Reuters Money

What are the oddest, quirkiest and downright weirdest tax laws of 2010?

According to the Onesource Tax & Accounting unit of Thomson Reuters, some of the year’s most unusual taxes include:

Bagel tax in New York.
Florida has oranges. Wisconsin has cheese. And New York has bagels. New York residents paid approximately eight to nine cents more per bagel in 2010 because the state cracked down on tax-evading food preparers. If you buy a whole bagel and take it home with you, it is exempt from tax. However, if you purchase that same bagel and eat it at the bagel shop, you pay a sales tax on the purchase price. Happily, there’s still no eating-at-your-desk tax. The state of Washington enacted legislation in June that made candy without flour taxable. As a result, “Rainbow Whirly Pops” and “Lemon Drops” were taxable, but “Twizzlers” and “Peppermint Bark Shortbread” remained exempt. Sweeter teeth prevailed, however. The law was repealed on December 2.

Belt buckles and rubber boots in Texas.
It’s taxing to be a rancher in Texas these days. Belts are exempt from tax, but belt buckles are not. Cowboy boots and hiking boots are exempt, but rubber boots and climbing boots are taxable. Instead of “all hat, no cattle,”  watch for the “all belt, no buckle” look for those at home on the range.

Cup lids in Colorado.
Colorado eliminated an exemption for non-essential food items and packaging provided with purchased food and beverage items on March 1. Cups are considered essential, but lids are not. The message? Protect the environment. But walk very carefully.

Haunted houses in New York.
Admission to haunted houses is subject to the New York sales tax, according to this tax ruling. Hopefully, all of the state’s ghosts and goblins won’t relocate to New Jersey.

Hot air balloons in Kansas.
This one is a bit lofty: Kansas typically taxes admission to amusement, entertainment or recreation services. The question was not whether or not balloon rides are entertaining, but whether or not federal law preempts the imposition of state sales tax on sales of those rides. That’s because states and local jurisdictions are prohibited from imposing fees and charges on airlines and other airport users. State sales tax can be imposed on tethered balloon rides. But the state decided that un-tethered balloon rides (where the balloon is actually piloted by someone to land ”some distance downwind from the launching point”) would be considered carrying passengers in air commerce — and not taxable. That’s not a bad deal. Rumor has it, the seats are more comfortable and the security precautions less onerous than at the local airport, too.