If I'm a contract poultry farmer in Arkansas and my contract requires me to mow around the chicken houses for biosecurity, can I buy a zero-turn mower sales-tax-free as farm equipment?
Subject
Whether the purchase of a zero-turn mower used by a contract poultry farmer to maintain the area around chicken houses for biosecurity is exempt from sales tax as "farm equipment and machinery" under A.C.A. § 26-52-403.
Plain-English summary
State Senators Bryan King and Gary Stubblefield asked the AG whether contract poultry farmers can buy zero-turn mowers tax-free under the farm-equipment exemption in A.C.A. § 26-52-403. The hypothetical: the farmer's contract with the integrator requires upkeep around the chicken houses, which is a health-and-safety practice (rodent control, fly control). The farmer buys a mower for that.
The AG laid out the three-part test for the exemption:
1. The buyer has to be in farming "as a business."
2. The purchase has to be an "implement" used in doing work, and it can't be a registered motor vehicle, an airplane, a hand tool, or used in timber production.
3. The implement has to be used "exclusively and directly" in the agricultural production of food or fiber.
The first two parts are easy: a commercial poultry contract is a farming business, and a zero-turn mower is an implement that isn't on the excluded list.
The third part, "exclusively and directly," is where DFA has historically pushed back. DFA's published position, in Office of Hearings & Appeals Docket 19-112 and Revenue Legal Opinions, is that a mower used to mow around chicken houses fails the "directly" test because the mowing isn't part of "actual" production.
The AG disagreed. Reading the statute "just as it reads," the AG concluded a court would likely find that "directly" means "immediately" or "without anything intervening" (the dictionary meaning), and the connection between mowing the chicken-house ground for required biosecurity and chicken production is immediate enough. The mower would qualify.
Two important caveats: First, the AG cannot decide a specific farmer's tax dispute. Whether any particular mower qualifies turns on whether it's used "exclusively" for agricultural production, and that's a fact question for the DFA, the Arkansas Tax Appeals Commission, and the courts on appeal. Second, the AG explicitly noted that courts review DFA's interpretations of statutes de novo (no deference to the agency's view), citing Myers v. Yamato Kogyo Co., 2020 Ark. 135.
What this means for you
Contract poultry farmers in Arkansas
If you've been paying sales tax on a zero-turn mower bought to maintain the area around your chicken houses because the contract requires it, the AG opinion gives you ammunition for a refund claim or for a future tax-free purchase. Practical steps:
- Document the use. Keep records showing the mower stays on the production land and is used for the contract-required biosecurity upkeep. The "exclusively" requirement will be the first place DFA pushes back; a paper trail showing no off-property or non-production use closes that door.
- File the exemption certificate at the time of purchase. Don't pay tax then chase a refund. Form ST-403 (DFA's farm-equipment exemption certificate) is the standard route.
- Expect pushback from DFA. DFA's published position predates this AG opinion and runs the other way. If DFA denies the exemption, your appeal goes to the Arkansas Tax Appeals Commission, then to circuit court under the Arkansas Tax Procedure Act.
- Save your contract. The integrator's contract requiring biosecurity upkeep is part of why a court would find the mowing "directly" connected to chicken production. Without the contract, the argument is weaker.
Farm equipment dealers
You can sell to contract poultry farmers using the GR-51 farm-equipment exemption certificate as you always have. The AG opinion does not bind DFA, but it strengthens the farmer's defense if audited. Document the sale carefully, keep the certificate on file, and don't take a position one way or the other on whether the use is exempt; that's the buyer's claim, not yours.
Tax practitioners
The AG opinion is a clean-text statutory-construction read against an entrenched agency interpretation. Two arguments to keep in your pocket:
- Myers v. Yamato Kogyo Co. eliminates Chevron-style deference to DFA in Arkansas. Courts review the meaning of "exclusively" and "directly" de novo.
- The Arkansas Tax Appeals Commission has not yet decided whether biosecurity mowing satisfies the "directly" element on facts like the senators' hypothetical. The AG opinion cited Docket 23-TAC-02526, but that case involved a pallet fork used for construction, which is genuinely off-production, and is distinguishable.
DFA Revenue Legal
The AG opinion expressly conflicts with DFA Revenue Legal Opinions Nos. 20200527 (2020) and 20181013 (2018). DFA may want to revisit those opinions or develop new factual support (epidemiology data on biosecurity, integrator-contract analysis) to preserve its administrative position. Note that the AG also pointedly cited Myers on de novo statutory review.
