This past month an email question was posed to the Ohio Ag Manager Team about the Ohio Sales & Use Tax Exemption for agricultural producers.
The farmer’s question was when he purchased a truck for use as a farm truck, why was he charged Ohio sales tax? This is a great question as there is often confusion on what agricultural purchases are or are not exempt from Ohio Sales Tax. The quick answer to the producer’s question is while the truck will be used exclusively as a farm vehicle it is NOT exempt from Ohio Sales tax. The purpose of this article is to help clarify the Ohio Sales Tax Exemption for Ohio Farmers.
The sales and use tax is Ohio’s second-largest source of revenue. The Ohio sales and use tax dates back to 1934, when the Ohio General Assembly enacted its first tax (at 3%). The state sales and use tax rate has been 5.5 percent since July 1, 2005. Current law gives counties the option of levying a sales tax of up to 1 percent for county general revenue, plus an additional tax of up to 0.5 percent for county general revenue or several specific purposes outlined in the Ohio Revised Code. The Ohio Department of Taxation web site at www.tax.ohio.gov has information about this tax .
Click here for a paper written by the Ohio Department of Taxation on the Sales and Use Tax.
Farmers have long enjoyed Ohio Sales tax exemption for many, but not all, items used for production of agricultural commodities. Below are some of the common questions asked by producers and how they are answered on the Ohio Department of Taxation’s web site.
As a farmer, may I claim exemption on my purchases and how?
“Farmers are entitled to claim exemption on the purchase of items of tangible personal property used directly in the production of a product for sale . This would include, but is not limited to: seeds, fertilizers, insecticides, pesticides, field tiles, tractors, plows, combines, and specially designed motor vehicles with PTO applicator units that travel from farm to farm to apply chemicals and fertilizers. This would not include: almost all motor vehicles licensed to operate on the highway [passenger cars; pick-up trucks; larger trucks and trailers that are primarily used to haul people, animals, raw materials (seeds, fertilizers, insecticides and pesticides) to the farm and finished goods (corn, wheat, soy beans, cattle, hogs, etc.) from the farm to market], lawn mowers, weed eaters, items used to maintain set-a-side fields, chain saws, all purposes vehicles that are primarily used for recreation, and home garden equipment. To claim exemption, a properly completed exemption certificate must be given to your supplier.”
What are some other Agricultural Related Items exempt from Ohio Sales Tax?
A complete list of items that are exempt from Ohio Sales Tax can be found at:
http://tax.ohio.gov/faqs/Sales/sales.stm#38 .
Some of the exemptions that are applicable to farm businesses include:
- Magazine subscriptions.
- Sales of property for use directly in agricultural production.
- Property used in the preparation of eggs for sale.
- Sale and installation of agricultural land tile.
- Sale and construction of portable grain bins to farmers.
- Building and construction materials sold to construction contractors or persons engaged in the business of horticulture or producing livestock for incorporation into a horticulture or livestock structure.
How will I know if a sale is exempt from tax?
“Sales tax must be charged on all retail sales unless the purchaser provides a properly completed exemption certificate stating the statutory reason for claiming exemption. The vendor must retain the certificate as proof of nontaxable sales. Exemption certificates are prescribed by the Tax Commissioner and can be obtained from a local printer or office supply store. Sample forms are also available on the Ohio Department of Taxation website.”
“Exemption certificates are not needed when the item sold is never taxable, such as prescription drugs and food sold for off-premises consumption. Certificates are not needed when the purchaser is clearly identified on the invoice as an entity that is always exempt, such as the federal government, the State of Ohio, or any local government of this state.”
“The State of Ohio does not issue a sales tax exemption number. A vendor’s license number is NOT a sales tax exemption number. To claim exemption, you must provide a properly completed exemption certificate to your supplier.”
Exemption Certificates
The following forms have been provided by the Ohio Department of Taxation for use by Ohio consumers when making exempt purchases.
Unit Exemption Certificate . This exemption certificate is used to claim exemption or exception on a single purchase.
Blanket Exemption Certificate . This certificate is used to make a continuing claim of exemption or exception on purchases from the same vendor or seller.
More information about the Ohio Sales Tax Exemption for Agricultural Producers can be found on the Ohio Department of Taxation web site located at: www.tax.ohio.gov .