Okla. Admin. Code § 710:65-13-15
Current through Vol. 42, No. 4, November 1, 2024
Section 710:65-13-15 - "Agricultural production" defined; taxable and exempt transactions(a)Definitions. For the purposes of this Section:(1)"Agricultural production" and "production of agricultural products" is limited to what would ordinarily be considered a farming or ranching operation undertaken for profit. The term refers to the raising of food crops or livestock for sale. Included within the meaning of "agricultural production" and "production of agricultural products" are ranches, orchards, and dairies. Also included is any feedlot operation, whether or not the land upon which a feedlot operation is located is used to grow crops to feed the livestock in the feedlot and regardless of whether or not the livestock fed are owned by persons conducting the feedlot.(2)"Farmers" means persons engaged in agricultural production or production of agricultural products.(3)"Farming" or "ranching" means the production, harvesting or processing of agricultural products.(4)"Livestock" means cattle, horses, sheep, goats, asses, mules, swine and also chickens, turkeys, and other domesticated fowl. It also includes American bison, emus, ostriches and llamas.(b)Examples of persons engaged in farming, ranching or agricultural production. Besides the persons defined as farmers and ranchers above, the law recognizes persons engaged in the following types of activities, whose aim is the making of a profit, to also be engaged in farming, ranching or agricultural production: (1) Wholesale divisions of nurseries are considered to be farmers and the planting, growing, cultivation and harvesting of shrubs, flowers, trees and other plants for sale in the wholesale division of a nursery operation are defined to be farming operations.(2) Persons who plant, cultivate, and harvest sod for commercial sale are also considered to be farmers.(c)Examples of persons who are not engaged in farming, ranching, or agricultural production. The following activities do not qualify as farming, ranching, or agricultural production:(1) Operation of commercial greenhouses;(2) Operation of plant nurseries, except their wholesale divisions;(4) Ownership of livestock solely for one's own use for pleasure riding, trail riding, performance riding, participation in horse shows, or racing; and, (5) The raising of cats, dogs, other fur-bearing animals not included in the definition of livestock, or non-domesticated fowl.(d)Sales of feed, fertilizers, biologicals, and pharmaceuticals. The statute provides an exemption from sales tax for sales of certain items, such as feed, fertilizer, pharmaceuticals, biologicals, seeds, plants, and pesticides, when sold to a person regularly engaged in farming or ranching, for profit, and the items are to be used and in fact are used in agricultural production. Sales of agricultural fertilizer, pharmaceuticals and biologicals sold to a person engaged in the business of applying such materials on a contract or custom basis are specifically exempted from sales and use tax.(e)Sales to persons other than farmers or ranchers. Sales of tangible personal property are subject to the sales or use tax under this rule, if the sales are to persons other than a farmer or rancher, regularly engaged in business for profit, or if the sales are made to a farmer or rancher, but the property is used or consumed for a purpose other than the production of agricultural products for sale.(f)Sales for personal use. Sales to a farmer or rancher of fuel, clothing, and all other tangible personal property for personal living or human consumption or use are taxable. Sales of tangible personal property are taxable when the property is used in producing food or other products for personal consumption and not for sale. Similarly, sales of seed, fertilizer, equipment, etc. to anyone for use on homes, gardens, lawns, parks and golf courses or for use by landscape gardeners are taxable.(g)Farm machinery. Sales of farm machinery used directly on a farm or ranch in the production of agricultural products are exempt. Such machinery is also exempt if sold to a custom harvester, baler, producer or planter performing service on a farm or a ranch.(1)"Farm machinery" includes:(A) Expendable supplies, such as baling wire, and binders twine, hand tools, and implements such as fence stretchers, picks, posthole diggers, scoops and shovels;(B) Lubricants for farm machinery;(C) Repair or replacement parts for machinery used directly on a farm or ranch in production of agricultural products;(D) Fencepost, cattle guards, gates and chutes;(E) Buildings and structures which are essentially an item of equipment or machinery for agricultural production if the structure is specifically designed for such use and the structure cannot be economically used for any other purpose, for example: an automated laying house or farrowing house.(2)"Farm machinery" does not include any motor vehicle licensed for highway use.(h)Exemption limited to use in agricultural production. The fact that an item is purchased for use on a farm or ranch, or that a piece of equipment is convenient, does not necessarily make the purchase exempt from sales tax. The items purchased must be directly used on the purchaser's farm or ranch in the production of agricultural products. "To be directly used by the purchaser on a farm or ranch in the production of food or agricultural products" requires that the property in question must have a direct effect on the article being produced.(i)Examples of taxable items. The following is a partial list of taxable items: (1) Water supply systems for personal use.(2) Repair parts for all motor vehicles (licensed with a farm tag or any other tag).(3) Household appliances.(4) Garden and lawn equipment.(6) Pets and their supplies.(7) All equipment, supplies and tools to maintain personal home and/or vehicle/ equipment storage buildings.(8) Electricity for non-agricultural use.(9) LPG storage tanks for fuels used for domestic purposes.