Q:

What are the benefits of submitting the farm use exemption form?

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Quick Answer

Submitting the farm use exemption form provides the benefit of legally removing the obligation of a farmer to pay use tax on tangible personal property or retail services. Each state specifically defines what constitutes the kinds of tangible personal property that is exempt from use tax, providing the farmer submits a farm use exemption form.

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Full Answer

States levy use taxes on purchased items with no sales tax, such as auctioned items or items privately sold between individuals. A farm use exemption is unique in that it applies to tangible property directly associated with farming and agribusiness.

Missouri defines the sort of tangible property that exempt farmers are eligible to own without having to pay use tax. The list includes tractors and other farm machinery, but it also includes consumables, such as livestock feed, grain to be sold in a processed form, poultry bred for consumption, certain kinds of fertilizers and medicines for livestock.

Some states offer partial exemption, such as California. A partial farm use exemption applies only to state use taxes but not use taxes at the local level, which the city, county or district may potentially levy. Farmers in California who apply for farm use exemption do not pay use tax on harvesting equipment, hand farm tools, dairy production equipment, fencing or cooling equipment.

Farm use exemption forms and certificates are typically available on the state's department of revenue website, although there are exceptions.

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