Which fishing baits are exempt from Texas sales tax as perishable bait, and which baits are still taxable?

Subject

Bait — Fishing Bait — Perishable And Exempt (Worms, Minnows, Shrimp, Squid, Water Dogs, Blood Baits, Dough, Cheese Balls) And Taxable (Plastic Worms, Artificial Flies)

Plain-English summary

A taxpayer wrote to the Comptroller asking for information on the perishable fishing bait exemption and what the state considers to be perishable fishing bait. The Comptroller answered that sales tax is no longer due on sales of perishable fishing bait.

The letter lists what counts as perishable bait -- "but is not limited to" -- worms, minnows, water dogs, crawfish, crawdads, live shrimp, frozen shrimp, frozen shad, frozen squid, blood baits, and crickets "and other similar baits." It also draws the line on what is still taxable: fishing lures, artificial flies, plastic worms, fish attractants, or commercially prepared artificial baits.

Because the exemption was new relief, the letter addresses refunds too: fishermen who have receipts showing sales tax paid on perishable bait within the last four years may request a refund from their bait suppliers. After refunding the tax to customers, bait suppliers may then request a refund or credit from the Comptroller's office, or adjust a current return to reflect the taxes refunded.

The letter closes by inviting the taxpayer to send in a list and description of any other baits sold that don't clearly fall into either category, so the Comptroller's office can determine their taxability. As with other letter rulings, the opinion is based on the facts presented, and different facts could produce a different result.

What this means for you

Bait shops and fishing bait suppliers

Stop charging sales tax on perishable bait -- worms, minnows, water dogs, crawfish, crawdads, live or frozen shrimp, frozen shad, frozen squid, blood baits, crickets, and similar perishable baits are exempt. Keep charging sales tax on fishing lures, artificial flies, plastic worms, fish attractants, and commercially prepared artificial baits, since those remain taxable. If a customer shows a receipt for sales tax paid on perishable bait within the last four years, you may refund that tax to them and then seek a refund or credit from the Comptroller, or adjust a current return to reflect the refunded tax.

Fishermen and retail customers

If you paid sales tax on perishable bait (worms, minnows, shrimp, squid, water dogs, blood baits, crickets, etc.) within the last four years, you can go back to the supplier with your receipt and request a refund of that tax.

Accountants and tax professionals advising bait or tackle retailers

When classifying a retailer's fishing-bait inventory, sort items into the two categories the letter draws: perishable bait (exempt) versus artificial/manufactured bait like lures, flies, plastic worms, and prepared artificial baits (taxable). For any bait product that doesn't clearly fit either bucket, the letter's own suggestion is to submit a list and description to the Comptroller's office for a taxability determination.

Common questions

Q: Is sales tax due on perishable fishing bait in Texas?
A: No. The letter states sales tax is no longer due on sales of perishable fishing bait.

Q: What counts as perishable bait under this ruling?
A: The letter lists, without limitation: worms, minnows, water dogs, crawfish, crawdads, live shrimp, frozen shrimp, frozen shad, frozen squid, blood baits, crickets, and other similar baits.

Q: What bait is still taxable?
A: Fishing lures, artificial flies, plastic worms, fish attractants, and commercially prepared artificial baits are not perishable bait and remain taxable.

Q: Can a fisherman get a refund for sales tax already paid on perishable bait?
A: Yes. Fishermen with receipts showing sales tax paid on perishable bait within the last four years may request a refund from their bait suppliers.

Q: What does a bait supplier do after refunding tax to a customer?
A: The supplier may request a refund or credit from the Comptroller's office, or adjust a current return to reflect the taxes refunded.

Q: What if a bait doesn't clearly fall into either the exempt or taxable list?
A: The letter invites the taxpayer to send in a list of the baits and a brief description so the Comptroller's office can determine their taxability.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9609L1437G07

Original ruling text

September 18, 1996

Dear ***:

This is in response to your request for information on
the perishable fishing bait exemption and what the state considers to be
perishable fishing bait.

Sales tax is no longer due on sales of perishable
fishing bait. Fishermen who have receipts for sales tax they have paid on
perishable bait within the last four years may request a refund from their bait
suppliers. After refunding the tax to their customers, bait suppliers may
request a refund or credit from this office or may adjust a current return to
reflect the taxes refunded.

Perishable bait includes, but is not limited to: worms,
minnows, water dogs, crawfish, crawdads, live shrimp, frozen shrimp, frozen
shad, frozen squid, blood baits, crickets and other similar baits. Perishable
bait does not include fishing lures, artificial flies, plastic worms, fish
attractants, or commercially prepared artificial baits. These examples should
give you a good idea of what is exempted and what is still taxable. If you
sell other baits that are not covered in the two categories above, feel free to
send in a list of the baits and a brief description (if not evident from the
name) and we will determine their taxability.

This opinion is based on the facts presented. Other facts though similar
may provide a different result.

You may call me toll-free at 1-800-531-5441, extension 3-4502. The direct
line is 512/463-4502. You may also write to Tax Policy Division, Comptroller
of Public Accounts. My Internet address is: [email protected].

Sincerely,

Gilbert Zamora
Tax Policy Division

NOTE: Previous Accession Number 9609689L