Were a breeder's retail sales of chinchillas and exotic birds kept as pets exempt as direct farm sales of livestock or poultry?

Plain-English summary

Florida ruled that retail sales of chinchillas and exotic birds raised and sold as pets were taxable. The breeder could not use the exemption for livestock, poultry, and other farm products sold directly by their producers.

The taxpayer bred both kinds of animals and sold them to other dealers for resale and directly to the public. The advisement's conclusion addressed the retail sales to the public.

Chinchillas were not statutory livestock

Section 212.02(29) listed equine, bovine, and swine classes, goats, sheep, mules, horses, hogs, cattle, ostriches, and other grazing animals raised for commercial purposes. The Department used the ordinary meaning of “chinchilla” as a rodent and found that it did not fit that livestock definition.

Because producing chinchillas did not make the breeder a “farmer” under the cited definition, direct-from-producer treatment did not exempt the retail proceeds.

Pet exotic birds were not poultry

The Department used the ordinary meaning of poultry as domesticated birds raised for eggs or meat. The taxpayer's exotic birds were raised and sold as pets, so they were neither poultry nor livestock for this exemption.

Florida strictly construed the exemption and resolved doubt in favor of taxation. The retail sales price of both the chinchillas and exotic birds was therefore subject to sales tax.

What this means for you

Animal breeders and exotic-pet sellers

Breeding an animal does not automatically make its sale an exempt farm-product sale. Species and the purpose for which the animal is raised matter under the statutory definitions.

Pet stores and animal dealers

The ruling addressed the breeder's retail sales to the public. The facts also mentioned sales to dealers for resale, but the conclusion did not classify those resale transactions.

Accountants and tax professionals

Start with the express livestock, farmer, poultry, and farm-product provisions. The Department emphasized that tax exemptions are narrowly construed.

Common questions

Q: Were pet chinchilla sales exempt as livestock?
A: No. The Department classified chinchillas as rodents outside the statutory livestock definition.

Q: Were exotic pet birds exempt as poultry?
A: No. The ruling treated poultry as domesticated birds raised for eggs or meat, not exotic birds raised as pets.

Q: Did being the breeder make the seller a farmer?
A: Not for these animals and this exemption.

Q: Did the ruling decide sales to other dealers for resale?
A: No express conclusion was given for those transactions; the holding stated that retail sales were taxable.

Citations and references

• Fla. Stat. § 212.02(28), (29) — farmer and livestock definitions
• Fla. Stat. § 212.05 — tax on retail sales of tangible personal property
• Fla. Stat. § 212.07(5)(a) — direct producer sales of livestock, poultry, and farm products
• Fla. Stat. § 212.08(13) — only express exemptions apply
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 04A-022

Original ruling text

SUMMARY

QUESTION: Whether sales of chinchillas and exotic birds are
exempt from sales tax when sold by the breeder or producer
of such animals.

ANSWER: - Based on Facts Below Pursuant to Section
212.07(5)(a), F.S., the gross proceeds derived from the
sale in this state of livestock, poultry, and other farm
products direct from the farm are exempted from the tax
levied by Chapter 212, F.S., provided such sales are made
directly by the producers. Chinchillas and exotic birds
are neither poultry nor livestock, and the breeders or
producers of such animals are not farmers. Therefore, the
gross proceeds from the sale of these animals are not
exempt from sales tax.

Mar 25, 2004

Re: Technical Assistance Advisement 04A-022
Sales and Use Tax - Sale of Chinchillas and Exotic Birds
XXX ("Taxpayer")
Florida Sales Tax Number: XXX
Sections 212.02, 212.05, and 212.08, F.S.

Dear :

This response is in reply to your letter to the Department,
dated February 10, 2004, requesting the Department's issuance of
a Technical Assistance Advisement ("TAA") pursuant to s. 213.22,
F.S., and Chapter 12-11, F.A.C., regarding the referenced matter
and parties. An examination of your petition has established
that you have complied with the statutory and regulatory
requirements for issuance of a TAA. Therefore, the Department
is hereby granting your request for issuance of a TAA.

ISSUE

The issue in this advisement is whether chinchillas and exotic
birds are livestock and exempt from sales tax when sold directly
by the producer or breeder of such animals.

