Sales and Use Tax Responsibilities of Ag-Chemical Dealers, Cooperatives, Elevators, Fertilizer Dealers
"Production of Agricultural Products" Begins With:
- Cultivation of land previously cleared for planting crops; or
- The purchase or breeding of livestock or domesticated fowl.
"Production of Agricultural Products" Ceases When:
- A product has been transported to the point where it will be sold by the producer or processed.
- Machinery and equipment used directly and primarily in the production of agricultural products
- Machinery and equipment used directly and primarily in a manufacturing process
- Replacement parts for exempt machinery and equipment
- Computers used in processing or storage of data by a commercial enterprise (farmers cannot purchase computers tax free, but an agribusiness may be eligible for exemption)
- All vehicles subject to registration
- All equipment attached to a vehicle subject to registration
- Labor to repair exempt machinery and equipment
- Parts not separately itemized from taxable labor
- Grain testing
- Grain storage
- Pest eradication
Taxable vs. Exempt Examples
Example 1 - Nurse Tank (for example, an anhydrous ammonia tank)
- Taxable if attached to a vehicle subject to registration
- Exempt if drawn by a self-propelled implement of husbandry used in agricultural production.
Example 2 - Grain Vacuum Conveyor
- Taxable if used at an elevator
- Exempt if used directly and primarily on a farm in agricultural production
Example 3 - Tractor
- Exempt if used to till fields and harvest crops
- Taxable if purchased by an elevator to primarily haul grain from an unloading dock to a silo
Example 4 - Skidloader
- Exempt if primarily used in agricultural production.
A co-op uses a skidloader 60% of the time to clean the feedlot of its livestock operation. The remaining 40% is used to handle fertilizer and do utility work on the co-op premises. The skidloader is exempt because it is primarily (more than 50%) used in agricultural production.
A co-op uses a skidloader 100% of the time to load bags of seed, fertilizer, and feed on customer's trucks.