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Tax Exemption

The Florida Cattlemen’s Association worked tirelessly on behalf of Florida’s AG producers to get this exemption signed into law. 

Sales Tax Exemptions for Ranchers

by Thomas J. Bryant, CPA and Ryan Beasley, CPA

In Florida, no transactions shall be exempt from the sales tax, except those expressly exempted by legislation. Florida courts have consistently held that exemptions must not be expanded beyond their express legislative terms and must be strictly and narrowly construed against the taxpayer.  Simply put, if the law does not state that an item is exempt then it is taxable. The law further requires that a purchaser of special-use items, like those exempt as agriculture-use items, must claim that the item qualifies for the exemption at the time of the purchase. The state has established three ways for a taxpayer to claim the agriculture use exemption with a selling dealer. The Florida Department of Revenue (“DOR”) states all tax-exempt purchases or rentals must be supported with sufficient documentation, which is an Exemption Certificate or an Affidavit that covers the item purchased or a TEAM card, that is timely submitted to a selling dealer. The documentation is per Rule 12A-1.087(10), F.A.C.

 

So, the question arises as to what is included in a legislative exemption like exempted fencing or powered agriculture equipment, etc.  To establish a clear understanding of what is tax-exempt for ranching operations, the Florida Cattlemen's Association, Inc. ("Taxpayer") requested a determination from the DOR of tax exemptions for many typical ranch purchases.  On December 1, 2023, they received Technical Assistance Advisement - 23A-023 (“TAA”) in response to the taxability of a number of detailed purchases, 172 items with pictures that were included in the TAA submission, are summarized as follows: 

The Summarized Questions:

  1. Are purchases of certain fencing items exempt from Florida sales and use tax? A detailed listing of 14 items that are normally purchased by ranchers related to the fencing category exemption was provided to the DOR, the listing was supported with pictures for clarification of the items.

  2. Are purchases of certain farm equipment exempt from Florida sales and use tax? A detailed 25-item listing of items purchased by ranchers encompassing the equipment category was provided to the DOR, the listing was supported with pictures for clarification of the items.

  3. Whether the purchase and/or rental of trailers and equipment are exempt from Florida sales and use tax? The exemption factor for rentals was determined on the trailer being “licensed for the road” vs non-licensed trailers

  4.  Whether electricity purchased for use on a farm is exempt from Florida sales and use tax?

  5.  How often must the exemption documentation be provided to vendors to validate that certain items are exempt from Florida sales and use tax?

  6.  Can a valid Florida exemption certificate or a Florida Farm Tax Exempt Agricultural Materials ("TEAM") card be presented to exempt a transaction from Florida sales and use tax?

Fencing

​If an item is deemed exempt below, it is under the premise that such item is incorporated into and becomes a component of the constructed or repaired fencing on qualified agriculture land.

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  1. Wood fencing materials - Exempt

  2. Fencing materials encompassing steel pipe, copper, poly, composite, and plastic. The poly or composite portions consist of a synthetic or fiberglass composition; as well as potentially other materials. - Exempt

  3. Wire fencing, including tensioners and tighteners - Exempt

  4. Portable cattle pens - Not Applicable (This was not considered by the DOR to be in the correct exemption class “fences” in the submission because the picture provided in the DOR showed the fencing panels had wheels. The pen should be considered exempt as a trailer?)

  5. Cattle wire panels - Exempt

  6. Numerous types of gates used to confine cattle - Exempt

  7. Cattle guards - Exempt

  8. Cattle corral panels - Exempt

  9. Energized fencing systems perimeter, interior, and rotational grazing pastures - Exempt

  10. Gate accessories, such as automatic opening equipment - Exempt

  11. Head catches and squeeze chutes - Exempt

  12. Parting gates - Exempt

  13. Loading chutes - Exempt

  14. Fencing specialty tools, such as fence pliers, staple pliers, fence staple guns, wire joining and stretching bars, hand post pounder, electric fence test tools, hammers, post hole diggers, crimping tools, power post hole diggers/augers, front end loaders, skid steers, and grinder mulcher heads. Taxable as "fencing" items. Please refer to power farm equipment below, as some items may be exempt as power farm equipment.

