Current through Vol. 42, No. 1, September 16, 2024
(a)
Definitions. For the
purposes of this Section:
(1)
"Agricultural production" and "production of agricultural
products" is limited to what would ordinarily be considered a farming or
ranching operation undertaken for profit. The term refers to the raising of
food crops or livestock for sale. Included within the meaning of
"agricultural production" and "production of agricultural
products" are ranches, orchards, and dairies. Also included is any
feedlot operation, whether or not the land upon which a feedlot operation is
located is used to grow crops to feed the livestock in the feedlot and
regardless of whether or not the livestock fed are owned by persons conducting
the feedlot.
(2)
"Farmers" means persons engaged in agricultural production or
production of agricultural products.
(3)
"Farming" or
"ranching" means the production, harvesting or processing of
agricultural products.
(4)
"Livestock" means cattle, horses, sheep, goats, asses, mules,
swine and also chickens, turkeys, and other domesticated fowl. It also includes
American bison, emus, ostriches and llamas.
(b)
Examples of persons engaged in
farming, ranching or agricultural production. Besides the persons
defined as farmers and ranchers above, the law recognizes persons engaged in
the following types of activities, whose aim is the making of a profit, to also
be engaged in farming, ranching or agricultural production:
(1) Wholesale divisions of nurseries are
considered to be farmers and the planting, growing, cultivation and harvesting
of shrubs, flowers, trees and other plants for sale in the wholesale division
of a nursery operation are defined to be farming operations.
(2) Persons who plant, cultivate, and harvest
sod for commercial sale are also considered to be farmers.
(c)
Examples of persons who are not
engaged in farming, ranching, or agricultural production. The following
activities do not qualify as farming, ranching, or agricultural
production:
(1) Operation of commercial
greenhouses;
(2) Operation of plant
nurseries, except their wholesale divisions;
(3) Catfish raising;
(4) Ownership of livestock solely for one's
own use for pleasure riding, trail riding, performance riding, participation in
horse shows, or racing; and,
(5)
The raising of cats, dogs, other fur-bearing animals not included in the
definition of livestock, or non-domesticated fowl.
(d)
Sales of feed, fertilizers,
biologicals, and pharmaceuticals. The statute provides an exemption from
sales tax for sales of certain items, such as feed, fertilizer,
pharmaceuticals, biologicals, seeds, plants, and pesticides, when sold to a
person regularly engaged in farming or ranching, for profit, and the items are
to be used and in fact are used in agricultural production. Sales of
agricultural fertilizer, pharmaceuticals and biologicals sold to a person
engaged in the business of applying such materials on a contract or custom
basis are specifically exempted from sales and use tax.
(e)
Sales to persons other than farmers
or ranchers. Sales of tangible personal property are subject to the
sales or use tax under this rule, if the sales are to persons other than a
farmer or rancher, regularly engaged in business for profit, or if the sales
are made to a farmer or rancher, but the property is used or consumed for a
purpose other than the production of agricultural products for sale.
(f)
Sales for personal use.
Sales to a farmer or rancher of fuel, clothing, and all other tangible personal
property for personal living or human consumption or use are taxable. Sales of
tangible personal property are taxable when the property is used in producing
food or other products for personal consumption and not for sale. Similarly,
sales of seed, fertilizer, equipment, etc. to anyone for use on homes, gardens,
lawns, parks and golf courses or for use by landscape gardeners are
taxable.
(g)
Farm
machinery. Sales of farm machinery used directly on a farm or ranch in
the production of agricultural products are exempt. Such machinery is also
exempt if sold to a custom harvester, baler, producer or planter performing
service on a farm or a ranch.
