amendments.

According to the Florida Department of Agriculture and Consumer Services, ethylene products registered by it as plant
regulators under Chapter 487, Florida Statutes, are labeled with directions for post harvest use on citrus and
tomatoes, as well as a variety of other agricultural crops produced by farmers. Plant regulators are a subcategory of
pesticides, which enjoy an exemption from Florida sales and use tax. Therefore, if Taxpayer's product is registered
with the Florida Department of Agriculture and Consumer Services as a plant regulator, then it qualifies for the

exemption on pesticides.

This response will not address whether ethylene gas is a packaging material.

This response constitutes a Technical Assistance Advisement under Section 213.22, F.S., which is binding on the
department only under the facts and circumstances described in the request for this advice, as specified in Section
213.22, F.S. Our response is predicated upon those facts and the specific situation summarized above. You are
advised that subsequent statutory or administrative rule changes or judicial interpretations of the statutes or rules
upon which this advice is based may subject similar future transactions to a different treatment from that which is

expressed in this response.

You are further advised that this response, your request and related backup documents are public records under
Chapter 119, F.S., and are subject to disclosure to the public under the conditions of s. 213.22, F.S. Confidential
information must be deleted before public disclosure. In an effort to protect confidentiality, we request you provide the
undersigned with an edited copy of your request for Technical Assistance Advisement, the backup material and this
response, deleting names, addresses and any other details which might lead to identification of the taxpayer. Your

response should be received by the Department within 15 days of the date of this letter.

Sincerely,

Sara D. Faulkenberry

Tax Law Specialist

Technical Assistance and Dispute Resolution

Control #60871

In response to your petition dated March 9, 2004, the Department issued Technical Assistance Advisement 04A-031,
dated April 27, 2004, pursuant to section 213.22, Florida Statutes, and Chapter 12-11, Florida Administrative Code.
After further consideration, the Department has revised its response to the questions contained in your petition. This

response constitutes Revised Technical Assistance Advisement 04A-031R.

FACTS

Your March 9, 2004, petition set forth the following facts:

[Taxpayer] is...in the business of processing fruit, specifically bananas and oranges, for human consumption. Fruit is
processed by exposing the fruit’s peel to ethylene gas within an enclosed environment, which accelerates the ripening

process and changes the color of the peel, making the product appear more attractive to the customer.

[Taxpayer] is requesting exemption from the taxation of ethylene gas used in the processing of fruit under the
[packaging] exemption as allowed by Florida law, because the peel of the fruit is a part of the product packaging and

not consumed by the final user of the product...

REQUESTED ADVISEMENT

Advice is requested whether the ethylene gas is exempt from tax as packaging material.

DETERMINATION

Section 212.08(5)(a), Florida Statutes, provides an exemption for "disinfectants, fertilizers, insecticides, pesticides,

herbicides, fungicides, and weed killers used for application on crops or groves, including commercial nurseries...."

Section 487.021(49), Florida Statutes, defines the term "pesticide" in pertinent part as follows:

"Pesticide" means any substance or mixture of substances intended for preventing, destroying, repelling, or mitigating
any insects, rodents, nematodes, fungi, weeds, or other forms of plant or animal life or viruses, except viruses,
bacteria, or fungi on or in living humans or other animals, which the department by rule declares to be a pest, and any

substance or mixture of substances intended for use as a plant regulator, defoliant, or desiccant.... (Emphasis

Supplied)

Section 487.021(51), Florida Statutes, defines the term "plant regulator" as follows:

"Plant regulator" means any substance or mixture of substances intended, through physiological action, for
accelerating or retarding the rate of growth or maturation, or for otherwise altering the behavior, of ornamental or crop
plants or the produce thereof; but does not include substances intended as plant nutrients, trace elements, nutritional

chemicals, plant inoculants, or soil amendments.

According to the Florida Department of Agriculture and Consumer Services, ethylene products registered by it as plant

regulators under Chapter 487, Florida Statutes, are labeled with directions for post harvest use on citrus and

tomatoes, as well as a variety of other agricultural crops produced by farmers. Plant regulators are a subcategory of
pesticides, which enjoy an exemption from Florida sales and use tax. Therefore, if Taxpayer's product is registered
with the Florida Department of Agriculture and Consumer Services as a plant regulator, then it qualifies for the

exemption on pesticides.

This response will not address whether ethylene gas is a packaging material.

This response constitutes a Technical Assistance Advisement under Section 213.22, F.S., which is binding on the
department only under the facts and circumstances described in the request for this advice, as specified in Section
213.22, F.S. Our response is predicated upon those facts and the specific situation summarized above. You are
advised that subsequent statutory or administrative rule changes or judicial interpretations of the statutes or rules
upon which this advice is based may subject similar future transactions to a different treatment from that which is

expressed in this response.

You are further advised that this response, your request and related backup documents are public records under
Chapter 119, F.S., and are subject to disclosure to the public under the conditions of s. 213.22, F.S. Confidential
information must be deleted before public disclosure. In an effort to protect confidentiality, we request you provide the
undersigned with an edited copy of your request for Technical Assistance Advisement, the backup material and this
response, deleting names, addresses and any other details which might lead to identification of the taxpayer. Your

response should be received by the Department within 15 days of the date of this letter.

Sincerely,

Sara D. Faulkenberry

Tax Law Specialist

Technical Assistance and Dispute Resolution

Control #60871