Does a lease of farm equipment qualify for the farmer tax exemption as well?
Yes. The lease of equipment used exclusively in agricultural production by a farmer who holds a valid farmer’s tax exemption permit is exempt from tax. Does the farmer tax exemption apply to purchases of services such as plowing, planting, harvesting or fertilizer application? No. The exemption is limited to purchases of goods. A farmer is liable for sales and use taxes on the purchase of any taxable service. Plowing, planting, harvesting, fertilizer application and other services are taxable as services to income-producing real property. If an individual operates a farm and also provides “custom hire work” such as plowing, fertilizer application or harvesting to other farmers, can he or she purchase the machinery and supplies to perform these services without paying sales tax? No. The farmer tax exemption permit may only be used to purchase equipment that will be used by a farmer for exclusive use in the production of agricultural products grown or raised by that farmer. Purchases of
