DAR File No. 29024

Tax Commission, Auditing

R865-19S-49

Sales to and by Farmers and Other Agricultural Producers Pursuant to Utah Code Ann. Section 59-12-104

NOTICE OF PROPOSED RULE

DAR File No.: 29024
Filed: 09/14/2006, 02:55
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

H.B. 54 (2006 General Session) amended the sales tax exemption for the exclusive sale of seasonal crops sold during the harvest season. (DAR NOTE: H.B. 54 (2006) is found at Chapter 268, Laws of Utah 2006, and was effective 07/01/2006.)

Summary of the rule or change:

The proposed amendment deletes language from rule that is no longer a statutory criteria for the sales tax exemption.

State statutory or constitutional authorization for this rule:

Section 59-12-104

Anticipated cost or savings to:

the state budget:

None--Any fiscal impact was taken into account in H.B. 54 (2006).

local governments:

None--Any fiscal impact was taken into account in H.B. 54 (2006).

other persons:

None--Any fiscal impact was taken into account in H.B. 54 (2006).

Compliance costs for affected persons:

None--While some sales that were taxable are now exempt, other sales that were exempt are now taxable.

Comments by the department head on the fiscal impact the rule may have on businesses:

Anticipated impact is minimal to none. Under the law, a business may or may not now need to collect sales tax. D'Arcy Dixon, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Tax Commission
Auditing
210 N 1950 W
SALT LAKE CITY UT 84134

Direct questions regarding this rule to:

Cheryl Lee at the above address, by phone at 801-297-3900, by FAX at 801-297-3919, or by Internet E-mail at clee@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

10/31/2006

This rule may become effective on:

11/07/2006

Authorized by:

D'Arcy Dixon, Commissioner

R865. Tax Commission, Auditing.

R865-19S. Sales and Use Tax.

R865-19S-49. Sales to and by Farmers and Other Agricultural Producers Pursuant to Utah Code Ann. Section 59-12-104.

[A. 1.](1)(a) For purposes of the sales and use tax exemption for tangible personal property used or consumed primarily and directly in farming operations, a person is engaged in "farming operations" if that person may deduct farm related expenses under Sections 162 or 212, Internal Revenue Code.

[2.](b) To determine whether a person may deduct farm related expenses under Sections 162 or 212 of the Internal Revenue Code, the commission shall consider Treas. Reg. Sections 1.183-1 and 1.183-2.

[B.](2) The purchase of feed, medicine, and veterinary supplies by a farmer or other agricultural producer qualify for the sales and use tax exemption for tangible personal property used or consumed primarily and directly in farming operations if the feed, medicine, or veterinary supplies are used:

[1.](a) to produce or care for agricultural products that are for sale;

[2.](b) to feed or care for working dogs and working horses in agricultural use;

[3.](c) to feed or care for animals that are marketed.

[C.](3) Fur-bearing animals that are kept for breeding or for their products are agricultural products.

[D.](4) A vendor making sales to a farmer or other agricultural producer is liable for the tax unless that vendor obtains from the purchaser a certificate as set forth in Rule R865-19S-23.

[E.](5) Poultry, eggs, and dairy products are not seasonal products for purposes of the sales and use tax exemption for the exclusive sale of [locally grown ]seasonal crops, seedling plants, or garden, farm, or other agricultural produce sold [by a producer ]during the harvest season.

 

KEY: charities, tax exemptions, religious activities, sales tax

Date of Enactment or Last Substantive Amendment: [October 13, 2005]2006

Notice of Continuation: April 5, 2002

Authorizing, and Implemented or Interpreted Law: 59-12-104