FACTS

As stated in your request for advisement, Taxpayer is a breeder
of exotic birds and chinchillas and sells these animals both for
resale to other dealers and directly to the general public. The
animals are raised and sold as pets. You state that the
Taxpayer, as a breeder or producer of the animals it sells,
should be exempt from the requirement of collecting sales tax on
all of its sales, as the animals produced meet the definition of
"livestock," as that term is defined in Section 212.02(29), F.S.

LAW AND DISCUSSION

Pursuant to Section 212.05, F.S., every person is exercising a
taxable privilege who engages in the business of selling
tangible personal property at retail in this state. For the
exercise of such privilege, tax is levied on each taxable
transaction or incident at the rate of 6 percent of the sales
price of each item or article of tangible personal property when
sold at retail in this state. As provided in Section
212.08(13), F.S., no transactions shall be exempt from the tax
imposed by this chapter except those expressly exempted herein.

Pursuant to Section 212.07(5)(a), F.S., the gross proceeds
derived from the sale in this state of livestock, poultry, and
other farm products direct from the farm are exempted from the
tax levied by Chapter 212, F.S., provided such sales are made
directly by the producers.

The term "livestock" is defined in Section 212.02(29), F.S., and
includes all animals of the equine, bovine, or swine class,
including goats, sheep, mules, horses, hogs, cattle, ostriches,
and other grazing animals raised for commercial purposes. The
term "farm products" is not defined in Chapter 212, F.S., but a
"farmer" as defined in Section 212.02(28), F.S., means a person
who is directly engaged in the business of producing crops,
livestock, or other agricultural commodities. The term

includes, but is not limited to, horse breeders, nurserymen,
dairy farmers, poultry farmers, cattle ranchers, apiarists, and
persons raising fish.

In construing statutory exemptions from tax, the Department must
follow the fundamental rule of statutory construction
established by the Florida Supreme Court, which mandates that
exemptions from, or exceptions to, taxing statutes are special
privileges granted by the legislature and must be strictly
construed, "with any doubt being resolved in favor of the
state." State v. Dickinson, 286 So.2d 259 (Fla. 1974).

The general rule of statutory interpretation is that common
words used in a statute are to be given their plain and ordinary
meaning, unless it appears that the words are being used in a
technical sense. See, State v. Tunnicliffe, 124 So. 279, 281
(Fla. 1929); Gasson v. Gay, 49 So.2d 525, 526 (Fla. 1950); State
v. Egan, 287 So.2d 1, 4 (Fla. 1973); and Parker v. State, 406
So.2d 1089, 1091 (Fla. 1981).

A chinchilla is defined in the Merriam-Webster Dictionary as a
"rodent." The term "rodent" as defined by Merriam-Webster means
a small mammal with sharp front teeth used for gnawing. Under
this plain and ordinary meaning, chinchillas are not included in
the definition of livestock, as that term is defined in Section
212.02(29), F.S.; nor are the producers or breeders of
chinchillas included in the definition of a farmer, as that term
is defined in Section 212.02(28), F.S. Therefore, the gross
proceeds from the retail sale of chinchillas by a breeder or
producer are not exempt from sales tax.

Our position is the same with respect to the sale of exotic
birds. As defined in the Merrimam-Webster Dictionary, the term
"poultry" means domesticated birds raised for their eggs or
meat. Exotic birds raised and sold as pets are neither poultry
nor livestock, and the breeders or producers of such birds are
not farmers. Therefore, the gross proceeds from the retail sale
of exotic birds are not exempt from sales tax.

CONCLUSION

The gross proceeds from the retail sale of chinchillas and
exotic birds are subject to sales tax on the retail sales price
of such animals.

This response constitutes a Technical Assistance Advisement
under s. 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 s. 213.22, F.S. Our response is
predicated on those facts and the specific situation summarized
above. You are advised that subsequent statutory and
administrative rule changes or that judicial interpretations of
the statutes or rules upon which this advice is based may
subject similar future transactions to a different treatment
than 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,

Richard R. Parsons
Tax Law Specialist
Technical Assistance & Dispute Resolution
(850) 922-4838

Ctrl. No.: 58752