Is a tarp purchased to cover an agricultural gravity box exempt from Kansas sales tax as part of farm machinery and equipment?

Plain-English summary

A farmer bought a tarp to cover an agricultural gravity box used to haul grain from grain bins to a livestock feeding area and asked whether the tarp was exempt.

The Department answered yes. A gravity box was designed to hold grain or feed, travel behind a tractor, and unload through a bottom hopper by gravity or, on some models, an auger.

Gravity boxes used in farming and ranching operations like the one described qualified as exempt farm machinery and equipment. The covering tarp was part of that exempt equipment and was also exempt.

Because the farmer had paid tax and now had the written determination, the Department instructed the vendor to refund the sales tax, deduct it on the next month's sales-tax return, and retain a copy of the letter.

What this means for you

Farmers and ranchers

A tarp specifically covering an exempt gravity box received the same exemption as the box under this opinion.

Farm-equipment vendors

Keep documentation tying the tarp to the exempt agricultural equipment and use.

Accountants

The Department allowed a vendor refund and return deduction because tax had already been paid on the exempt purchase.

Common questions

Q: Was the gravity-box tarp exempt?
A: Yes. It was treated as part of exempt farm machinery and equipment.

Q: Did the described use matter?
A: Yes. The box was used in a farming operation to move grain to a livestock feeding area.

Q: What if tax was already paid?
A: The Department directed the vendor to refund it and deduct the amount on its next return.

Citations and references

• Kansas farm machinery and equipment exemption — applied by the Department without a section number in the letter

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: O-2002-004

Original ruling text

Opinion Letter

Body:

Office of Policy & Research

February 14, 2002

XXXX
XXXX
XXXX

RE: Your letter received on February 8, 2002

Dear XXXX:

Thank you for your recent letter. You ask if a tarp that you bought to cover the top of a agricultural gravity box is exempt from sales tax. Please be advised your purchase is exempt from Kansas sales tax.

An agricultural gravity box often is used to haul grain from field to an unloading area. In your case, you haul grain from your grain bins to a livestock feeding area. Gravity boxes are designed to be loaded with grain or feed and pulled behind a farm tractor. When the hopper door at the bottom is opened to release the load, grain flows down the slopped sides using gravity to generate the movement. Gravity flow boxes may be mounted on two or four wheels. On four wheeled models, the wheels are typically located at the four corners of the vehicle and connected to one another by axles and a ladder frame. Bracing runs from the frame to the top section of box where the flat sides are parallel to one another. The flat sides below the top section are slopped to the hopper door. On some gravity boxes, an auger is incorporated into the side of the box and can be used for unloading instead of gravity.

Hopper boxes that are used in farming and ranching operations like yours qualify for sales tax exemption as farm machinery and equipment. A tarp that covers the hopper box is considered to be part of the exempt equipment and is also exempt. Since you paid sales tax on the purchase and have this written determination, the vendor should refund the sales tax you paid and take a deduction on its next months sales tax return. The vendor should place a copy of this letter in their files. I hope that I have answered your questions. If you or your vendor have any more questions, please call me at 785-296-3081.

Sincerely,

Thomas E. Hatten
Attorney/Policy & Research

Date Composed: 02/27/2002 Date Modified: 02/27/2002

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