State legislators
If the General Assembly wants to settle this, the cleanest move is to amend A.C.A. § 26-52-403 with a definition of "directly" that explicitly includes (or excludes) biosecurity-required maintenance. As written, the statute leaves "directly" undefined and DFA has tried to define it through GR-51, with mixed results.
Common questions
Q: Does the exemption apply to all mowers, or just zero-turn mowers?
The senators' hypothetical was zero-turn mowers, but the AG's analysis turns on the "implement" definition and the use, not the brand or type. A push mower used for the same biosecurity upkeep should follow the same logic. The exclusion for "hand tools" in § 26-52-403(a)(1)(C) might be invoked against a hand-pushed reel mower, but a powered mower is an "implement," not a "hand tool."
Q: What if the farmer also mows the lawn around their personal residence with the same mower?
That defeats the "exclusively" requirement and the exemption is lost. The presumption in GR-51(C)(1)(A) (used on land owned or leased for production) is rebuttable, and DFA can produce evidence of personal use to defeat the exemption. The clean answer is one mower for production, another for the lawn.
Q: I'm not a contract grower; I run my own small flock. Does this still apply?
The exemption requires "farming as a business" under § 26-52-403(a)(2). A hobby flock probably doesn't qualify; a commercial operation that produces eggs or meat for sale does. The Arkansas Tax Appeals Commission has been active on this question (Docket 23-TAC-00833 reviewed whether a farmer was actually engaged in business for profit).
Q: What about the mower I bought last year? Can I get a refund?
Refund claims under the Arkansas Tax Procedure Act must be filed with DFA within the statutory limitations period (generally three years for sales tax). Use Form ET-179A (Claim for Refund). Attach a copy of the AG opinion and your contract showing the biosecurity-upkeep requirement.
Q: How does this opinion fit with the existing GR-51 rule?
GR-51 is the DFA rule defining the farm-equipment exemption. Its (C)(2)(A) defines "directly" to include implements "used in the actual agricultural production." The AG's reading of "directly" is broader than DFA's: the statute itself doesn't define "directly," and the AG read the dictionary definition ("immediately"; "without anything intervening") as controlling. A court applying Myers v. Yamato Kogyo would resolve that conflict de novo, not by deferring to DFA.
Q: Are there other states with the same kind of exemption?
Yes. Most states with sales tax have a farm-equipment exemption. The exact contours of "directly" vary, but the question of whether maintenance equipment around production buildings qualifies is recurring. Cases in other states have gone both directions; Arkansas is a clean fit for the more permissive reading.
Background and statutory framework
Arkansas's farm-equipment exemption, A.C.A. § 26-52-403, exempts "farm equipment and machinery" from sales tax when the equipment is "used exclusively and directly" in the "agricultural production of food or fiber … as a business." The exemption excludes timber-production equipment, registered motor vehicles, airplanes, and hand tools.
The administrative gloss is in DFA's Gross Receipts Tax Rule GR-51, which the Department promulgates under § 26-18-301(a)(1) and § 26-52-105(b). GR-51(C)(1)(A) creates a rebuttable presumption that an implement is "used exclusively in the agricultural production of food … [or] fiber if" it "is used on land owned or leased for the purpose of agricultural production of food … [or] fiber." GR-51(C)(2)(A) defines "directly" to include implements "used in the actual agricultural production of food or fiber to be sold in processed form or otherwise at retail."
The taxpayer carries the burden of proving entitlement to the exemption by a preponderance of the evidence (§ 26-18-313(c)–(d); Chandler v. Baker, 16 Ark. App. 253). The Arkansas Supreme Court has held that statutes are construed "just as [they] read[], giving the words their ordinary and usually accepted meaning in common language" (Roberson v. Phillips County Election Commission, 2014 Ark. 480).
DFA's published position, before this opinion, was that mowers used to mow around chicken houses fail the "directly" element. Office of Hearings & Appeals Docket 19-112 (sustained on Commissioner's review) and DFA Revenue Legal Opinions Nos. 20200527 and 20181013 all hold that lawn mowers used for chicken-house maintenance "are not used directly in production." The Office of Hearings & Appeals also extended this rationale to fence-row mowing in Docket 19-013.
The AG's opinion takes a different view. Reading "directly" by its dictionary meaning ("immediately"; "without anyone or anything intervening" per Black's Law Dictionary), the AG concludes the statutory text supports a broader reading than DFA's, especially for a contract-mandated biosecurity practice. The AG also flags Myers v. Yamato Kogyo (2020) as eliminating Arkansas's Chevron-style deference to agencies on statutory interpretation, meaning a reviewing court would not defer to DFA's reading of "directly."