(1)
"Farm
machinery" includes:
(A) Expendable
supplies, such as baling wire, and binders twine, hand tools, and implements
such as fence stretchers, picks, posthole diggers, scoops and
shovels;
(B) Lubricants for farm
machinery;
(C) Repair or
replacement parts for machinery used directly on a farm or ranch in production
of agricultural products;
(D)
Fencepost, cattle guards, gates and chutes;
(E) Buildings and structures which are
essentially an item of equipment or machinery for agricultural production if
the structure is specifically designed for such use and the structure cannot be
economically used for any other purpose, for example: an automated laying house
or farrowing house.
(2)
"Farm machinery" does not include any motor vehicle
licensed for highway use.
(h)
Exemption limited to use in
agricultural production. The fact that an item is purchased for use on a
farm or ranch, or that a piece of equipment is convenient, does not necessarily
make the purchase exempt from sales tax. The items purchased must be directly
used on the purchaser's farm or ranch in the production of agricultural
products. "To be directly used by the purchaser on a farm or ranch in the
production of food or agricultural products" requires that the property in
question must have a direct effect on the article being produced.
(i)
Examples of taxable items.
The following is a partial list of taxable items:
(1) Water supply systems for personal
use.
(2) Repair parts for all motor
vehicles (licensed with a farm tag or any other tag).
(3) Household appliances.
(4) Garden and lawn equipment.
(5) Personal apparel.
(6) Pets and their supplies.
(7) All equipment, supplies and tools to
maintain personal home and/or vehicle/ equipment storage buildings.
(8) Electricity for non-agricultural
use.
(9) LPG storage tanks for
fuels used for domestic purposes.
(10) Livestock, not including horses, but
including cattle, mules or other domestic or draft animals except those sold
for resale to a person who holds a valid sales tax permit or those sold by the
producer by private treaty or at a special livestock sale.
(11) All computers and software, except that
which is to be used directly on a farm or ranch in the production, cultivation,
planting, sowing, harvesting, processing, spraying, preservation or irrigation
of any livestock, poultry, agricultural or dairy products produced from such
lands.
(12) Home and or office
furnishings and supplies.
(13)
Groceries and purchases of meals and beverages at restaurants.
(j)
Examples of items not
commonly exempt, except when used in agricultural production. The
following items are taxable, unless used directly in agricultural production:
(1) Liquefied petroleum gas (LPG).
(2) Communication radios.
(3) Building materials, including:
(A) Roofing cement.
(B) Lumber.
(C) Electrical wiring.
(D) Nails, staples, and other
fasteners.
(k)
Examples of exempt items.
The following items are exempt if used directly in agricultural
production, or as otherwise stated:
(1)
Electric fence insulators.
(2)
Electric fence chargers.
(3) Cattle
electric water warmer & tank.
(4) Cattle water tank.
(5) Cattle squeeze chute.
(6) Welding machines and associated
equipment, including the lease or rental of both the equipment and the
cylinders used to store the gases used in welding. Welding rod, oxygen,
acetylene are exempt, providing welding machine with which they are used is
qualified for the exemption.
(7)
Sprays for control of flies & lice, insect repellent.
(8) Pinkeye patches, livestock
wormers.
(9) Disinfectants
(alcohol, iodine).
(10) Breeding
supplies (includes semen, biostate sales & liquid nitrogen for
storage).
(11) Drugs for disease or
bacteria control such as penicillin, milk fever medicines, mastitis
treatment.
(12) Supplies for
administering drugs to farm animals for production (syringes,
needles).
(13) Vaccines for
preventive disease.
(14) Bottles,
nipples & mixing containers for feeding calves.
(15) Farm tractors.
(16) Combines.
(17) Hay balers, mowers, rakes &
loaders.
(18)
Cultivators.
(19) Harrows, disks,
planters, drills.
(20) Windmills
(except for domestic use).
(21)
Spray machines.
(22) Mechanical
brush cutters, ensilage cutters.
(23) Grain grinders.
(24) Electric milking machines &
separators.
(25) Standby generators
(except those for domestic use).
(26) Silo unloaders, silage
distributor.
(27) Augers-power take
off.
