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. 13. 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 equipment and supplies that will be used both on and off the applicant’s farm do not qualify for the exemption. 14. If a farmer is renovating a building for farm animals, are the purchases of materials for this project exempt from sales and use taxes? Yes. Lumber, hardware
