DEPARTMENT OF STATE REVENUE
04-20080035.LOF
Letter of Findings Number: 08-0035
Use Tax
For the Year 2004
NOTICE: Under IC § 4-22-7-7, this document is required to be published in the Indiana Register and is effective on its date of publication. It shall remain in effect until the date it is superseded or deleted by the publication of a new document in the Indiana Register. The publication of this document will provide the general public with information about the Department's official position concerning a specific issue.
ISSUE
I. Use Tax–Agricultural Exemption.
Taxpayer protests the Department's assessment of use tax with respect to an item of equipment.
STATEMENT OF FACTS
Taxpayer is an individual who operates a farm. In 2004, Taxpayer purchased a Bradco trencher attachment for a skid loader ("trencher"). When Taxpayer purchased the trencher, Taxpayer provided an exemption certificate to the retailer. By issuing the exemption certificate, Taxpayer avoided paying sales tax at the time of purchase. Subsequently, the Indiana Department of State Revenue ("Department") audited the retailer. Upon audit, the Department noted Taxpayer's exemption certificate, and assessed Taxpayer use tax on the trencher. Taxpayer protested the assessment, and this Letter of Findings results.
I. Use Tax–Agricultural Exemption.
DISCUSSION
Taxpayer protests the assessment of use tax with respect to the trencher. In particular, Taxpayer argues that he used the trencher for agricultural purposes.
Under IC § 6-2.5-5-2,
(a) Transactions involving agricultural machinery, tools, and equipment are exempt from the state gross retail tax if the person acquiring that property acquires it for his direct use in the direct production, extraction, harvesting, or processing of agricultural commodities.
(b) Transactions involving agricultural machinery or equipment are exempt from the state gross retail tax if:
(1) the person acquiring the property acquires it for use in conjunction with the production of food and food ingredients or commodities for sale;
(2) the person acquiring the property is occupationally engaged in the production of food or commodities which he sells for human or animal consumption or uses for further food and food ingredients or commodity production; and
(3) the machinery or equipment is designed for use in gathering, moving, or spreading animal waste.
45 IAC 2.2-5-4, provides several examples of taxable purchases. Among these taxable transactions include "ditchers," which Taxpayer indicates is the function of the trencher.
Taxpayer has indicated that the trencher is used for providing water to livestock and for field drainage. While the Department accepts Taxpayer's contentions that he used the trencher as part of Taxpayer's agricultural operations and that he used the trencher only for agricultural purposes, Taxpayer did not meet the "directly used" in the "direct production" statutory elements necessary to claim an agricultural exemption.
FINDING
Taxpayer's protest is denied.
Posted: 04/30/2008 by Legislative Services Agency
DIN: 20080430-IR-045080273NRA
Composed: Apr 28,2024 12:28:13AM EDT
A
PDF version of this document.