The Arkansas Tax Appeals Commission, established under §§ 26-18-1102 et seq., is the first appellate stop after DFA. Its decisions are reviewable in circuit court.
Citations
- A.C.A. § 26-52-403 (farm equipment and machinery exemption)
- A.C.A. § 26-52-403(a)(1)(A) (implement used exclusively and directly)
- A.C.A. § 26-52-403(a)(1)(C) (exclusions: timber, registered motor vehicles, airplanes, hand tools)
- A.C.A. § 26-52-403(a)(2) (farming as a business)
- A.C.A. § 26-52-403(b) (exemption applies to new and used equipment)
- A.C.A. § 26-52-103(35)(A) (definition of tangible personal property)
- A.C.A. § 26-52-301(1)(A) (sales tax on tangible personal property)
- A.C.A. § 26-52-105 (DFA general administrative authority)
- A.C.A. § 26-18-301(a)(1) (DFA rulemaking authority)
- A.C.A. § 26-18-313(c)–(d) (taxpayer's burden, preponderance standard)
- A.C.A. §§ 26-18-1102, 26-18-1110, 26-18-1117 (Tax Appeals Commission)
- Gross Receipts Tax Rule GR-51 (farm equipment and machinery)
- Myers v. Yamato Kogyo Co., Ltd., 2020 Ark. 135, 597 S.W.3d 613 (de novo review of agency statutory interpretation)
- Roberson v. Phillips County Election Commission, 2014 Ark. 480, 449 S.W.3d 694 (statutes construed as written)
- Chandler v. Baker, 16 Ark. App. 253, 700 S.W.2d 378 (1985) (preponderance standard)
- Ark. Dep't of Hum. Servs. v. Siloam Springs Nursing & Rehab., 92 Ark. App. 391, 214 S.W.3d 275 (2005) (plain meaning of administrative rules)
- Johnson v. Ark. Bd. of Examiners in Psych., 305 Ark. 451, 808 S.W.2d 766 (1991) (rules presumed valid)
- Prior AG opinions cited: 2024-088, 2024-067, 2024-047, 2023-106, 2014-067, 2011-120, 2009-054, 2008-001, 2004-319, 2002-170, 2002-066, 2002-002, 2000-029, 97-209, 93-328, 93-169, 91-371, 91-270, 82-174, 79-58
- DFA Revenue Legal Opinion Nos. 20200602, 20200527, 20200320, 20181013, 20170924
- Arkansas Tax Appeals Commission Dockets 23-TAC-00833, 23-TAC-00706, 23-TAC-02526
- Office of Hearings & Appeals Dockets 18-311, 19-013, 19-112, 19-410
Source
Original opinion text
Opinion No. 2024-072
January 7, 2025
The Honorable Bryan B. King
State Senator
871 County Road 814
Green Forest, Arkansas 72638
The Honorable Gary Stubblefield
State Senator
2542 Skeets Road
Branch, Arkansas 72928
Dear Senators King and Stubblefield:
I am writing in response to your request for my opinion on questions concerning zero-turn
mowers and the sales-tax exemption for the sale of farm equipment and machinery under
A.C.A. § 26-52-403. You indicate that some poultry farmers have contracts that require
them "to upkeep the buildings and surrounding areas, which includes mowing the grass."
To mow these areas, the poultry farmers "often purchase zero-turn mowers." Paraphrasing
your questions, you ask if these purchases qualify for the sales-tax exemption for farm
equipment and machinery.
RESPONSE
To claim the "farm equipment and machinery" exemption under A.C.A. § 26-52-403, the
taxpayer must meet three requirements. First, the taxpayer must, "as a business," be
producing food or fiber. Second, the purchase in question must be a tool, utensil, or other
piece of equipment used in doing work. But it cannot be "used in the production and
severance of timber, motor vehicles of a type subject to registration, airplanes, or hand
tools." Third, the implement must be used "exclusively" and "directly" in the agricultural
production of food or fiber. It is my opinion that a court likely would find that mowers
used only to upkeep the ground around chicken houses for health and safety as required by
contract are exempt under A.C.A. § 26-52-403 and Gross Receipts Tax Rule GR-51.
Although I can opine on the interpretation of sales-tax exemptions—and this office has
often done so—I caution that whether an exemption applies to any particular purchase is
a fact-specific issue upon which I cannot definitively opine.
