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Northwest Iowa Dairy Outlooks

A local discussion of current science and issues concerning dairying in northwest iowa

The Texas Comptroller’s office will require farmers and ranchers to acquire an agriculture sales tax exemption number after Jan. 1, 2012 if the producer claims the farm use tax exemption. House Bill 268 approved in the 2011 legislative session was put in place to address the long-time issue of how merchants can be assured that buyers actually qualify for the ag or timber sales tax exemption that they were claiming.

Currently, anyone who buys products for agricultural production only has to say they are sales tax exempt and sign a form. People who do not qualify for the exemption claim it and the retailer may end up holding the bag, or paying the sales tax when a problem arises. The new process seeks to curb the abuse, by issuing only those who qualify a unique number.

Farmers and ranchers apply to the Comptroller’s office for that unique number. That number will then be provided on an exemption certificate issued by the purchaser or retailer, assuring the retailer that the customer claiming the Texas farm sales tax exemption is indeed eligible. The retailer can retain on file that one certificate, with the new number, as verification that the purchases made by the customer qualify for exemption. It’s as simple as that.

The online application has two parts. The first is to register through “MyCPA”, which creates a secure online identification for you. Once registered, “MyCPA” will take you directly to the application, which should take about 10 minutes to complete. You will receive an ag/timber number on completion – no signature is required.

Producers can register for the number at http://www.window.state.tx.us/taxinfo/agriculture/get_ready_texas.html.

Before you begin the process producers will need the basic information about your operation, such as business name, description and address, you will need your Social Security number. Businesses registered with the Texas Secretary of State (SOS) will need to provide the file number as well.

Activities that DO NOT qualify and are not eligible for a registration number include: home gardening; horse racing, boarding or training; trail rides and zoos; florists or similar retailers who maintain plants prior to sale; wildlife management and conservation; hunting and fishing operations, including aerial hunting; predator control and/or wildlife/livestock; censuses or surveys; commercial fishing; and companion animal (pet) breeding and kennels.

A person, including a non-Texas resident, engaged in the production of agricultural or timber products for sale in the regular course of business is eligible for a registration number. This number can be used to claim an exemption from Texas sales tax on the purchase of qualifying items. Included for eligibility for registration numbers are persons in these groups: farmers and ranchers who raise agricultural products to sell to others; persons engaged in aquaculture and apiculture; (i.e. commercial fish farms or bee keepers); custom harvesters; persons engaged in agricultural aircraft operations, as defined by 14 C.F.R. Section 137.3 (crop dusting); commercial nurseries engaged in fostering growth of plants for sale (i.e., growing stock from seed or cuttings, replanting seedlings in larger containers); and, timber producers, including contract lumberjacks.

The requirement of an agricultural sales tax exemption number does not change the sales tax laws that have been in place since 1961. Only the process for claiming the exemption has changed.

While it may seem like a lot of bureaucratic red tape, remember that the agricultural sales tax exemption itself is at stake.

Abuses affected retailers who end up holding the bag and municipalities who miss out on tax receipts. This new process will protect the ag sales tax exemption—so vital to the food and fiber production in this state—without overburdening farmers, ranchers or retailers.

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