A. The gross
receipts or gross proceeds derived from the sale of new and used farm equipment
and machinery is exempt from gross receipts tax.
"Farm equipment and machinery" means
agricultural implements used exclusively and directly for the agricultural
production of food or fiber as a commercial business or the agricultural
production of grass sod or nursery products as a commercial business. Farm
equipment and machinery does not include implements used in the production and
severance of timber, motor vehicles that are subject to registration,
airplanes, or hand tools.
agricultural implements are exempt provided they meet the requirements of
GR-51(C)(1) and GR-51(C)(2):
Combines, cotton pickers, cotton module builders, cotton
trailers, cultivators, discs, farm tractors, (other than garden tractors)
harrows, irrigation equipment, milking equipment including milking machines,
mechanical pickers, planters, plows, rotary hoes, sprayers, spreaders and
terrain vehicles which are not subject to licensing or registration for use on
c. Machinery and
equipment used in poultry grow-outhouses including heaters, cages, feeding
systems, storage bins for short term storage of feed, medicators, watering
systems, augers, fans and generators.
d. Egg racks, poultry loaders and module coop
systems used by egg and poultry producers in farming operations.
"Irrigation equipment" means
(i) pipes, hoses, tubing and accessories to
the pipes, hoses and tubing which deliver irrigation water from the water
source to the crops regardless of whether the equipment becomes affixed to real
(ii) pumps, gates,
and other equipment other than pipes, hoses and tubing, which is movable and
does not become affixed to real property. Irrigation equipment, other than
pipes, hoses, and tubing, which is designed or intended to be permanently
attached or incorporated into real property is not exempt.
The list of exempt items in
GR-51(B)(1)(a) is not intended to be exclusive. Other agricultural implements
may qualify for this exemption provided they meet the requirements of
GR-51(C)(1) and GR-51(C)(2).
may not be treated as tax exempt unless it is used "exclusively" in the
agricultural production of food or fiber as a business or the agricultural
production of grass sod or nursery products as a business.
a. An implement will be presumed to be used
exclusively in the agricultural production of food, fiber, grass sod, or
nursery products as a business if the implement is used on land owned or leased
for the purpose of agricultural production of food, fiber, grass sod, or
b. A person who
uses agricultural implements in the production of food, fiber, grass sod, or
nursery products primarily for his own consumption is not entitled to this
implement may not be treated as tax exempt unless it is used "directly" in the
agricultural production of food or fiber as a business or the agricultural
production of grass sod or nursery products as a business. The term "directly"
limits the exemption to the following:
those implements used in the actual agricultural production of food, fiber,
grass sod, or nursery products to be sold in processed form or otherwise at
b. Machinery and
equipment used in the agricultural production of farm products to be fed to
livestock or poultry which is to be sold ultimately in processed form at
which are not exempt include, but are not limited to, the following:
a. Containers or storage
b. Implements used in
the production or severance of timber (except as exempted by GR-51(F) of this
rule), or any motor vehicle of a type subject to registration for use on the
highway, or airplanes, or hand tools;
c. Attachments to and accessories not
essential to the operation of the implement itself (except when sold as part of
an assembled unit);
d. Items which
are incorporated into real property; and
e. Repair labor and repair parts.
f. Examples of non-exempt items include (i) a
machine owned by a commercial farmer but also used at a location other than the
farming property (such as a duck club or deer camp); (ii) a machine owned by a
commercial farmer but also used for any purpose at any time for activities
other than commercial farming, even while located at the commercial farm (such
as pleasure riding, household activities, residential yard work, gardening,
hunting, and fishing); and (iii) a machine purchased by a commercial farmer who
also uses the machine to produce food or fiber primarily for his own
D. PROOF OF ENTITLEMENT. Sellers of farm
equipment and machinery, which the purchaser claims as an exempt transaction,
should refer to GR-79 concerning exemptions. As an alternative to an exemption
certificate, a seller may accept a certification from the purchaser that the
item (i) will be used exclusively in the agricultural production of food or
fiber as a retail business; and either (ii) used directly in the actual
agricultural production of food or fiber to be sold in processed form or at
retail; or (iii) used directly in the agricultural production of farm products
to be fed to livestock or poultry, which is to be sold ultimately in processed
form at retail. The suggested certification form appears at the end of this
ENGAGED IN THE BUSINESS OF
FARMING. A purchaser of farm machinery and equipment shall be considered to be
engaged in the business of farming for purposes of the exemption if the
purchaser meets the requirements in GR-51(E)(1) or GR-51(E)(2).
1. The purchaser is engaged in the
agricultural production of food, fiber, grass sod, or nursery products as a
business for profit as defined in Internal Revenue Code § 183 as adopted
by Ark. Code Ann. §
a. The purchaser provides services to farmers
directly related to the production of food, fiber, grass sod, or nursery
b. The items of farm
machinery and equipment are used exclusively and directly to provide those
The items of farm
machinery and equipment would have otherwise qualified for the farm machinery
exemption if purchased and used exclusively and directly by the farmer for the
Example: A fertilizer spreader or seed spreader, or chemical
applicator purchased by a farmer would qualify for the farm machinery exemption
if used exclusively by a farmer in applying fertilizer, planting seed, or
applying agricultural chemicals as part of the agricultural production of food,
fiber, grass, sod, or nursery products as a business. The farm machinery
exemption will also be available to a fertilizer dealer, seed company, or other
similar business upon the purchase of these same items provided the items are
used exclusively and directly by the business in applying fertilizer, planting
seed, or applying agricultural chemicals for farmers.
If new or used machinery or equipment and related attachments are sold to or
used by a person engaged primarily in the harvesting of timber, then the
purchaser is entitled to a rebate of gross receipts tax paid on the first
$50,000.00 of the purchase price.
1. In order
for the machinery or equipment and related attachments to be subject to the
rebate, it must be (i) purchased by a person who commits more than fifty
percent (50%) of his or her activities to the harvesting of timber; and (ii)
used exclusively in the off-road activity of harvesting of timber.
2. Only complete systems or units that
operate exclusively and directly in the offroad harvesting of timber are
subject to the rebate of tax. The equipment and related attachments meet this
requirement if they are used in harvesting timber from the time the tree is
severed from the ground through the point at which the tree or its parts in any
form have been loaded in the field in or on a truck or other vehicle for
transport to the place of use. Examples of such equipment include skidders,
feller bunchers, delimbers of all kinds, and bulldozers equipped with grapples
used as skidders.
3. This rebate
does not apply to repair or replacement parts for the machinery and equipment
used in timber harvesting.
CLAIMS FOR REBATE FOR TIMBER HARVESTING
MACHINERY AND EQUIPMENT.
Self Rebate. A
purchaser that holds an active Arkansas sales and use tax permit and files
excise tax reports with the Department may offset the amount of credit or
rebate claimed against any municipal or county sales or use tax due to be
remitted with the return.
a. The purchaser
must list each local code and the amount of tax paid to the seller on the
b. If the total amount of
the credit or rebate is being requested is larger than the local tax due for
that month, then the purchaser will deduct the remaining credit or rebate from
the state tax due on the return and remit the difference.
c. The purchaser must maintain documentation,
such as photocopies of the invoices or receipts provided by the seller, for
which the credit or rebate is being requested.
File a Claim. A purchaser that qualifies
for a rebate, but is not required to file a sales or use tax return as provided
in GR-51(G)(1), may file a claim for a credit or rebate by completing the Claim
for Refund Form 2004-6.
Click here to
*These certifications shall be kept on file by the seller for
six years from the date of sale for audit purposes.