Does Tennessee's general definition of 'agriculture' apply to the word 'agriculture' in the property-tax statute that defines 'Farm Property'?

Plain-English summary

Senator Mike Bell asked a small but important interpretation question. The Tennessee Constitution at Article II, Section 28 splits real property for tax purposes into four subclasses: Public Utility, Industrial and Commercial, Residential, and Farm Property. The legislature defines what goes in each subclass. Tenn. Code Ann. § 67-5-501(3) defines Farm Property as "all real property that is used, or held for use, in agriculture." But § 67-5-501(3) does not separately define "agriculture." What does the word mean?

The AG pointed to two existing statutory definitions of agriculture, both intended to be portable across the Code:

• Tenn. Code Ann. § 1-3-105(2)(A), applicable "[a]s used in [the Tennessee Code], unless the context otherwise requires," defines agriculture to include the land/buildings/machinery used in commercial production of farm products and nursery stock, the activity carried on in connection with that production, recreational/educational activities on such land, and entertainment activities conducted in conjunction with but secondary to commercial production.
• Tenn. Code Ann. § 43-1-113(b)(1) (the Department of Agriculture's organic definition) is substantively identical and is "applicable to the term wherever it appears in the code, unless a different definition is specifically made applicable to the part, chapter, or section in which the term appears." § 43-1-113(a).

Section 67-5-501(3) does not specifically supply a different definition of agriculture for property tax purposes. The context of property classification does not require a different reading. So both general definitions apply to the word "agriculture" in § 67-5-501(3). Because the two definitions are substantively identical, there's no conflict and no need to pick between them.

The AG added a constitutional caveat: any statutory definition that conflicts with the inherent meaning of "Farm Property" in Article II, Section 28 would yield to the constitution. Williams v. Carr, 218 Tenn. 564, 404 S.W.2d 522 (1966), is the cite for "the Constitution is the superior law." The legislature has broad latitude to define property classifications, but cannot craft a definition that distorts the constitutional terms.

Currency note

This opinion was issued in 2017. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule mentioned here.

Background and statutory framework

Tennessee's property tax classification is constitutional at its core. Article II, Section 28 of the Tennessee Constitution divides real property into four subclasses with different assessment ratios. Farm Property gets a 25% assessment ratio (vs. 40% for commercial/industrial), which is why classification matters so much to taxpayers.

The legislature implements the constitution by defining what fits in each subclass. § 67-5-501(3) says Farm Property is "all real property that is used, or held for use, in agriculture." That brief definition pushes all the analytical weight onto the word "agriculture."

The two general definitions.

Tenn. Code Ann. § 1-3-105(2)(A) gives "agriculture" four components:

1. Land, buildings, and machinery used in commercial production of farm products and nursery stock;
2. Activity carried on in connection with that commercial production;
3. Recreational and educational activities on land used for such commercial production; and
4. Entertainment activities conducted in conjunction with, but secondary to, the commercial production on such land.

This is a Code-wide definition that applies "[a]s used in [the Tennessee Code], unless the context otherwise requires."

Tenn. Code Ann. § 43-1-113(b)(1) gives a substantively identical definition. § 43-1-113(a) sets the scope: "applicable to the term wherever it appears in the code, unless a different definition is specifically made applicable to the part, chapter, or section in which the term appears."

The application to § 67-5-501(3).

The AG's analysis was textual. § 67-5-501(3) uses "agriculture." It does not provide its own definition. The context of property classification does not require a different reading. Both default definitions apply by their own terms. They are identical in substance. So an assessor or taxpayer can use either to interpret "Farm Property" under § 67-5-501(3).

The four components of the definition matter to assessors. Component 4 in particular is important for agritourism: an entertainment activity conducted in conjunction with, but secondary to, commercial farm production, on land used for that production, is "agriculture" under the statutory definition. That's relevant for things like wedding venues on working farms, U-pick operations, or small-scale event hosting on agricultural property.

The constitutional caveat. The AG noted, properly, that Article II, Section 28's property subclasses control any statutory definition. The legislature has wide power to specify what constitutes "Farm Property," but if it crafted a definition that contradicted the inherent constitutional meaning, the constitution would prevail. Williams v. Carr is the standard cite for this principle. The opinion did not identify any inconsistency between the existing statutory definition and the constitution.

A practical note for assessors. Because § 1-3-105(2)(A) and § 43-1-113(b)(1) are both applicable and identical, an assessor's analysis of whether a parcel qualifies for Farm Property classification turns on whether the parcel is used or held for use in:

• Commercial production of farm products or nursery stock;
• Activity connected with that production;
• Recreational/educational activities on land used for such production; or
• Entertainment conducted in conjunction with, but secondary to, such production.

Recreational activities without a connection to commercial production do not qualify. Entertainment that is primary, not secondary, to the commercial production does not qualify.

Common questions

Q: What's "Farm Property" for Tennessee property tax purposes?
A: § 67-5-501(3) defines it as all real property "used, or held for use, in agriculture." Under this opinion, "agriculture" uses the standard statutory definitions in § 1-3-105(2)(A) and § 43-1-113(b)(1).