(28) Bale loaders.
(29) Crust busters.
(30) Diamond packers
(31) Rotary hoes.
(32) Bulk milk tanks & pipeline
milkers.
(33) Power take off post
hole diggers.
(34) Motor chain saw
(to clear land).
(35) Repair parts
for farm equipment (includes tires, batteries, oil filters, belts, air filters
& other parts).
(36) Diesel
& special fuels (for agricultural use).
(37) Antifreeze (for agricultural
use).
(38) Oil & grease (for
agricultural use).
(39) Stock
tanks.
(40) Grain storage
bins.
(41) Stock
trailers.
(42) Wire
fencing.
(43) Fence
posts.
(44) Air conditioner (for
agricultural use).
(45) Feed
racks.
(46) Bulk feed bins &
associated equipment.
(47) Silo
loading chutes.
(48) Farm wagons,
farm plows, truck unloaders.
(49)
Fertilizer spreading equipment.
(50) All farm animals for
production.
(51) Containers used to
package farm products for sale.
(52) Cattle chutes.
(53) Hay wire or twine, hay hooks.
(54) Ear tags, neck tags for
cattle.
(55) Seeds,
plants.
(56) Fertilizers.
(57) Insecticides.
(58) Packaging materials, such as sacks,
wrappers, and crates, for use in packing, shipping or delivering of
agricultural products. This exemption shall not apply to any packaging material
which can be used more than once or which is ordinarily known as a returnable
container, except those specifically noted under 68 O.S. §
1359(3),
68 O.S. § 1359(4), and 68 O.S. § 1359(14) .
(59)
"Returnable cartons, crates,
pallets, and containers used to transport mushroom products from a farm for
resale to the consumer or processor." [ See: 68 O.S.
§
1359(14)
]
(60) Salt blocks (for
agricultural use).
(61) Irrigation
equipment (for agricultural use).
(l)
Examples not exhaustive.
Activities and items enumerated in this Section as examples and illustrations
are not intended to be exclusive or exhaustive.
(m)
Purchases of taxable personal
property or services by a contractor. Purchases of taxable personal
property or services by a contractor, as defined by 68 O.S. §
1352, are
taxable to the contractor. A contractor who performs improvements to real
property for a farmer may not purchase the tangible personal
property or services to perform the contract exempt from sales tax under the
exemption provided by statute to a farmer. However, sales of materials,
supplies, and equipment may be made exempt from sales tax to any person who has
contracted to construct facilities which are or will be used
directly in the production of any livestock. For purposes of this
subsection, "used directly in the production of any livestock"
includes facilities used in the production and storage of feed for livestock
owned by the permit holder. To receive the exemption, the contractor must
follow the applicable requirements of Section
710:65-13-17.
(n)
The exemption as it pertains to
horses, ranching, and ranches.
(1) The
exemption is allowed only to those persons breeding or raising horses for
marketing.
(2) The exemption is not
extended to persons who own horses for personal use or who are solely engaged
in activities such as boarding horses, giving riding lessons, or providing
horses for recreational riding.
(o)
The exemption as it extends to feed
and similar products for livestock, including horses. The holder of an
agricultural exemption permit may purchase generally recognized animal feeds,
stock tonics, water purifying products, stock sprays, disinfectants, and other
such agricultural supplies subject to the following limitations:
(1) The purchaser must obtain an Agricultural
Permit; and
(2) The purchaser must
follow the applicable requirements of Section
710:65-13-17.
Amended at 10 Ok Reg
3847, eff 7-12-93; Amended at 11 Ok Reg 3521, eff 6-26-94; Amended at 12 Ok Reg
2635, eff 6-26-95; Amended at 14 Ok Reg 2711, eff 6-26-97; Amended at 17 Ok Reg
2708, eff 6-25-00; Amended at 18 Ok Reg 2823, eff 6-25-01; Amended at 29 Ok Reg
542, eff 5-11-12
