It’s not very often that a legal question can be answered with specificity and certainty. So when I was asked if there was a list of items that qualified for the state sales tax exemption for agricultural purposes, I was prepared to sift through tons of research. Fortunately for us, the State Legislature did us a favor by listing these exemptions in a few statutes.
Categories of Agriculture Items Exempt
1. Livestock Feedstuffs – Commercial
The statute lists several things that are included in “livestock feedstuffs” – processed or unprocessed grains; mixed or unmixed grains; whole or ground hay; whole or ground straw; hulls, whether or not mixed with other minerals; and all food supplements, whether nutritional or medicinal, including hormones, antibiotics, vitamins, minerals and medications ingested by poultry or livestock. There is also a provision that allows for other feedstuffs to be considered based on the circumstances of the situation.
2. Ag Fertilizer and Chemicals
These products, as listed in the statute, include agricultural fertilizer and agricultural limestone. Other agricultural chemicals are also covered by the exemption. These include agricultural pesticides and herbicides used in commercial production of agricultural products, and vaccines, medications and medicinal preparations used in treating livestock and poultry being grown for commercial purposes.
3. Farm Equipment and Machinery
The statute defines “farm equipment and machinery” as implements used exclusively and directly in farming. “Farming” means the agricultural production of food or fiber as a business or the agricultural production of grass sod or nursery products as a business. Farm equipment and machinery includes “irrigation pipe used to carry water from an irrigation well to the crops produced in farming, regardless of whether the irrigation pipe is used above ground or is buried underground.” Implements used to harvest crops produced by others, such as in custom harvesting, also qualifies for the exemption. There are some types of equipment that do not qualify for the sales tax exemption. These include implements used in the production and severance of timber, motor vehicles of any type subject to registration, airplanes and hand tools.
To be able to claim the farm equipment exemption, you must make a certification that the item will be used exclusively and directly in commercial production of farm products. Often these exemptions are applied to items which will not be used exclusively in farming. The most common example of this is the purchase of an ATV that will be used for other purposes – such as for hunting, pleasure riding or residential yard work. These rules are enforced by the Department of Finance and Administration, which does check on items purchased with the exemption. It is important to be honest when claiming an exemption for an agricultural tax exemption. Violating these laws is a misdemeanor and any tax payer that wrongfully claims the farm equipment exemption will have to pay the tax along with interest and a penalty.