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In summary, the purchases of fencing items that are: a) used to construct or repair permanent or temporary fencing; b) incorporated into and become a part of the constructed or repaired fencing; and c) supported with adequate exemption documentation, are exempt from Florida sales and use tax. All fencing items listed in the TAA were determined to be exempt with only two exceptions. 

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  1. Tools that were not powered and did not become part of the fence are taxable.

  2. A “Portable cattle pen” was not considered by the DOR to be in the correct exemption class in the submission because the picture provided to the DOR showed the fencing had wheels. The pen should be considered exempt as a trailer?  If the DOR does a closer look after the pen is set up and is in use, they may reconsider and make it exempt as portable fencing also.

Power Farm Equipment and Trailers

  1. Feeder wagons - Exempt

  2. Feed gravity hoppers - Taxable

  3. Feed silo, including gravity (Taxable) and with auger (Exempt)

  4. An ATV (All-Terrain Vehicle) bunk storage feeder dispensers - Exempt

  5. Bunk feeders - Taxable

  6. Hay rings - Taxable

  7. Mineral feeders, huts, and houses - Taxable

  8. Creep Feeders - Taxable

  9. Water troughs - Taxable

  10. Water trough float valves - Exempt if with a pump

  11. Purchase of new or used trailers used exclusively in agricultural production which may also be used to transport the farmer's farm equipment, or products to market - Exempt

  12. Purchase or rental of new or used power equipment, including replacement parts – Exempt if it meets the definition of power farm equipment

  13. Rental or purchase of trailers used exclusively in agricultural production which may also be used to transport the farmer's farm equipment or products to market - Purchase is Exempt. Rental is Taxable, If the trailer is required to be licensed as a motor vehicle under Chapter 320, F.S.

  14. Rental of trailers used exclusively in agricultural production which may also be used to transport the farmer's farm equipment, or products to market if attached to a rancher's vehicle operated by a rancher or his employee - Taxable (see response in Question #13).

  15. Rental of tractor-pulled fertilizer spreaders including chicken, litter, and lime - Exempt

  16. Rental of tractor-pulled manure spreaders - Exempt

  17. Rental of hay trailer wagon – Taxable if licensed for highway (see response in Question #13).

  18. Front-end loaders - Exempt

  19. Skid steers - Exempt

  20. Grinder mulcher head - Exempt

  21. Diggers/augers for fence post Installation - Exempt If items meet the definition of powered farm equipment

  22. Electric source, generator, solar and batteries, ground systems, and insulators - Exempt if in compliance with Rule 12A-1.087(10), F.A.C.

  23. Generators on ranches - Exempt if in compliance with Rule 12A-1.087(10), F.A.C.

  24. Cattle prods - Exempt if the items meet the definition of power farm equipment

  25. Cattle weight scales, including scale indicators, alleyway platforms, and scale load bars - Taxable

 

Simply put, the purchase of items meeting the definition of power farm equipment and are adequately supported with exemption documentation are exempt from Florida sales and use tax. The key is the item must be a powered unit (i.e. battery-powered, solar-powered, All-Terrain Vehicle, tractor) or an implement that is attached to a power unit (i.e. a tractor, ATV). Non-powered items like bunk feeders, hay rings, mineral feeders, huts, houses, creep feeders, and water troughs were determined to be taxable. Note, a gravity silo is taxable while a silo with a powered auger is exempt. The same reasoning should hold for tools like manual post-hole diggers and powered post-hole augers even hand screwdrivers vs battery-powered screwdrivers.

