PURPOSE: Sections 144.030.2(22), 144.045.1,
144.047, and 144.063, RSMo, exempt certain farm machinery, equipment, repair
parts, supplies, lubricants, and fuels from taxation. This rule explains which
items qualify for these exemptions.
(1) In general, the purchase of farm
machinery, equipment, and repair and replacement parts and supplies and
lubricants used exclusively, solely, and directly for producing crops, raising
and feeding livestock, fish, or poultry, or producing milk for ultimate sale at
retail, and motor fuel used for agricultural purposes is exempt from
tax.
(2) Definition of Terms.
(A) Equipment-Devices that have a degree of
permanence to the business, contribute to multiple processing cycles over time,
and generally constitute fixed assets, other than land and buildings, that are
capitalized and depreciated for purposes of business and accounting
practices.
(B) Farm machinery,
equipment, and parts-Machinery, equipment, and parts used directly and
exclusively in the agricultural production process.
(C) Machinery-Combinations of parts that work
together as a functioning unit, even if they are subordinate elements of more
complex machinery. Machinery may be simple or complex, but does not include the
replacement of an individual part, even if that part becomes an element of a
functioning machine.
(D) Motor
fuel-Gasoline, diesel fuel, kerosene, and blended fuel, as defined in section
142.800, RSMo.
(E) Repair and replacement parts-Articles of
tangible personal property that are components of machinery and equipment,
which can be separated from the machinery or equipment and replaced. Like
machinery and equipment, parts must have a degree of permanence and durability.
Included in the repair and replacement part category are batteries, tires, fan
belts, mufflers, spark plugs, oil filters, plow points, standard type motors,
and cutting parts. Substances such as coolants that are added to machinery and
equipment for operation are not parts. Substances such as paints or adhesives
that adhere to the surface of machinery and equipment, but are not distinct
articles of tangible personal property, are not parts.
(F) For the purposes of this rule, supplies
shall mean-Tangible personal property consumed in producing crops or milk, or
raising and feeding livestock, fish, poultry, pheasants, chukar, or quail for
ultimate sale at retail.
(3) Basic Application of Exemption.
(A) To qualify for exemption pursuant to
section 144.030.2(22), RSMo, items purchased must be-
1. Used exclusively for agricultural
purposes;
2. Used on land owned or
leased for the purpose of producing farm products; and
3. Used directly in producing farm products
to be sold ultimately in processed form or otherwise at retail or in producing
farm products to be fed to livestock or poultry to be sold ultimately in
processed form at retail. The term "used directly" encompasses items that are
used in some manner prior to the actual commencement of production, during
production, or in some manner after the production has terminated. In
determining whether items are used directly, consideration must be given to the
following factors:
A. Where the items in
question are used;
B. When the
items in question are used; and
C.
How the items in question are used to produce a farm product.
(B) Pursuant to section
144.045.1, RSMo, farm machinery or equipment that would otherwise qualify as
exempt farm machinery and equipment will not lose its exempt status merely
because the machinery or equipment is attached to a vehicle or real property.
Such equipment includes, but is not limited to, a grinder mixer mounted on a
vehicle or special livestock flooring. When exempt farm machinery or equipment
attached to a motor vehicle is sold with the motor vehicle, the part of the
total sales price attributable to the farm machinery or equipment is exempt
from tax if the farm machinery or equipment is separately invoiced. If not
separately invoiced, the total sales price is subject to tax as a motor
vehicle.
(C) Pursuant to section
144.047, RSMo, farm machinery
includes aircraft used solely for aerial application of agricultural
chemicals.
(D) Pursuant to section
144.030.2(34), RSMo, all sales of grain bins for storage of grain for resale
are exempt; pursuant to this section, parts purchased separately for these bins
are not exempt. However, grain bins, including all parts, that are used in
production of a farm product and qualify as farm machinery and equipment are
exempt pursuant to section 144.030.2(22), RSMo.
