Which buyers of horse feed can purchase it exempt from Kansas sales tax, and which exemption certificate applies?

Plain-English summary

A company that sells horse feed asked which of its customers can buy exempt from Kansas retailers' sales tax, and which exemption certificate each should give. The Department worked through the buyer types one by one.

Exempt buyers (with the certificate the Department listed):

• A feed dealer purchasing for resale — exempt, using a resale exemption certificate, which "requires the purchaser to be a registered Kansas retailer."
• A horse breeder that intends to sell the offspring — exempt, as an ingredient or component part.
• A livestock operator feeding out horses that "are intend[ed] for human consumption or as an ingredient or component of an item for resale" — exempt, as an ingredient or component part.
• A farmer or rancher buying feed for horses "use[d] in agriculture" — exempt, as consumed in production, or animals "primarily used in agriculture."

Taxable buyers:

• An owner of pleasure horses — not exempt.
• An owner of racing horses — not exempt.

The Department enclosed "the appropriate exemption certificate" and "an appendix that contains the relevant statutes and regulations."

Bottom line: horse feed is exempt when it feeds animals that are part of an agricultural or resale chain — resale inventory, breeding stock whose offspring will be sold, animals raised for consumption/resale, or horses used in agriculture — but it is taxable when it feeds pleasure or racing horses.

What this means for you

The buyer's use decides the tax

Whether horse feed is exempt does not depend on the feed itself but on who buys it and why. A seller should collect tax unless the buyer qualifies and provides the correct exemption certificate.

Resale requires a registered Kansas retailer

A feed dealer buying for resale is exempt only with a resale exemption certificate, and that certificate requires the purchaser to be a registered Kansas retailer.

Breeding and food/resale animals qualify as ingredient/component

A breeder that will sell the offspring, and a livestock operator feeding horses intended for human consumption or for resale, both claim the ingredient-or-component-part exemption.

Agricultural use qualifies; pleasure and racing do not

Feed for horses used in agriculture by a farmer or rancher is exempt (consumed in production / animals primarily used in agriculture). Feed for pleasure horses or racing horses is taxable.

Collect the right certificate for your records

Match each exempt sale to the certificate the Department identified — resale for dealers, ingredient/component for breeders and food-animal operators, consumed-in-production/agricultural for farmers and ranchers.

Common questions

Is all horse feed exempt in Kansas?
No. It is exempt only for certain buyers and uses; feed for pleasure or racing horses is taxable.

Can a feed dealer buy exempt for resale?
Yes, with a resale exemption certificate — and the dealer must be a registered Kansas retailer.

Is feed for a breeding operation exempt?
Yes, if the breeder intends to sell the offspring; it qualifies as an ingredient or component part.

What about a farmer or rancher's horses?
Feed for horses used in agriculture is exempt as consumed in production, or for animals primarily used in agriculture.

Are pleasure and racing horses treated the same?
Yes — feed for owners of pleasure horses and owners of racing horses is taxable in both cases.

Citations and references

• The ruling classifies each buyer of horse feed by exemption type — resale (registered Kansas retailer), ingredient or component part, and consumed in production / agricultural use — and states the rule in a table rather than by numbered statute. The Department enclosed an appendix of the relevant statutes and regulations.
• K.A.R. 92-19-59 — authorizes Kansas private letter rulings; this ruling binds the Department only as to the requesting taxpayer and the facts presented.
• Issued August 28, 1998 by Mark D. Ciardullo, Tax Specialist, Kansas Department of Revenue.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1998-93

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

August 28, 1998

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Dear Mr. XXXXXXX:

The purpose of this letter is to respond to your letter, that was received by this office on August 4, 1998. This is a private letter ruling pursuant to Kansas Administrative Regulation 92-19-59.

In your letter you stated that your company sells horse feed to various customers. You seek guidance as to which purchasers are exempt from Kansas retailers’ sales tax and the proper exemption certificate to be issued by exempt purchasers. I have indicated the proper treatment for each purchaser listed in your letter.

Type of customer Tax exempt Type of exemption certificate

Feed dealer purchasing Yes Resale exempt certificate, this certificate
for resale requires the purchaser to be a
registered Kansas retailer.

Owner of pleasure No Not applicable
horses

Owner of racing No Not applicable
horses

Horse breeder Yes Ingredient or component part
that intends to sell
offspring

Livestock operator Yes Ingredient or component part
feeding out horses, that
are intend for human
consumption or as an
ingredient or component
of an item for resale

Farmer or Rancher feed Yes Consumed in production or animals
for horses use in agriculture primarily used in agriculture

I have enclosed the appropriate exemption certificate for your use. I have also enclosed an appendix that contains the relevant statutes and regulations.

This private letter ruling is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to an accurate determination by the department, this ruling is null and void. This private letter ruling will be revoked in the future by operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or a published revenue ruling, that materially effects this private letter ruling.

Sincerely,

Mark D. Ciardullo
Tax Specialist

MDC

Date Composed: 09/04/1998 Date Modified: 10/11/2001

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