Is the sale of ostriches, emus, and rheas exempt from Texas sales tax when raised for meat, feathers, hides, and oil?

Plain-English summary

A taxpayer asked the Comptroller whether sales tax applies to sales of ostriches, emus, and rheas -- a group of flightless birds collectively known as ratites -- which are raised for their meat, feathers, hides, and oil.

The Comptroller pointed to Rule 3.296 (Agriculture, Animal Life, Feed, Seed, Plants, and Fertilizer), which exempts from sales tax the sale of any form of animal life whose products ordinarily constitute food for human consumption. Notably, the letter states that the Comptroller's office did not necessarily agree that emus, ostriches, and rheas ordinarily constitute food for human consumption in the way that, say, cattle or poultry do. Even so, the office chose to extend the same tax treatment to these ratites as it applies to other animals when they are processed as food for human consumption.

The bottom line: sales of ostriches, emus, and rheas are exempt from Texas sales tax under these circumstances. The stub's inherited title, "Ostriches/Rheas — Food For Human Consumption," is accurate to the letter's subject matter, though the ruling body also expressly covers emus (mentioned throughout the text alongside ostriches and rheas), so this enrichment's title has been updated to "Sales of Ostriches, Emus, and Rheas Raised for Meat Are Exempt as Food-Producing Animal Life (Rule 3.296)" to reflect that all three species are addressed.

The Comptroller also cautioned that this opinion is based on the facts presented, and that different facts, though similar, might lead to different answers.

What this means for you

Ratite farmers and livestock producers

If you raise and sell ostriches, emus, or rheas -- whether for meat, feathers, hides, or oil -- sales of the live birds can qualify for the Rule 3.296 exemption for animal life whose products ordinarily constitute food for human consumption, even though the Comptroller expressed some skepticism about whether these birds are conventionally viewed as food animals. The exemption was extended based on the birds being processed as food.

Accountants and tax professionals

This letter is a useful precedent for exemption questions involving nontraditional livestock. The Comptroller's reasoning here is notable: rather than making a factual finding that ratites are commonly eaten, it extended existing exemption treatment for consistency with how other food-producing animals are treated. Keep in mind the letter's own caveat that different facts could lead to a different outcome, and that STAR letters are binding only on the taxpayer who received them.

Business owners considering diversifying into ratite farming

Before relying on this 1992 letter for a current transaction, confirm it hasn't been superseded, since agricultural exemption rules (including registration-number requirements added by later legislation) have changed over time.

Common questions

Q: Are sales of live ostriches, emus, and rheas subject to Texas sales tax?
A: No. The Comptroller ruled they are exempt under Rule 3.296, which exempts animal life whose products ordinarily constitute food for human consumption, extending the same treatment given to other food-producing animals.

Q: Did the Comptroller agree that ostriches, emus, and rheas are typically eaten as food?
A: Not exactly. The letter states the office "does not necessarily agree" that these birds ordinarily constitute food for human consumption, but chose to extend the same exemption treatment as it gives other animals processed as food.

Q: Does the exemption cover birds raised for feathers, hides, or oil rather than meat?
A: The letter describes the birds as raised for meat, feathers, hides, and oil collectively, and the exemption applies to the sale of the birds themselves when processed as food for human consumption under Rule 3.296 -- the ruling does not separately analyze feathers, hides, or oil as distinct products.

Q: Can I rely on this 1992 letter for my own ratite sales today?
A: Only the original recipient can rely on it for detrimental-reliance purposes, and the letter itself notes that different facts might lead to a different answer. Also note that Texas later required registration numbers for certain agricultural exemption claims starting in 2012, so confirm current requirements with a tax professional.

Citations and references

Statutes/Rules:

• 34 Tex. Admin. Code Rule 3.296 (Agriculture, Animal Life, Feed, Seed, Plants, and Fertilizer)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9205L1174G13

Original ruling text

ALERT: This document may be affected by changes to the Tax Code which was amended by H.B. 268, 82nd Reg. Legislative Session, 2011. The amendment required persons claiming a sales tax exemption for certain agricultural and timber products to apply for and provide a registration number issued by the Comptroller, effective 01/01/2012.

May 21, 1992

Dear **:

This is in response to our telephone conversation and your letter dated April
7, 1992.

You requested a written opinion regarding sales tax as it applies to ostriches,
emus, and rheas. The group of birds is referred to as ratites, meaning
flightless birds. The birds are raised for meat, feathers, hides, and oil.

Rule 3.296, Agriculture, Animal Life, Feed, Seed, Plants, and Fertilizer
exempts from tax the sale of any form of animal life of any kind, the products
of which ordinarily constitute food for human consumption.

Although this office does not necessarily agree that emus, ostriches, and rheas
ordinarily constitute food for human consumption, we will extend the same
treatment to them as we have other animals when processed as food for human
consumption. The sale of these birds is exempt from tax under these
circumstances.

This opinion is based on the facts presented. Different facts, though similar,
might lead to different answers. If you have any questions, feel free to write
or call me at 1-800-531-5441, extension 5-0330, or 512/463-4600.

Sincerely,

Bettie Peterson
Tax Administration Division