Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
139.010,
139.200,
139.260,
139.470,
139.480
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
131.130(1) authorizes the
Department of Revenue to promulgate administrative regulations necessary for
the administration and enforcement of all tax laws in Kentucky.
KRS 139.480
exempts specified property from sales and use taxes. This administrative
regulation establishes the sales and use tax requirements for sales to
farmers.
Section 1. Definitions.
(1) "Attachments" means tangible personal
property that:
(a) Is necessary for the
operation of farm machinery and is purchased primarily to improve efficiency to
diversify the function which the machinery is capable of performing;
and
(b) Includes replacement
attachments, or repair or replacement parts for the attachments.
(2) "Crops" means plants, trees,
or shrubs grown for sale, including corn, flowers, fruit, hay, sod, soybeans,
straw, timber, tobacco, vegetables, and wheat.
(3) "Farmer" means any person that is
regularly engaged in the occupation of:
(a)
Tilling and cultivating the soil for the production of crops as a
business;
(b) Raising livestock or
poultry, if the livestock or poultry, or the products of the livestock or
poultry, are for sale;
(c)
Producing milk for sale; or
(d)
Breeding or producing:
1. Aquatic
organisms;
2. Buffalos;
3. Cervids;
4. Llamas or alpacas; or
5. Ratites.
(4) "Farm machinery" is defined by
KRS
139.480(11).
(5) "Livestock" means animals of a kind the
products of which ordinarily constitute food for human consumption.
(6) "On-farm facility" means property used in
the pursuits provided under
KRS 139.480 as
follows:
(a) Fencing or structures
permanently affixed to or installed on the premises of the property;
(b) Improvements to real property such as
ponds;
(c) Any materials
incorporated into the construction, renovation, or repair of the fencing,
structures, or improvements described in paragraph (a) or (b) of this
subsection; and
(d) Any equipment,
machinery, or attachments including repair or replacement parts for the
equipment, machinery, or attachments used in the operation of the
facility.
(7) "Person" is
defined by
KRS
139.010(26).
Section 2. The examples of taxable and
nontaxable items contained in this administrative regulation shall be used for
illustrative purposes only and are not intended to be all inclusive.
Section 3. Farm Machinery. In addition to the
more commonly recognized items that are classified as "farm machinery", the
list provided in this section shall serve as examples of the items that shall
qualify for exemption if used exclusively and directly for farming as provided
in
KRS
139.480(11):
(1) All terrain vehicles (ATV) or utility
vehicles;
(2) Automatic or portable
feeding equipment including:
(a) Livestock
creep feeders; and
(b) Poultry
feeders;
(3) Automatic
egg gathering systems;
(4)
Automatic washers;
(5) Automatic
waterers;
(6) Brooders;
(7) Bulk tanks (mechanical);
(8) Bush hogs;
(9) Chain saws;
(10) Cleaning machinery
(mechanical);
(11) Clippers for
livestock;
(12) Coke stoves for
curing tobacco;
(13) Cooling units
or cooling fans;
(14) Egg
processing machinery;
(15) Farm
wagons;
(16) Grain or hay
elevators;
(17) Hay
mowers;
(18) Heaters
(portable);
(19)
Incubators;
(20) Insecticide
sprayers (hand-held);
(21)
Irrigation systems;
(22) Log
splitters;
(23) Milking
machines;
(24) Posthole diggers
(mechanical);
(25) Roller
mills;
(26) Seed sowers
(automatic);
(27) Shop welders or
other machinery (mechanical) used exclusively to maintain other farm
machinery;
(28) Silo unloaders
(augers);
(29) Tilt table for
livestock;
(30) Tobacco curing
machinery;
(31) Tobacco
setter;
(32) Tobacco transplant
system machinery, including:
(a) Clipping
equipment;
(b) Heating
equipment;
(c) Injector
systems;
(d) Seeding equipment;
and
(e) Ventilation equipment;
or
(33) Tractor mounted
sprayer.
Section 4.
Exempt Chemicals. In addition to more commonly recognized items that are
classified as "farm chemicals", the list provided in this section shall serve
as examples of items that shall qualify for the farm chemical exemption as
provided in
KRS
139.480(8):
(1) Adjuvant to enhance herbicide coverage of
crops;
(2) Antiseptic wipes to
clean cows' udders;
(3)
Insecticidal dipping chemicals;
(4)
Insecticidal ear tags;
(5) Lime or
hydrated lime for disinfectant;
(6)
Methyl bromide gas or similar tobacco chemicals; or
(7) Seed flow enhancers to optimize seed
planting and spacing, including talc or graphite.
Section 5. Exempt Feed. The list provided in
this section shall serve as examples of items that shall qualify for the feed
and feed additive exemptions as provided in
KRS
139.480(9):
(1) Bag or block salt;
(2) Dietary supplements as a feed
additive;
(3) Fish pellets, grain,
corn gluten, peanut hulls, soybean hulls, or distiller's grain;
(4) Milk replacer;
(5) Mineral blocks;
(6) Protein blocks;
(7) Protein supplements; or
(8) Special medicated feed
pre-mixes.
