JOE CORBI’S WHOLESALE PIZZA, INC.

DECLARATORY ORDER

DOCKET NO. 04-30-6-0136

On October 26, 2004, the Director issued a Declaratory Order in the above-referenced case. The Petitioner is a Maryland corporation that operates a bakery that produces pizza, bread, and dessert kits. The Petitioner also distributes prepackaged cookie dough to nonprofit organizations for use as a fundraising activity. The Petitioner has a new product that is marketed as, “Crayola Pop Art Cookie Decorating Kit” (Kit) is a part of the cookie dough fundraising program. The Kit contains one tube of white icing, four tubes of writing icing in different colors, four bottles of cookie toppings, two plastic cookie cutters, four cellophane gift bags, name tags, ribbons, recipe cards, and a twistable crayon. The issue to be determined in this Declaratory Order was whether the Kits sold by the customers (nonprofit fundraisers) of the Petitioner were subject to Iowa sales tax when sold as part of a fundraising activity by the nonprofit groups.

The Kits, when sold by the Petitioner to the nonprofit fundraisers, are exempt because they are sold to the nonprofit fundraisers for resale. Consequently, they are exempt pursuant to Iowa Code section 423.2(2005) as a sale for resale.

Sales by the nonprofit fundraisers would be considered to be taxable as bundled purchases pursuant to Iowa code section 423.1(47) (2005) under the definition of “sales price”. However, the gross receipts from sales by the nonprofit fundraisers may also be exempt to the extent that proceeds for such sales are expended for a religious, charitable, or educational activity pursuant to Iowa Code section 423.3(78)(2005)