How should a veterinary and farm-supply seller apply Georgia's GATE exemption to agricultural inputs, equipment, and related products?

Plain-English summary

The seller could exempt qualifying agricultural production inputs, energy used in agriculture, and agricultural machinery or equipment when it accepted a valid GATE certificate in good faith. The certificate had to be complete, appropriate, available for the transaction and jurisdiction, potentially applicable to the item, and reasonable for the purchaser's business.

The Department did not decide the treatment of every veterinary or cleaning product listed by the seller. It stated the category rules: qualifying inputs and machinery were exempt; machinery used to maintain agricultural equipment and installed repair parts could qualify; consumable supplies were generally taxable except qualifying employee safety equipment. The seller had to retain supporting records for at least three years.

Common questions

Q: Did a GATE certificate automatically exempt every item sold to a farmer?

A: No. The claimed exemption still had to be potentially applicable to the item and reasonable for the purchaser's business.

Q: How long did the seller need to keep records?

A: At least three years, and longer if an assessment appeal remained pending.

Citations and references

• O.C.G.A. § 48-8-3.3(a), (b) -- agricultural inputs, machinery, and energy
• O.C.G.A. § 48-8-38 -- good-faith exemption certificates
• O.C.G.A. § 48-8-52 -- three-year recordkeeping

Source

• Landing page: Georgia Sales & Use Tax Letter Rulings
• Original PDF: LR SUT-2013-03

Original ruling text

State of Georgia
Douglas J. MacGinnitie
Commissioner

Department of Revenue

Administrative Division – Office of Tax Policy
1800 Century Blvd., Suite 15107
Atlanta, Georgia 30345-3205
(404) 417- 6649

Frank M. O’Connell
Director

June 13, 2013

Re: Request for Declaratory Ruling dated April 26, 2013

This letter is in response to your request for guidance on the application of Georgia sales and use
tax to the sale of certain items.
Facts
Taxpayer offers products ranging from vaccines and pharmaceuticals to state of the art
equipment and software. Taxpayer sells products for small animals, large animals, equine,
animal equipment, personal care items, food, clothing etc. Because of recent changes to
Georgia’s sales and use tax exemptions for the agricultural industry, Taxpayer is requesting
guidance as to the appropriate taxation of various veterinary items and cleaning supplies.

Issue
How is tax appropriately applied to items sold by Taxpayer when the Taxpayer accepts in good
faith a purchaser’s GATE certificate?
Analysis
Georgia levies and imposes sales tax (subject to certain specific exemptions) on the retail
purchase, retail sale, storage, use, or consumption of tangible personal property and on certain
enumerated services. 1 Every purchaser of tangible personal property at retail in Georgia is liable
for a tax on the purchase at the rate of 4 percent of the sales price of the purchase, plus any
1

O.C.G.A. §§ 48-8-1 and 48-8-30(a).

June 13, 2013
Page 2 of 5
applicable local sales taxes. 2 All sales are deemed taxable unless the contrary is established. 3 In
order to claim exemption, the seller ordinarily obtains an exemption certificate from the
purchaser showing that the purchaser is exempt from the tax. 4
The sales and use taxes levied or imposed by this article shall not apply to sales to, or use by, a
qualified agriculture producer of agricultural production inputs, energy used in agriculture, and
agricultural machinery and equipment. 5 A dealer can make exempt sales of agricultural
machinery and equipment to a qualified agricultural producer providing a valid Georgia
Agriculture Tax Exemption (GATE) certificate issued by the Georgia Department of Agriculture.
"Agricultural production inputs" means
• seed;
• seedlings;
• plants grown from seed, cuttings, or liners;
• fertilizers;
• insecticides;
• livestock and poultry feeds, drugs, and instruments used for the administration of such
drugs;
• fencing products and materials used to produce agricultural products;
• fungicides;
• rodenticides;
• herbicides;
• defoliants;
• soil fumigants; plant growth regulating chemicals;
• desiccants, including, but not limited to, shavings and sawdust from wood, peanut hulls,
fuller's earth, straw, and hay;
• feed for animals, including, but not limited to, livestock, fish, equine, hogs, or poultry;
sugar used as food for honeybees kept for the commercial production of honey, beeswax,
and honeybees;
• cattle, hogs, sheep, equine, poultry, or bees when sold for breeding purposes;
• ice or other refrigerants, including, but not limited to, nitrogen, carbon dioxide, ammonia,
and propylene glycol used in the processing for market or the chilling of agricultural
products in storage facilities, rooms, compartments, or delivery trucks;
• materials, containers, crates, boxes, labels, sacks, bags, or bottles used for packaging
agricultural products when the product is either sold in the containers, sacks, bags, or
bottles directly to the consumer or when such use is incidental to the sale of the product
for resale;

2

Tangible personal property is defined as personal property “which may be seen, weighted, measured, felt, or
touched, or is in any other manner perceptible to the senses.” State v. Cherokee Brick & Tile Co., 79 S.E.2d 322
(1953).
3
O.C.G.A. § 48-8-38.
4
O.C.G.A. § 48-8-38; Ga. Comp. R. & Regs. r. 560-12-1-.08(1).
5
O.C.G.A. § 48-8-3.3(b).