Section 6.
On-farm Facilities. The list provided in this section shall serve as examples
of items the sale or purchase of which shall qualify for the exemption provided
for all on-farm facilities under
KRS 139.480:
(1) Branding iron heaters or irons;
(2) Bucket racks;
(3) Building materials, including:
(a) Concrete;
(b) Gravel;
(c) Guttering;
(d) Insulation;
(e) Lumber;
(f) Nails;
(g) Paint;
(h) Rock;
(i) Roofing materials; or
(j) Sand;
(4) Culvert pipe;
(5) Drainage tile;
(6) Erosion mats;
(7) Farm gates;
(8) Feeding system materials or equipment,
including:
(a) Feed buckets;
(b) Feed bunks for farm wagons;
(c) Hoses;
(d) Nozzles;
(e) Pipelines;
(f) Round bale feeders;
(g) Salt or mineral feeders; or
(h) Tubes;
(9) Fencing materials, including:
(a) Cattle guards;
(b) Fence chargers;
(c) Insulators or other components used in an
electrical fence system;
(d)
Planks;
(e) Posts;
(f) Staples; or
(g) Wire;
(10) Handling facilities, including:
(a) Corral panels, chutes, or
sweeps;
(b) Farrowing
crates;
(c) Headgates; or
(d) Holding crates or hutches;
(11) Insect control
(electric);
(12) Livestock
oilers;
(13) Manure pit for
livestock;
(14) Pond
sealers;
(15) Silos, silo covers,
or silage covers;
(16) Water
hydrants or water tanks; or
(17)
Water pipe including plastic or other material.
Section 7. Packaging Materials. The list
provided in this section shall serve as examples of items the sale or purchase
of which shall be exempt from sales and use tax if used in the packaging of
products for sale, in addition to the exemption provided for twine and wire
used for baling hay and straw in
KRS
139.480(26):
(1) Bags or sacks;
(2) Baskets;
(3) Crates;
(4) Net Wrap; or
(5) Shrink Wrap.
Section 8. Farm Work Stock. The list provided
in this section shall serve as examples of farm work stock the sale or purchase
of which shall be exempt from sales and use tax as provided in
KRS
139.480(6):
(1) Donkeys or burros;
(2) Draft horses;
(3) Guard dogs, including the Pyrenees or
Polish Tatra breeds, to protect sheep, goats, or other livestock;
(4) Herd dogs for herding sheep, cattle, or
other livestock;
(5) Jacks;
or
(6) Mules.
Section 9. Attachments, Repair and
Replacement Parts.
(1) Attachments sold or
purchased for use on farm machinery which are necessary to the operation of the
farm machinery shall be exempt from sales and use tax. The list provided in
this subsection shall serve as examples of items of sale or purchase of which
shall be exempt from sales and use tax:
(a)
Dual wheel assemblies;
(b)
Hitches;
(c) Hydraulic
systems;
(d) Water tanks;
or
(e) Weights.
(2) Repair and replacement parts
sold or purchased for use on farm machinery which are necessary to the
operation of the machinery shall be exempt from sales and use tax. The list
provided in this subsection shall serve as examples of items the sale or
purchase of which shall be exempt from sales and use tax:
(a) Batteries;
(b) Bolts;
(c) Chain saw repair parts;
(d) Cutting parts;
(e) Fan belts;
(f) Farm machinery filters;
(g) Miscellaneous motor repair
parts;
(h) Mufflers;
(i) Plow points;
(j) Spark plugs;
(k) Springs;
(l) Tires; or
(m) V-belts.