 

Trailers that are purchased by a farmer for exclusive use in agricultural production or to transport farm products from his or her farm to the place where the farmer transfers ownership of the farm product to another are exempt from Florida sales and use tax as long as the purchase is adequately supported with exemption documentation. Note: Trailers that are required to be licensed as a motor vehicle under Chapter 320, F.S., are not exempt when rented.

Electricity

Taxpayer's purchases of electricity used directly or indirectly for the production or processing of cattle on a farm is exempt from sales tax. Electricity used for the packing of cattle on a farm and electricity used in a packinghouse for the production, packing, or processing of cattle, including packinghouses that are not located on a farm is exempt from Florida sales and use tax. The exemption does not apply to electricity used in buildings or structures where cattle are sold at retail. The exemption only applies if the electricity is separately metered from any electricity used for purposes other than production, packing, or processing (such as in a retail facility), or other non­exempt use.

 

Please note that all tax-exempt purchases or rentals must be supported with sufficient documentation, which is a TEAM card, an exemption certificate, or an affidavit that covers the item purchased.  The documentation must be timely submitted to a selling dealer.

What is the Florida TEAM Card?

New Florida Farm Tax Exempt Agricultural Materials (TEAM) Card Program began on January 1, 2024. The DOR began accepting applications.  Log on to the DOR website taxapps.floridarevenue.com to apply online. The Florida Department of Agriculture and Consumer Services (FDACS) will provide cards to farmers approved by the DOR. There is no cost to apply for a TEAM Card.  The TEAM Card allows qualified ranchers to claim sales tax exemptions on items purchased for agricultural use. Ranchers may present the plastic, wallet-size TEAM card to selling dealers instead of preparing a paper exemption certificate for each purchase.  

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A rancher whose property is classified as agricultural, under Florida greenbelt, or who has implemented agricultural best management practices adopted by FDACS on property the rancher owns or leases is eligible to apply for a TEAM card.  A qualified rancher desiring to obtain a TEAM Card must complete the Application for a Florida Farm Tax Exempt Agricultural Materials (TEAM) Card (Form DR-1 TEAM). Qualified ranchers may apply to the DOR online or obtain a copy of Form DR-1 TEAM to apply by mail at floridarevenue.com/forms, under the Sales and Use Tax category.

 

The following are some Team Card Application tips. 

  1. A Business Partner number is not required to apply for a TEAM Card, but it may speed up the process.  A Business Partner (BP) number is a unique identification number assigned by the DOR to entities that register with it for tax purposes. The Business Partner number field should be completed by rancher applicants who are currently registered with the DOR for tax purposes. If you are currently registered with the DOR and are having trouble locating your BP number, contact Taxpayer Services at (850) 488-6800.

  2. Farmers applying as an individual/sole proprietor should use their first name, middle initial, and last name for the legal business name. However, see items 6 and 7 below for the proper applicant name to use.

  3. You may leave the DBA line blank if you do not have a trade name or DBA.

  4. If your qualifying property does not have an address, provide the name of the closest street. You should also provide the city, state, and ZIP code, as well as the county the property is located.

  5. If a rancher owns property classified as agricultural and also has implemented best management practices (BMP) adopted by the Florida Department of Agriculture and Consumer Services a rancher needs to only answer “yes” to qualifying question 1, the name of the applicant must match the green belt property owner’s name as listed on the county property appraiser’s website.  Provide the address and parcel number of the qualifying property and then enter the number of Team Cards Requested. The online application will not show the BMP questions once you answer “yes” to question 1.  Your card will show that you are a rancher who owns property classified as agricultural pursuant.

  6. If verifying eligibility through the BMP option for non-green belt property or leased property, the name on the application must match the BMP enrollee name on file with FDACS.

