LYNDALL HARNED: New agricultural tax exemption law requirements | News

New requirements of the KY agricultural tax exemption law

A new law came into effect on January 1 and will directly affect anyone who operates a farm and indirectly anyone who is a home gardener or farmer.

The law is from KRS 139.481, passed in the 2020 legislative session, and it requires farmers who are eligible for agricultural sales and use tax exemptions to apply for and use their agricultural exemption number (AE) on certificates. used to claim applicable tax exemptions.

In the past, if you operated a farm, any farm provides seed, feed, fencing, etc., you could buy without sales and use tax. And this has been codified in the KRS. All you were supposed to do, by law, was fill out a state form with your contact details and farm information, and give it to the farm store you were dealing with at the time to put it in. its files.

Nowhere on the form did you have to show that you were actually involved in farming. The hobby gardeners or hobby farmers mentioned above could fill out the form and get the same tax exempt status as a person actually involved in farming.

This is no longer the case. Non-farmers will no longer be able to take advantage of this loophole.

The process now for someone who is a farmer to get this tax exemption is relatively straightforward, but a bit long at first. This new tax program is implemented and supervised by the Ministry of Revenue.

First, you need to complete a Farm Exemption Number Application (Form 51A800). This form requires the normal elements: name, mailing address, farm address, email address and driver’s license number or Federal Employer Identification Number (FEIN).

Next, to prove that you are actually involved in production farming, you need to identify the type of farming activity that you are

are engaged. You’ll also need to provide one of the following five checks, according to the Revenue Department when I called them, even though there are only four options on the form itself.

IRS Schedule F, Profit or Loss from Farming, IRS Form 4835, Farm Rental Income and Expenses, The FSA, Farm Services Agency, number, Any other type of documentation / information that can verify / document sales of agricultural products to prove that you are eligible for the AEN (Agricultural Exemption Number), such as receipts, invoices, etc.

A written declaration of agricultural activity. This option should only be used if you cannot provide any of the other options above.

Since home gardeners and home farmers will not be able to produce any of these required documents, 1-4, and making a return to meet 5 would be lying on a government form, they will now start paying the tax. sales on seeds, fertilizers, etc. they buy.

The request is then sent to Frankfurt. After processing the request, they will send you a letter with your NEA on it. This letter is for you only. Do not make copies to take them to the farm stores you do business with. It is of no use to them.

This application can be viewed and completed online, found on the Ministry of Revenue’s website, and emailed. Either way, the NEA is good for three years. The Ministry of Revenue will provide details on the renewal at a later date.

Instead, you need to complete two additional forms. You can do one or both. The first form is one that most farmers will certainly want to do. This is the agricultural exemption certificate (form 51A158). This form is for general farm supplies such as feed, seed, fencing, fertilizer, etc.

The second form is the on-farm facilities exemption certificate for materials,

Machinery and Equipment (Form 51A159). These are articles intended for use in the construction, repair or renovation of agricultural installations (barns, fodder sheds, hay storage structures, etc.) exempt under KRS 139.480. This can be used directly by the farmer or in conjunction with a contractor performing the work.

These last two forms that the farmer completes or copies are to be given to each agricultural retailer with which the farmer does business.

Each farm store or retailer should keep copies on file. The responsibility of the farmer ends when he gives a copy to the store.

It is the responsibility of the farm store / retailers to keep all of these items on file for anyone who they do not charge sales tax to under the guise of being a farmer.

So what types of farms are eligible for the NEA? Here is a short list, taken from the FAQ page of tax firms on the NEA program: Occupation of plowing and cultivating the soil for the production of corn, soybeans, hay, timber, vegetables (commercially), etc., Occupation of raising and feeding the type of livestock sold for human food (this does not include horses and bees), poultry breeding and feeding, bird breeding (ostriches, emus, etc.) llamas, alpacas, buffaloes, deer (deer, elk, red deer. etc.) or aquatic organisms, All these activities must be for commercial purposes and not for personal consumption.

All of this came into effect on January 1; However, if you have not yet completed and submitted an application, you can still complete one or both of the exemption certificates and indicate your driver’s license number instead.

This can be used until you get your AEN, at which point you will need to give a new form, or change the old one, at each farm store or retailer. The last date on which the driver’s license number can be used is June 30. After this date, if you do not have an exemption certificate

in the farm store / retailer record, they will need to start charging sales tax.

Plus, those who farm in West Virginia or Ohio, even if they also live there, can fill out these same forms and go through the same process if they buy farm supplies in Kentucky. If they buy their farm supplies in another state, this does not apply.

In an effort to try to make this easier for farmers in Boyd County, I have filed copies of all appropriate forms to distribute to the three local farm stores / retailers, as well as the Conservation Office and Farm Bureau Offices. , on US 60 and Carter Avenue. They are also available at the Boyd County Extension Office in Catlettsburg at 2420 Center St.

I will also offer a few opportunities, open to anyone, to help explain this new process further. They are scheduled for 10 a.m. and 6 p.m. Wednesday and at the Extension Education Center in Coalton. I will have forms to fill out and I will offer my help to those who ask for it.

For more information, call the extension office at (606) 739-5184.

LYNDALL HARNED is Boyd County Agriculture and Natural Resources Extension Officer.

LYNDALL HARNÉ

Copyright (c) 2022 Ashland The Independent, edition 1/8/2022

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