Section 10. Taxable Items. The list provided
in this section shall serve as examples of items commonly used on farms, the
sale or purchase of which shall not be exempt from the sales or use tax as
provided by
KRS 139.480:
(1) Hand tools or wholly hand-operated
equipment, including:
(a) Axes;
(b) Barn brooms;
(c) Barn forks;
(d) Brooms;
(e) Drench guns;
(f) Grease guns;
(g) Hoes;
(h) Jacks (manual or electronic);
(i) Ladders;
(j) Pitchforks;
(k) Pliers;
(l) Post hole diggers (manual);
(m) Rakes;
(n) Shovels;
(o) Tobacco balers (hand operated);
(p) Wheelbarrows; or
(q) Wrenches;
(2) Accessories not essential to the
operation of the farm machinery except if sold as a part of an assembled unit,
including:
(a) Air conditioning
units;
(b) Cabs;
(c) Canopies;
(d) Cigarette lighters;
(e) Deluxe seats;
(f) Lubricators;
(g) Radios;
(h) Seat cushions or covers; or
(i) Tool or utility boxes;
(3) Miscellaneous equipment,
materials, or supplies, including:
(a)
Antifreeze, oil, grease, lubricant, hydraulic fluid, or transmission
fluid;
(b) Bedding materials
including:
1. Chicken bedding;
2. Chicken litter;
3. Straw;
4. Sawdust; or
5. Wood shavings;
(c) Bird seed;
(d) Bromo gas applicators;
(e) Bumper hitch trailers;
(f) Calcium chloride;
(g) Castrators or elastrator bands or
rings;
(h) Chains;
(i) Charcoal for cistern
filtration;
(j) Chicken transport
cages;
(k) Coke for curing
tobacco;
(l) Copper
sulphate;
(m) Dehorners;
(n) Dog food;
(o) Feed for work stock animals;
(p) Identification tags;
(q) Lawn or garden equipment, including:
1. Push mowers;
2. Riding lawn mowers;
3. Rotor tillers;
4. Weed eaters; or
5. Zero turn mowers;
(r) Livestock oil unless containing
insecticide;
(s) Milk cans, milk
strainers, or milk storage tanks;
(t) Rope;
(u) Snaps or washers;
(v) Tobacco canvas or other plant bed
covers;
(w) Tobacco knives, tobacco
spears, or tobacco sticks;
(x)
Tobacco transplant system materials, including:
1. Plastic;
2. Trays; or
3. Ventilation curtains.
(y) Tractor paint;
(z) Truck batteries and truck tires;
or
(aa) Work shoes or boots, work
clothes, or safety goggles;
(4) Items sold or purchased for use in
raising, feeding, showing, exhibiting, or breeding of horses except water as
provided in
KRS
139.470(12);
(5) Items sold or purchased for use in the
raising and keeping of bees;
(6)
Medicines, vaccines, vitamins, or wormers; or
(7) Veterinary instruments, including:
(a) Needles;
(b) Operating tables; or
(c) Syringes.
Section 11. Exemption Certificates.
(1) A farmer shall issue a Farm Exemption
Certificate, Form 51A158, or a Streamlined Sales and Use Tax Agreement -
Certificate of Exemption, Form 51A260, for the exempt purchase of tangible
personal property other than tangible personal property referenced in
subsection (2) of this section.
(2)
(a) A farmer shall issue an On-farm
Facilities Certificate of Exemption for Materials, Machinery and Equipment,
Form 51A159, for the exempt purchase of tangible personal property for
incorporation into the construction, repair, or renovation of on-farm
facilities exempt under the provisions of
KRS
139.480.
(b) A farmer shall issue a separate,
individual certificate for new construction, repairs, or renovations. Unless
the certificate has an expiration date when submitted jointly with a
contractor, the certificate shall remain effective for each project type (new
construction, repairs, or renovations) until the purchaser notifies the seller
in writing that it is no longer valid.
(3)
(a) A
contractor may jointly execute an On-farm Facilities Certificate of Exemption
for Materials, Machinery, and Equipment, Form 51A159, with a farmer for
building materials, machinery, and equipment that are for incorporation into
the construction, repair, or renovation of an on-farm facility.
(b) A contractor shall not use the
certificate for the purchase, rental, or lease of construction equipment,
consumable supplies, or other tangible personal property that is not for
incorporation into the on-farm facility.
(c) A jointly executed On-farm Facilities
Certificate of Exemption for Materials, Machinery, and Equipment, Form 51A159,
with a contractor shall be acceptable only for purchases made for periods
within the effective dates indicated on the certificate at the time of
purchase.
(d) A contractor shall
jointly execute a new certificate with a farmer for additional purchases of
materials, machinery, or equipment required for the same project after the
initial expiration date or for additional projects.
Section 12. Service Providers.
(1) Persons engaged in spraying fertilizer,
hauling agricultural lime, or providing other services to persons regularly
engaged in farming shall not qualify for the farm machinery
exemption.
(2) The service provider
shall not execute an exemption certificate on behalf of the farmer for the
purchase of fertilizer, agricultural lime, or other tangible personal property
used to perform the service.
(3)
Services otherwise treated as landscaping services pursuant to
KRS
139.200(2)(g), including
fence clearing, mowing, spraying, and tree trimming provided to a farmer where
the service is performed on land that is regularly used in the business of
farming shall not be subject to sales tax.
Section 13. Non-taxable Service and
Installation Labor. If installing or applying property that is not subject to
sales tax, charges for labor or services to install or apply the property shall
also not be subject to sales tax. This treatment shall include charges for the
installation or repair of tax-exempt farm machinery and any tax-exempt
attachments, repair, or replacement parts thereto.
Section 14.
(1) This administrative regulation shall
replace Revenue Policies 51P090, 51P100, 51P105, 51P120, 51P130, 51P135 and
51P360.
(2) Revenue Policies
51P090, 51P100, 51P105, 51P120, 51P130, 51P135 and 51P360 are hereby rescinded
and shall be null, void, and unenforceable.
STATUTORY AUTHORITY:
131.130(1)