(E) Pursuant to section
144.063, RSMo, fencing and motor
fuel used for agricultural purposes are exempt.
(F) The fact that particular items may be
considered to be essential or necessary will not automatically entitle them to
exemption. The following categories of items are excluded from the meaning of
the term farm machinery and farm equipment, including supplies, and are subject
to tax:
1. A motor vehicle and parts for a
motor vehicle do not qualify as exempt farm machinery or equipment. A trailer
and parts for a trailer generally do not qualify as tax exempt farm machinery
or equipment. The terms motor vehicle and trailer are defined by Chapter 301,
RSMo;
2. Containers and storage
devices such as oil and gas storage tanks, pails, buckets, and cans;
3. Hand tools and hand-operated items such as
wheelbarrows, hoes, rakes, pitchforks, shovels, brooms, wrenches, pliers, and
grease guns;
4. Attachments and
accessories not essential to the operation of the machinery itself (except when
sold as part of the assembled unit) such as cigarette lighters, radios,
canopies, air-conditioning units, cabs, deluxe seats, tool or utility boxes,
and lubricators;
5. Equipment used
in farm management such as communications and office equipment, repair,
service, security, or fire protection equipment;
6. Building materials and general heating,
lighting, and ventilation equipment for nonproduction areas; and
7. Machinery and equipment used for a dual
purpose, one purpose being agricultural and the other being nonagricultural,
are not exempt.
(G)
Example A is a list of items of farm machinery, equipment, and supplies that
will usually be exempt if used exclusively for agricultural purposes on land
owned or leased for the purpose of producing farm products and used directly in
producing farm products or livestock to be sold ultimately at retail.
(4) Examples.
(A) Usually Exempt Items.
Anti-freeze
Artificial insemination equipment
Augers
Bale loader
Bale transportation equipment
Baler twine
Baler wire
Balers
Batteries for farm machinery and equipment
Bedding used in production of livestock or poultry for food
or fiber
Binder twine
Binders
Brooders
Bulk feed storage tanks
Bulk milk coolers
Bulk milk tanks
Bulldozers used exclusively in agricultural production
Calcium for tires
Calf weaners and feeders
Cattle currying and oiling machine
Cattle feeder, portable
Chain saws for commercial use in harvesting timber, lumber,
and in orchard pruning
Chicken pluckers
Choppers
Cleansing agents and disinfectants for agricultural
process
Combines
Conveyors, portable
Corn pickers
Crawlers, tractor
Crushers
Cultipackers
Cultivators
Curtains and curtain controls for livestock and poultry
confinement areas
Debeakers for productive animals
Dehorners for productive animals
Discs
Drags
Dryers
Dusters
Ear Tags
Egg handling equipment
Ensilage cutters
Ether
Fans, livestock and poultry
Farm tractors
Farm wagons
Farrowing houses, portable
Farrowing crates
Feed carts
Feed grinders/mixers
Feed storage bins
Feeders
Fencing Materials
Fence Posts
Fertilizer distributors
Field drain tile
Flooring slats
Foggers
Forage boxes
Forage harvester
Freon
Fruit graters
Fruit harvesters
Fuel additives
Gates
Generators
Gestation crates
GPS-Global Positioning System equipment
Grain augers
Grain bins for storage of grain for resale (but not
separately billed parts or add-ons to these grain bins)
Grain binders
Grain conveyors
Grain drills
Grain elevators, portable
Grain handling equipment
Grain planters
Greases and oils
Harrows (including spring-tooth harrow)
Hay loaders
Head gates
Heaters, livestock and poultry
Hog feeders, portable
Hog rings
Hoists, farm
Husking machines
Hydraulic fluid
Hydro-coolers
Incubators
Irrigation equipment
Light bulbs
Livestock feeding, watering, and handling equipment
Lubricating oils and grease
Manure handling equipment (including front and rearend
loaders and blades)
Manure spreaders
Marking chalk
Milk cans
Milk coolers
Milk strainers
Milking equipment (including bulk milk refrigerators,
coolers, and tanks)
Milking machine
Motor Fuel (gasoline, diesel fuel, kerosene, and blended
fuel) Mowers, hay and rotary blade used exclusively for agricultural
purposes
Off-road utility vehicles, other than all-terrain vehicles
(provided the vehicle qualifies as farm machinery or equipment)
Panels, livestock
Pickers
Planters
Plows
Posthole diggers
Poultry feeder, portable
Pruning and picking equipment
Repair and replacement parts for exempt machinery
Rollers
Root vegetable harvesters
Rotary hoes
Scales (not truck scales)
Seed cleaners
Seed planters
Seeders
Shellers
Silo unloaders
Snow Fence
Sorters
Sowers
Sprayers
Spreaders
Sprinkler systems, livestock and poultry
Squeeze chutes
Starting Fluid
Subsoiler
Tarps to protect agriculture products
Threshing machines
Tillers
Tires for exempt machinery
Tractors, farm
Vacuum coolers
Vegetable graders
Vegetable washers
Vegetable waxers
Wagons, farm
Washers, fruit, vegetable, and egg
Waxers
Weeders
Wire fencing
(B) Usually Taxable Items.
