Rule 1.
(1) For
the purpose of this rule, "agricultural producing" means the commercial
production, for sale, of crops, livestock, poultry, and other products by
persons regularly engaged in business as farmers, nurserymen, or
agriculturists.
(2) Sales of
tangible personal property are subject to the sales or use tax under this rule,
if the sales are to persons other than those specified in subrule (1), or if
the sales are made to persons specified in subrule (1), but the property is
used or consumed by those persons for a purpose other than the commercial
production of agricultural products for sale.
(3) Sales to farmers of fuel, clothing, and
all other tangible personal property for personal living or human consumption
or use are taxable. Sales of tangible personal property to all persons are
taxable when the property is used in producing food or other products for
personal consumption and not for sale.
(4) All sales to persons using land, but not
included in the definition of "agricultural producing" in subrule (1), are
taxable. For example, a mowing machine is taxable when sold to the operator of
a riding stable for use in cutting hay to be fed to the operator's riding
horses. The sale of the machine is exempt, however, if made to a person
regularly engaged in business as a farmer for use in cutting hay to be fed to
the farmer's work horses or cattle.
(5) Sales of the following are exempt only
when used in "agricultural producing" as defined in subrule (1):
(a) Seeds and other propagative portions of
plants.
(b) Fertilizer and similar
substances for improving quality of the soil.
(c) Spray materials for insecticides,
germicides, and fungicides.
(d)
Livestock, poultry, their feeds, and foodstuffs, including salt, bone meal, cod
liver oil, limestone, grit, oyster shell, and other similar substances used to
sustain animals or poultry.
(e)
Sacks, wrappers, and other nonreturnable containers resold with crops; also,
binding twine and baling wire.
(f)
Machinery, tools, other equipment, repair parts, motor fuel, oil, grease, and
other tangible personal property necessary for their operation and maintenance,
except that sales of such equipment are taxable under the following
circumstances:
(i) If the equipment is to be
attached to and becomes a part of real estate.
(ii) If a motor vehicle is used on a public
highway and is required by the motor vehicle law to have registration license
plates.
(iii) Gasoline, oil, tires,
and parts for a motor vehicle specified in paragraph (ii).
(g) Electricity or gas used directly in
producing agricultural products.
When a separate meter is not installed for recording exempt
electrical use, an allocation for exemption may be utilized if the total
electrical consumption exceeds 1,500 kwh per month, or 2,500 kwh per month for
homes with electric heat during the months of November to March. (See
R 205.115)
(6) Sales of all tangible personal
property used to improve real estate, or attached to and becoming a structural
part of real estate, are taxable. Sales of tangible personal property consumed
or used in the construction, alteration, repair, or maintenance of houses,
barns, water supply systems, fences, drains, and all other structures and
appurtenances forming a part of real estate are taxable. Readily movable
equipment, such as portable hog houses and feeding troughs, is not considered a
part of real estate and is not taxable if used in commercial agricultural
producing. Sales of tangible personal property used in clearing land of trees,
stumps, and rocks or used in ditching, tiling, or otherwise improving real
estate are taxable.
(7) Sales of
seed, fertilizer, equipment, and all other tangible personal property to anyone
for use on homes or other noncommercial gardens, lawns, parks, boulevards, and
golf courses or for use by landscape gardeners are taxable.
(8) Every person, including farmers,
nurserymen, and agriculturists, who sells tangible personal property, other
than food at retail, to persons for consumption or use, and not for resale,
shall obtain a sales tax license and pay the tax to the state on the entire
gross proceeds from those sales. It is immaterial whether the retail sales are
made at the place of production, a roadside stand, a market, from a vehicle, or
elsewhere.
(9) A retail sale of
tangible personal property used for agricultural production may be deducted
from gross proceeds before computation of the tax if, at the time of sale, the
following certificate is signed by the purchaser:
CERTIFICATE UNDER AGRICULTURAL PRODUCING EXEMPTION
The undersigned hereby certifies that all items, except as
indicated hereon, are purchased for use of consumption in connection with the
production of horticultural or agricultural products as a business enterprise,
and agrees to reimburse the seller the sales tax if used or consumer
otherwise.
DATE _______________________
SIGNED ____________________________________
Purchaser
ADDRESS
_______________________________________________________________
Unlawful use of this certificate subjects persons to the
penalties of the sales tax act.
(10) A
deduction for sales in agricultural producing shall not be taken from gross
sales for agricultural production in the absence of an executed exemption
certificate, as specified in subrule (9), covering each deductible sale. A
blanket or so-called standing or continuous certificate is not acceptable,
except for continuous sales of utilities wherein the taxability for consumption
does not change from month to month. More than 1 item upon which a claim for
exemption is made may be covered by 1 certificate if all the items are
purchased at the time of the given sale. Taxable and nontaxable sales may be
listed on the sales invoice, if taxable items are indicated. For example, the
letter "T" may be placed before a taxable item.
(11) Separate copies of the certificate may
be used by sellers, or the wording may be imprinted or rubber-stamped on sales
invoices. All language expressed in the certificate shall be used. The date of
purchase or address of the purchaser may be made to appear anywhere on the
invoices;
however, provision for the signature of the purchaser shall
follow the wording of the certificate. Selection of the size of type used in
the preparation of certificates is discretionary.
(12) A deduction for agricultural producing
shall not be considered in the absence of the seller being in possession of
executed certificates.