  7. If the names do not match, the application will be denied.

 

If you have questions about completing the application for a Florida TEAM Card, contact the DOR, Account Management, at (850)717-6628.  When the DOR approves an application, the DOR will notify DACS to issue the TEAM Card to the rancher. The TEAM Card will feature a unique certificate number, date of issuance, and expiration date.  TEAM cards expire five years after the date of issuance. At the end of the five-year period, the DOR will use available information to determine whether the TEAM Cardholder continues to qualify. If the renewal is approved, the DOR will notify DACS to issue a new TEAM Card. The DOR will issue the rancher a request for documentation when it is unable to determine eligibility for renewal.   Selling dealers are required to document the exempt nature of their tax-exempt sales. Dealers who make a tax-exempt sale to a qualified rancher who presents their TEAM card are required to obtain one copy of the rancher’s TEAM Card for purposes of documenting exempt sales to the rancher during the effective period of the card.  Currently, the FDACS is providing 10 cards to a qualified rancher. Each card will contain the individual or corporate name and address. Cards will not name individual cardholders. We assume more can be requested if one buys from more than 10 dealers.  A selling dealer who accepts the TEAM Card in good faith will not be held liable for any tax due on sales made to the rancher during the effective period indicated on the card.

 

Instead of obtaining a copy of the rancher’s TEAM Card, a selling dealer may document the exempt sale by requesting a transaction authorization number, valid for a single transaction only, from the DOR prior to or at the time of sale.  Selling dealers may request a transaction authorization number by:

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Selling dealers who make sales to qualified ranchers who are regular customers may also request a vendor authorization number instead of maintaining a copy of a farmer’s TEAM card.  The vendor authorization number is a customer-specific number and is valid for purposes of documenting exempt sales during the effective period of the rancher’s TEAM Card. Selling dealers may request a vendor authorization number using the Department’s online Certificate Verification System at floridarevenue.com/taxes/certificates. 

 

For forms and other information, visit the DOR’s website at floridarevenue.com or call Taxpayer Services at (850) 488-6800.  The TEAM card does not expand or create agricultural exemptions.

Issues with agricultural sale tax exemptions

What happens if the dealer charges the rancher tax when the item is exempt and will not recognize your TEAM card on the transaction? We have seen this happen with online dealers and big box stores like Home Depot, Lowes, Rural King, and Tractor Supply to name a few.  Their systems have not been programmed to allow Ag sale tax exemptions on many items. Currently, there are no provisions for getting a refund from the state for overpaid sales tax.  The only recourse is to get it from the vendor.  Once the tax is remitted to the State the dealer is the only one that may request a refund.

Summary

The new fence sale tax exemption now covers anything related to containing, confining, or processing cattle on agricultural land.  This includes all materials that become part of fences, gates, energized fencing systems, and even cattle guards.  Please note that all tax-exempt purchases or rentals must be supported with sufficient documentation, which is an exemption document that covers the item purchased timely submitted to the dealer. The selling dealer is only required to obtain one certificate for sales made for the purposes indicated on the certificate and is not required to obtain an exemption certificate for subsequent sales made to the same purchaser for the exempt purpose indicated on the exemption certificate. A farmer may present the Florida farm TEAM card, an exemption certificate, or an affidavit to the selling dealer as an exemption document. The document now expires five years after the date of issuance. Florida ranchers can still use Tax Exemption Certificates if desired, and they may still need to do so for online retailers. 

Questions?

For more information on this topic and other tax planning for ranching, please contact Tom Bryant at (863) 640-2008 or Tom@beasleybryantcpa.com and/or Ryan Beasley at (863) 646-1373 or Ryan@beasleybryantcpa.com. Please visit our website at www.beasleybryantcpa.com for information on other relevant topics. Beasley, Bryant & Company, CPA’s, P. A. are experienced in agricultural business problems, tax issues or concerns, and are here to help you. Thomas J. Bryant, CPA is Senior Tax Partner, and Ryan Beasley, CPA is Business Management Partner; Beasley, Bryant & Company, CPA’s, P. A., Lakeland, Florida (863) 646-1373.

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