(10) Livestock, not including horses, but including cattle, mules or other domestic or draft animals except those sold for resale to a person who holds a valid sales tax permit or those sold by the producer by private treaty or at a special livestock sale.(11) All computers and software, except that which is to be used directly on a farm or ranch in the production, cultivation, planting, sowing, harvesting, processing, spraying, preservation or irrigation of any livestock, poultry, agricultural or dairy products produced from such lands.(12) Home and or office furnishings and supplies.(13) Groceries and purchases of meals and beverages at restaurants.(j)Examples of items not commonly exempt, except when used in agricultural production. The following items are taxable, unless used directly in agricultural production: (1) Liquefied petroleum gas (LPG).(2) Communication radios.(3) Building materials, including: (D) Nails, staples, and other fasteners.(k)Examples of exempt items. The following items are exempt if used directly in agricultural production, or as otherwise stated:(1) Electric fence insulators.(2) Electric fence chargers.(3) Cattle electric water warmer & tank.(5) Cattle squeeze chute.(6) Welding machines and associated equipment, including the lease or rental of both the equipment and the cylinders used to store the gases used in welding. Welding rod, oxygen, acetylene are exempt, providing welding machine with which they are used is qualified for the exemption.(7) Sprays for control of flies & lice, insect repellent.(8) Pinkeye patches, livestock wormers.(9) Disinfectants (alcohol, iodine).(10) Breeding supplies (includes semen, biostate sales & liquid nitrogen for storage).(11) Drugs for disease or bacteria control such as penicillin, milk fever medicines, mastitis treatment.(12) Supplies for administering drugs to farm animals for production (syringes, needles).(13) Vaccines for preventive disease.(14) Bottles, nipples & mixing containers for feeding calves.(17) Hay balers, mowers, rakes & loaders.(19) Harrows, disks, planters, drills.(20) Windmills (except for domestic use).(22) Mechanical brush cutters, ensilage cutters.(24) Electric milking machines & separators.(25) Standby generators (except those for domestic use).(26) Silo unloaders, silage distributor.(27) Augers-power take off.(32) Bulk milk tanks & pipeline milkers.(33) Power take off post hole diggers.(34) Motor chain saw (to clear land).(35) Repair parts for farm equipment (includes tires, batteries, oil filters, belts, air filters & other parts).(36) Diesel & special fuels (for agricultural use).(37) Antifreeze (for agricultural use).(38) Oil & grease (for agricultural use).(44) Air conditioner (for agricultural use).(46) Bulk feed bins & associated equipment.(47) Silo loading chutes.(48) Farm wagons, farm plows, truck unloaders.(49) Fertilizer spreading equipment.(50) All farm animals for production.(51) Containers used to package farm products for sale.(53) Hay wire or twine, hay hooks.(54) Ear tags, neck tags for cattle.(58) Packaging materials, such as sacks, wrappers, and crates, for use in packing, shipping or delivering of agricultural products. This exemption shall not apply to any packaging material which can be used more than once or which is ordinarily known as a returnable container, except those specifically noted under 68 O.S. § 1359(3), 68 O.S. § 1359(4), and 68 O.S. § 1359(14) .(59)"Returnable cartons, crates, pallets, and containers used to transport mushroom products from a farm for resale to the consumer or processor." [ See: 68 O.S. § 1359(14) ](60) Salt blocks (for agricultural use).(61) Irrigation equipment (for agricultural use).(l)Examples not exhaustive. Activities and items enumerated in this Section as examples and illustrations are not intended to be exclusive or exhaustive.(m)Purchases of taxable personal property or services by a contractor. Purchases of taxable personal property or services by a contractor, as defined by 68 O.S. § 1352, are taxable to the contractor. A contractor who performs improvements to real property for a farmer may not purchase the tangible personal property or services to perform the contract exempt from sales tax under the exemption provided by statute to a farmer. However, sales of materials, supplies, and equipment may be made exempt from sales tax to any person who has contracted to construct facilities which are or will be used directly in the production of any livestock. For purposes of this subsection, "used directly in the production of any livestock" includes facilities used in the production and storage of feed for livestock owned by the permit holder. To receive the exemption, the contractor must follow the applicable requirements of Section 710:65-13-17.(n)The exemption as it pertains to horses, ranching, and ranches.(1) The exemption is allowed only to those persons breeding or raising horses for marketing.(2) The exemption is not extended to persons who own horses for personal use or who are solely engaged in activities such as boarding horses, giving riding lessons, or providing horses for recreational riding.(o)The exemption as it extends to feed and similar products for livestock, including horses. The holder of an agricultural exemption permit may purchase generally recognized animal feeds, stock tonics, water purifying products, stock sprays, disinfectants, and other such agricultural supplies subject to the following limitations: (1) The purchaser must obtain an Agricultural Permit; and(2) The purchaser must follow the applicable requirements of Section 710:65-13-17.Okla. Admin. Code § 710:65-13-15
Amended at 10 Ok Reg 3847, eff 7-12-93; Amended at 11 Ok Reg 3521, eff 6-26-94; Amended at 12 Ok Reg 2635, eff 6-26-95; Amended at 14 Ok Reg 2711, eff 6-26-97; Amended at 17 Ok Reg 2708, eff 6-25-00; Amended at 18 Ok Reg 2823, eff 6-25-01; Amended at 29 Ok Reg 542, eff 5-11-12Amended by Oklahoma Register, Volume 32, Issue 23, August 17, 2015, eff. 8/27/2015