Lobster Sales - Taxable?

Every year St. Ann's Episcopal Church in Woodstock holds a fundraiser and takes orders for, and sells, lobsters. This year's price for one 1 1/3-pound lobster is $24.00, whether purchased "live" or cooked.

As I read an emailed invitation to purchase lobsters this year, I wondered whether Illinois sales tax is collected and remitted on the sales, and so I emailed the church what I thought was a nicely-worded inquiry, asking whether it collects and remits sales tax.

I was amused by the short reply, which read: "Why is it you ask?"

Of course, it really didn't matter why I was asking, but I sent back this explanation: "Food and merchandise sales in Illinois are sales-taxable, and I am interested in learning whether you collect and remit sales tax on your lobster sales. Do you?"

So far, no reply has been received. In the absence of a reply, I'll assume that sales tax is not remitted to Illinois. Or I could assume that, since I'm not a member or visitor of the church (and, thus, no Sunday contributions are at risk), their position is that it's none of my business.

But then I began to wonder at what rate sales would be taxable. Since St. Ann's handles the orders and is the middleman, they must pay for the lobsters, buying them "wholesale." Then they mark them up to $24.00 and sell them retail. Is the sales tax different on a live lobster than it is on a cooked (ready-to-eat) lobster?

I suspect the sales tax rate is different, but the tax category could get complex. Is a live lobster taxable at the full rate, like a pet or other merchandise? Or is it taxed at the "dead" rate, like a package of chicken off the shelf at your supermarket? Or, when cooked, is it taxed as prepared food, ready-to-eat, like at McDonald's?

And is the "profit" on each lobster sale considered "unrelated" income and therefore taxable income to St. Ann's Episcopal Church? Its non-profit status might protect it from paying income tax on Sunday donations, but non-profits are taxed on income "unrelated" to their established purpose for existence.

And this led me to another question. When a customer buys 3-4 lobsters for $72-96 and makes her/his check out to the Church, do you suppose s/he deducts the entire amount as a donation to the Church? (It's not.)

Or what if he buys a dozen lobsters, gets the 13th free, and makes his check out to St. Ann's for $288? Will he remember at tax time that he bought food and didn't make a "donation"?

And yet another question. Do the many lobster fundraiser "advertising" signs on lawns all over town fall within the guidelines of the Woodstock City Code?


A simple yes-or-no might have ended my curiosity process on this issue, but the question-in-reply-to-my-question and then the lack of further reply only fueled my interest.



Maybe St. Ann's just takes the sales tax out of the $24.00 and forks it over to the State...