June 13, 2013
Page 3 of 5
•

and containers, plastic, canvas, and other fabrics used in the care and raising of
agricultural products or canvas used in covering feed bins, silos, greenhouses, and other
similar storage structures. 6

“Agricultural machinery and equipment” means machinery and equipment used in the
production of agricultural products, including, but not limited to, machinery and equipment used
in the production of poultry and eggs for sale, including, but not limited to, equipment used in
the cleaning or maintenance of poultry houses and the surrounding premises…. 7 Machinery and
equipment used to repair or maintain agricultural machinery and equipment is qualifying
agricultural machinery and equipment and exempt from Georgia sales and use tax. “Agricultural
machinery and equipment” also means . . . any repair, replacement, or component parts installed
on agricultural machinery and equipment. 8 Repair, replacement, and component parts installed
on machinery and equipment used to repair or maintain agricultural machinery and equipment is
exempt from Georgia sales and use tax.
Consumable supplies are subject to tax with the exception of employee safety equipment, which
is tax exempt even if typically considered a consumable supply. 9
The previous and the amended versions of O.C.G.A. § 48-8-38 both state that the seller bears the
burden of proving that a retail sale is not subject to sales tax. Prior to March 5, 2013, sellers met
the burden of proving that a sale was not subject to sales tax by accepting a properly completed
certificate of exemption or obtaining the relevant data from the purchaser within 90 days
subsequent to the date of the sale. The amendment changes the manner in which sellers meet this
burden. Effective March 5, 2013, O.C.G.A. § 48-8-38 requires retail sellers to collect sales tax
unless they “in good faith” take from the purchaser a properly completed certificate of
exemption.
A seller takes a properly completed certificate in good faith if the certificate is:
•
•
•
•
•

Fully completed, including, but not limited to, the name, address, sales tax number, and
signature of the taxpayer when required;
In a form appropriate for the type of exemption claimed;
Claiming an exemption that was statutorily available on the date of the transaction in the
jurisdiction where the transaction is sourced;
Claiming an exemption that could be applicable to the item being purchased; and
Claiming an exemption that is reasonable for the purchaser's type of business.

The amendment’s good faith requirement applies to all exempt sales, including sales exempt
under the GATE program. The amendment does not change the exemption certificate acceptable

6

O.C.G.A. § 48-8-3.3(a)(3).
O.C.G.A. § 48-8-3.3(a)(1)(A).
8
O.C.G.A. § 48-8-3.3(a)(1)(B).
9
Informational Bulletin SUT 2013-01-28.
7

June 13, 2013
Page 4 of 5

under the GATE program: The GATE certificate remains the only form of agriculture
exemption certificate acceptable for purchases under this program.
Record Keeping for Audit Purposes
All dealers must keep and preserve: (a) suitable records of sales and purchases; (b) books of
account necessary to compute the tax due; and (c) other information required by the
Commissioner. 10
Regulations require that the following records be kept:
•
•
•
•
•

a daily record of all cash and credit sales, including any type of financing or
installment plan in use, and amounts of taxes collected;
a record of the amount of all merchandise purchased, including all bills of
lading, invoices, and copies of purchase orders;
a record of all deductions and exemptions claimed in filing sales or use tax
returns, including exemption and resale certificates;
a record of all tangible personal property used or consumed in the conduct of
the business; and
a true and complete inventory of the stock on hand and its value, taken at least
once yearly. 11

Dealers must retain records for three years. 12 However, if an assessment has been made and an
appeal to the Commissioner or a court is pending, books and records relating to the period
covered by the assessment must be preserved until the final disposition of the appeal. 13
Ruling
Effective March 5, 2013, O.C.G.A. § 48-8-38 requires retail sellers to collect sales tax unless
they “in good faith” take from the purchaser a GATE certificate or other appropriate and
properly completed certificate of exemption.
Although the Department of Revenue is unable to address each specific item, sales of
agricultural production inputs, energy used in agriculture, and agricultural machinery and
equipment are exempt from Georgia sales and use tax when Taxpayer accepts a valid GATE
certificate in good faith. Taxpayer must retain records to support its sales for a period of no less
than three years.

10

O.C.G.A. § 48-8-52; Ga. Comp. R. & Regs. r. 560-12-1-.15.
Ga. Comp. R. & Regs. r. 560-12-1-.23(1)(a) to Ga. Comp. R. & Regs. r. 560-12-1-.23(1)(e).
12
O.C.G.A. § 48-8-52(a); Ga. Comp. R. & Regs. r.560-12-1-.15.
13
O.C.G.A. § 48-8-52(a); Ga. Comp. R. & Regs. r. 560-12-1-.15; Ga. Comp. R. & Regs. r. 560-12-1-.23(1); Ga.
Comp. R. & Regs. r. 560-12-1-.23(3).
11

June 13, 2013
Page 5 of 5

Conclusion
The opinions expressed in this ruling are based upon the information contained in your request
and limited to the specific transactions, facts, and taxpayer in question. Should the circumstances
regarding the transactions change, or differ materially from those represented, then this ruling
may become invalid. In addition, please be advised that subsequent statutory or administrative
rule changes or judicial interpretations of the Statutes or Rules upon which this advice is based
may subject similar future transactions to a different tax treatment than that expressed in this
response.