The Kentucky Department of Revenue (DOR) is now accepting applications from eligible farmers for new agriculture exemption numbers. All eligible farmers accustomed to buying certain items exempt from sales tax must have an agriculture exemption number on January 1, 2022 to continue making exempt purchases.
An eligible farmer is a person who:
- Regularly engages in the occupation of tilling and cultivating the soil for the production of crops as a business
- Regularly engages in the occupation of raising and feeding livestock of a kind the products of which ordinarily constitute food for human consumption
- Raising and feeding poultry
- Producing milk for sale
- Regularly engages in raising ratite birds, llamas, alpacas, buffalos, cervids, or aquatic organisms as an agricultural pursuit.
The sales and use tax exemptions for certain agriculture items have not changed. An example of an exemption is feed and feed additives for livestock or poultry, provided the products of such livestock or poultry ordinarily constitute food for human consumption.
Also exempt are feed and feed additives when used in connection with:
- An agricultural pursuit involving ratite birds and eggs
- Llamas and alpacas that are used either as beasts of burden or in an agricultural pursuit
- The pursuit of cervid farming
- Buffalo that are used either as beasts of burden or in an agricultural pursuit
- An aquacultural pursuit involving aquatic organisms.
Similarly, exempt is water sold to a person regularly engaged in the business of farming and used either:
- In the production of crops
- In the production of milk for sale
- In the raising and feeding of livestock or poultry (the products of which ordinarily constitute food for human consumption), or ratites, llamas, alpacas, buffalo or aquatic organisms.
The General Assembly enacted the requirement for an agriculture exemption number in 2020.
“Our Department of Revenue staff have worked closely with both the farming and retail communities in the development of a simple process to qualify for the exemption number,” said Tom Miller, Department of Revenue Commissioner. “This application process and issuance of an agriculture exemption number will improve overall compliance with state tax codes while minimizing claims by parties ineligible for the exemptions. An upcoming release of a new searchable database will also make this process transparent and convenient for both the sellers and the buyers.”
The Application for the Agriculture Exemption Number, Form 51A800, should be submitted by email to DOR.Webresponsesalestax@ky.gov or mailed to:
DOR’s Division of Sales and Use Tax
Station 66, P.O. Box 181,
Frankfort, KY 40602-0181
In addition, DOR advises applicants to supply IRS Schedule F, Profit or Loss from Farming, if possible, to expedite the application process.
The deadline to apply for the new agriculture exemption number for current farmers is January 1, 2022. The agriculture exemption number is valid for three years from the date of issuance.
Erica Horn, CPA, JD | Tax Associate Director
ehorn@deandorton.com
859.425.3674