DISCUSSION
Under A.C.A. § 26-52-403, both new and used "farm equipment and machinery" are
exempt from sales tax. Purchases are "farm equipment and machinery" if they are
"implements used exclusively and directly" in "the agricultural production of food or fiber
… as a business." Farmers claiming this exemption have the burden of proving they are
entitled to it.
To claim the exemption, farmers must meet three requirements. First, they must be engaged
in farming as a business. Second, the purchase in question must be an "implement"—
that is, "[a] tool, utensil, or other piece of equipment used in doing work." But it does not
include implements that are "used in the production and severance of timber, motor
vehicles of a type subject to registration, airplanes, or hand tools." Third, the "implement"
must be "used exclusively and directly in the agricultural production of food or fiber." If
any of these requirements are not met, the farmer cannot claim the exemption.
While zero-turn mowers may be implements used by farmers engaged in farming as a
business, the primary hurdle of qualifying for the exemption for farm equipment and
machinery is the third requirement: does the farmer use the zero-turn mower on a
commercial farm "exclusively and directly" in the "agricultural production of food or
fiber"? Although both "exclusively" and "directly" are undefined by the applicable
statutes, State tax rules provide definitions for each. But a State agency's ability to create
rules is limited by the scope of statutory authority: it cannot create a rule that is contrary to
a statute or beyond the power given to it by a statute.
-
Exclusively. A zero-turn mower must be used "exclusively" in the agricultural
production of food or fiber. "Exclusively" typically means "[n]ot allowing something else,"
"[n]ot divided or shared," or "sole." Thus, under the plain language of A.C.A. §
26-52-403, a zero-turn mower must be used only for the "agricultural production of food
or fiber" and nothing else. The applicable administrative rule creates a presumption that an
implement is "used exclusively in the agricultural production of food … [or] fiber if" it "is
used on land owned or leased for the purpose of agricultural production of food … [or]
fiber." This presumption is rebuttable if evidence shows that the farmer is using the
implement for non-production purposes. Thus, while the hypothetical farmer likely meets
the "exclusively" presumption if he or she mows on land "owned or leased for the purpose
of agricultural production of food or fiber," this presumption could be rebutted with
contrary evidence indicating that the mower is not being used only for the production of
food or fiber. -
Directly. A zero-turn mower must also be used "directly" in "the agricultural production
of food or fiber." The rules created by the Department of Finance and Administration
("DFA") define "directly" to include an implement that is "used in the actual agricultural
production" of food or fiber "to be sold in processed form or otherwise at retail." Courts
will give the "[w]ords in an administrative rule … their plain and ordinary meaning unless
there is an ambiguity." The word "actual" is undefined but typically means "[e]xisting in
fact; real"; or "conforming to the characteristics of a group or type; typical."
The DFA has interpreted both the statutes and rules as prohibiting the use of the underlying
exemption for a lawnmower used to mow around chicken houses: "The Department has
consistently interpreted Ark. Code Ann. § 26-52-402(b) … and GR-51 in a manner so that
the use of machinery or equipment to … mow around chicken houses … results in
machinery or equipment failing to satisfy the 'directly' test."
But one must interpret a statute "just as it reads," and must give "the words their ordinary
and usually accepted meaning in common language." The word "directly" typically
means "immediately" or "[w]ithout anyone or anything intervening." It is my opinion
that under the hypothetical facts presented—a farmer who only uses the mower to upkeep
the ground around chicken houses for health and safety as required by a contract—a court
likely would find the "directly" requirement met because of the close—or "immediate"—
connection between "farming" in § 26-52-403 and the mower's use.
I note again, however, that determining when a mower is no longer used in sufficiently
close connection with farming to be considered "directly" used in farming is a highly
factual question, so I cannot opine whether any particular mower is exempt.
If a fact issue arises, that should be resolved initially by the DFA. Any appeal of the
Arkansas DFA's decisions concerning sales-tax assessments and use of exemptions would
go to the Arkansas Tax Appeal Commission, which would review the facts and issue a
decision that could be appealed to circuit court under the Arkansas Tax Procedure Act,
A.C.A. §§ 26-18-101 to 26-18-1120. And, ultimately, courts determining the meaning of
statutes do not give "deference to agencies' interpretations of statutes," and will review
agency interpretations of statutes de novo.
In conclusion, it is my opinion that a court likely would find that mowers used only to
upkeep the ground around chicken houses for health and safety as required by contract are
exempt under A.C.A. § 26-52-403 and Gross Receipts Tax Rule GR-51.
Assistant Attorney General William R. Olson prepared this opinion, which I hereby
approve.
Sincerely,
TIM GRIFFIN
Attorney General