Ezel / Tax Rulings / CT
CT Ruling 89-126 Sales and Use Taxes 1989-09-27

Did a tobacco farmers cooperative qualify as a farmer engaged in agricultural production for the cited sales-tax exemption?

Short answer: No. The cooperative steamed, fumigated, shipped, and sold members' tobacco as their agent, but did not raise or harvest the crop. Its activities were outside the cited definition of agricultural production, so sales to it were not exempt.

Apply this to your situation

This page answers the general question as of 1989. Ezel answers yours, under current Connecticut tax law, with citations.

Currency note: this ruling is from 1989
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official 1989 Connecticut Department of Revenue Services Ruling applying the cited agricultural-production exemption to a tobacco farmers cooperative. The result depends on the cooperative providing processing, shipping, and sales-agent services without itself raising or harvesting the tobacco. Connecticut imposes sales and use tax solely at the state level: there are no local or municipal sales taxes. This summary is informational only and is not legal or tax advice. Consult a licensed Connecticut tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

Company X steamed and fumigated members' tobacco leaves, shipped them to the Dominican Republic, and negotiated sales to cigar manufacturers as the members' agent. The members retained title until sale.

DRS concluded that these activities were not agricultural production because the cooperative did not raise or harvest an agricultural or horticultural commodity. Sales to the cooperative therefore did not qualify for the cited sales-and-use-tax exemption.

What this means for you

Under the cited historical definition, processing and selling members' crops did not make the cooperative a farmer engaged in agricultural production when it did not raise or harvest the crop.

Common questions

What services did the cooperative perform? Steaming, fumigating, shipping, and negotiating tobacco sales.

Who retained title before sale? The cooperative's members.

Why was the exemption denied? The cooperative did not raise or harvest the tobacco.

Citations and references

  • 1989 Connecticut Public Act 89-123, § 9, as cited in the ruling.

Source

Original ruling text

Ruling 89-126, Agent for Sale

Your letter inquires whether a farmers cooperative is "a farmer engaged in agricultural production as a trade or business"; Conn. Pub. Acts No. 89-123, § 9.

The cooperative in question, Company X, is described in your letter as a provider of various services to its members. These services include the steaming and fumigation of tobacco leaves and the shipment of those leaves to the Dominican Republic. The members retain title to their tobacco until the cooperative, as agent for its members, negotiate the sale of the tobacco to cigar manufacturers.

These activities do not fall within the definition of "agricultural production" which, in relevant part, means "the raising and harvesting of any agricultural or horticultural commodity." Conn. Pub. Acts No. 89-123, § 9.

Because the cooperative does not raise or harvest or both raise and harvest an agricultural or horticultural commodity, sales to the cooperative will not be sales exempted from sales and use taxes pursuant to Conn. Pub. Acts No. 89-123, § 9.

LEGAL DIVISION

September 27, 1989

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