Acetylene torches
Air compressors
Air tanks
All-terrain vehicles (unlike an off-road utility vehicle that
does not meet the definition of a motor vehicle, an all-terrain vehicle is a
motor vehicle because it has a seat that is straddled and handlebars for
steering)
Automobiles
Axes
Barn ventilators
Brooms
Brushes
Building materials and building supplies
Bulldozers
Cement
Chain saws
Construction tools
Electrical wiring
Equipment and supplies for home or personal use
Fence building tools
Field toilets
Fire prevention equipment
Garden hose
Garden rakes and hoes
Gasoline tanks and pumps
Golf carts
Hammers
Hand tools
Hog ringers
Lamps
Lanterns
Lawnmowers
Nails
Office supplies and equipment
Packing room supplies
Paint and decals
Personal property installed in or used in housing for farm
workers
Pumps for household or lawn use
Pumps, gasoline
Refrigerators for home use
Repair tools
Road maintenance equipment
Road scrapers
Roofing Sanders Shovels Silos Small tools Snowplows and snow
equipment Staples
Supplies for home or personal use
Tanks, air
Tanks, gasoline
Tools for repair construction
Tractors, garden
Truck beds
Water hose
Welding equipment
Wrenches
(C) A farmer purchases a lawnmower. The
farmer uses the lawnmower to mow in an orchard, as well as to mow his lawn. The
purchase of the lawnmower is subject to tax, because the lawnmower is not used
exclusively and directly for agricultural production.
(D) A farmer purchases a water chiller for
use to control the climate inside the hatchers and setters. The water chiller
is also used to cool the administrative areas in the hatchery. The purchase of
the water chiller is subject to tax, because it is not used exclusively for
agricultural production.
(E) A
farmer takes his tractor to the implement dealer for routine maintenance, which
includes changing the oil, filters, and antifreeze. The sale of the oil,
filters, and antifreeze are exempt.
(F) A farmer buys a bale spike to be
installed on his pickup truck. The bale spike is not subject to tax.
(G) A farm supply store sells commercial
rabbitry equipment, such as feeders, nest boxes and wire hanging cages used for
rabbit cages and feeders, to a farmer who raises rabbits in confinement for
human consumption. These items are not subject to tax.
Notes
12 CSR
10-110.900
AUTHORITY:
section 144.270, RSMo Supp. 2009 and
section 144.705, RSMo 2000.* Original
rule filed Nov. 18, 1999, effective June 30, 2000. Amended: Filed Oct. 2, 2009,
effective May 30, 2010.
AUTHORITY: section
144.270, RSMo Supp. 2009 and
section 144.705, RSMo 2000.* Original
rule filed Nov. 18, 1999, effective June 30, 2000. Amended: Filed Oct. 2, 2009,
effective May 30, 2010.