Q: Does land used for hobby farming count as Farm Property?
A: The statutory definitions all reference "commercial production." Land used for non-commercial hobby activities likely does not qualify. Specific factual analysis matters.

Q: What about agritourism, like a U-pick or wedding venue on a working farm?
A: Component 4 of the statutory definition includes "entertainment activities conducted in conjunction with, but secondary to, commercial production." If the entertainment is secondary to a real commercial farm operation on the same land, it can fit within the agriculture definition.

Q: Why does Farm Property classification matter?
A: Article II, Section 28 of the Tennessee Constitution sets a 25% assessment ratio for Farm Property compared to 40% for commercial/industrial. Misclassification can mean substantial tax differences.

Q: Can the legislature redefine "Farm Property" however it wants?
A: The legislature has broad latitude, but the AG noted that Article II, Section 28's constitutional subclassifications control. A statutory definition that distorted the constitutional concept would yield to the constitution. Williams v. Carr establishes the priority.

Q: Are § 1-3-105(2)(A) and § 43-1-113(b)(1) different in any way that matters?
A: According to this opinion, no. They are substantively identical, so applying either gives the same result.

Citations and references

Statutes and constitution:

• Tenn. Const. art. II, § 28
• Tenn. Code Ann. § 1-3-105(2)(A)
• Tenn. Code Ann. § 43-1-113(a), (b)(1)
• Tenn. Code Ann. § 67-5-501(3)

Cases:

• Williams v. Carr, 218 Tenn. 564, 404 S.W.2d 522 (1966)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2017/op17-030.pdf

Original opinion text

STATE OF TENNESSEE
OFFICE OF THE ATTORNEY GENERAL
April 17, 2017
Opinion No. 17-30
Definition of "Agriculture" for Property Taxation

Question
Is the definition for "agriculture" at Tenn. Code Ann. §§ 1-3-105(2)(A) and 43-1-113(b)(1) applicable to the word "agriculture" as used in the definition of "Farm Property" in Tenn. Code Ann. § 67-5-501(3)?

Opinion
Yes.

ANALYSIS

"As used in [the Tennessee Code], unless the context otherwise requires," "agriculture" is defined as

(i) The land, buildings and machinery used in the commercial production of farm products and nursery stock;
(ii) The activity carried on in connection with the commercial production of farm products and nursery stock;
(iii) Recreational and educational activities on land used for the commercial production of farm products and nursery stock; and
(iv) Entertainment activities conducted in conjunction with, but secondary to, commercial production of farm products and nursery stock, when such activities occur on land used for the commercial production of farm products and nursery stock;

Tenn. Code Ann. § 1-3-105(2)(A).

Tennessee Code Annotated § 43-1-113(b)(1) also defines "agriculture," and that definition, like the definition in § 1-3-105(2)(A), is "applicable to the term wherever it appears in the code, unless a different definition is specifically made applicable to the part, chapter, or section in which the term appears." Tenn. Code Ann. § 43-1-113(a). The definitions of "agriculture" in § 1-3-105(2)(A) and § 43-1-113(b)(1) are substantively identical.

For purposes of taxation, the Tennessee Constitution separates real property into four subclassifications: "Public Utility Property," "Industrial and Commercial Property," "Residential Property," and "Farm Property." Article II, Section 28, of the Constitution gives the General Assembly authority to determine "the value and definition of property in each class or subclass." The Legislature has exercised that authority to define "Farm Property" as "all real property that is used, or held for use, in agriculture . . . ." Tenn. Code Ann. § 67-5-501(3) (emphasis added).

The word "agriculture" is used in Tenn. Code Ann. § 67-5-501(3), is not specifically defined in connection with its use in § 67-5-501(3), and is not used in a context that requires diverging from the definition of "agriculture" in Tenn. Code Ann. § 1-3-105. Therefore, the definition of "agriculture" in Tenn. Code Ann. § 1-3-105(2)(A) applies to define "agriculture" as it is used in the statutory definition of "Farm Property" in § 67-5-501(3). And because no "different definition is specifically made applicable" to the word "agriculture" in the definition of "Farm Property" in Tenn. Code Ann. § 67-5-501(3), the definition of "agriculture" in Tenn. Code Ann. § 43-1-113(b)(1) would also apply. Since the two applicable definitions are identical, there is no difficulty or conflict in applying them both, and it is unnecessary to determine which of the two code sections, if either, takes precedence over the other.

The property subclassifications in Article II, Section 28, of the Constitution would of course control any statutory definition. See Williams v. Carr, 218 Tenn. 564, 404 S.W.2d 522, 529 (1966) ("[T]he Constitution is the superior law . . . ."). While the General Assembly has broad power to define the property that falls within each class or subclass, it may not craft a definition that is inconsistent with the inherent meaning of the words used in the Constitution.

HERBERT H. SLATERY III
Attorney General and Reporter

ANDRÉE SOPHIA BLUMSTEIN
Solicitor General

JAMES P. URBAN
Assistant Attorney General

Requested by:
The Honorable Mike Bell
Tennessee State Senator
309 War Memorial Building
Nashville, TN 37243