Does a farm tire repair machine qualify for Kansas's farm machinery and equipment sales-tax exemption?

Plain-English summary

A company that produces and lays sod bought a farm tire repair machine and claimed it was exempt as farm machinery and equipment. The vendor refused to honor the exemption, so the company asked the Department. The answer: not exempt — it is repair equipment, not farm production equipment.

Sod is agriculture, but that isn't enough. The Department agreed that sod production is an agricultural pursuit (citing Miami County, Kansas v. Svoboda, 264 Kan. 204, 995 P.2d 122 (1998)), and that commercial sod production requires irrigation — here, center-pivot systems running on pneumatic tires. The company used the tire repair machine to repair and replace tires on the irrigation center pivots and on farm tractors. But the farm exemption does not cover everything a farmer buys.

What the exemption covers — and doesn't. The exemption is for machinery and equipment used "only in farming, ranching, or agricultural production." That means equipment used in the field to till the soil, plant and harvest crops, spread fertilizer and pesticides, and non-field equipment used to dry grain, handle grain, and produce and handle feed for cattle operations. It does not cover:

• construction materials (fences, barns, roads, grain bins, silos, drainage tile, confinement/storage buildings); or
• repair and cleaning equipment and tools — including tools, welding equipment, high-pressure washers, and a tire repair machine — even when used to service exempt production machinery.

Repair/maintenance equipment "may be used to maintain and service production agricultural equipment but is not equipment that is used 'only in farming, ranching, or agricultural production.'"

Bottom line: a tire repair machine is taxable. The farm exemption reaches equipment that directly performs agricultural production, not the tools a farmer uses to repair or maintain that equipment.

What this means for you

Farmers, ranchers, and ag producers

The farm machinery exemption is not a blanket "anything a farm buys is tax-free" rule. It covers equipment that directly does production work — tillage, planting, harvesting, spreading, grain/feed handling. Repair tools, welders, pressure washers, and shop equipment are taxable, even if you use them only on exempt farm machinery.

Buying repair or shop equipment

Expect to pay sales tax on tools and machines whose job is to repair, service, or clean your production equipment. Don't present a farm exemption certificate for those purchases.

Construction materials are taxable too

The exemption also does not cover construction materials for fences, barns, bins, silos, buildings, and similar structures — those are taxable purchases.

Common questions

Q: Is a farm tire repair machine exempt as farm equipment in Kansas?
A: No. The Department treats it as taxable repair equipment, not exempt farm production machinery used only in agricultural production.

Q: Sod production is agriculture — why doesn't the exemption apply?
A: Being in agriculture isn't enough. The exemption covers equipment used directly in production (tilling, planting, harvesting, grain/feed handling), not the tools used to repair or maintain that equipment.

Q: What farm purchases are taxable despite the exemption?
A: Repair and cleaning tools and equipment (tools, welders, high-pressure washers, a tire repair machine) and construction materials (fences, barns, bins, silos, buildings) are taxable.

Citations and references

• Kansas farm machinery and equipment exemption — covers machinery and equipment used "only in farming, ranching, or agricultural production"; the ruling applies this standard without citing a subsection number.
• Miami County, Kansas v. Svoboda, 264 Kan. 204, 995 P.2d 122 (1998) — Kansas Supreme Court holding that sod production is an agricultural pursuit.
• K.A.R. 92-19-59 — the regulation authorizing Kansas private letter rulings.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2002-023

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

March 11, 2002

XXXX
XXXX
XXXX

RE: You e-mail of March 4, 2002

Dear XXXX:

Thank you for your recent e-mail. You ask if your company's purchase of a tire repair machine is exempt from sales tax as the purchase of farm machinery and equipment. Please be advised that it is not exempt because it is repair equipment --- not farm production equipment.

Your company produces and lays sod. The Kansas Supreme Court has ruled that sod production is an agricultural pursuit. Miami County, Kansas v. Svoboda, 264 Kan. 204, 995 P. 2d 122 (1998). Commercial sod production in Kansas requires irrigation, which is often done by rolling pipe systems that are attached to a center pivot. You indicate that your irrigation equipment uses pneumatic tires at the center pivot.

When your company purchased a farm tire repair machine, the vendor refused to honor your claim that the purchase qualified for exemption as the purchase of farm machinery and equipment. You use the tire repair machine to repair and replace tires on the center pivots of the irrigation equipment and on farm tractors used in the sod operations.

The exemption in question is for machinery and equipment used "only in farming, ranching, or agricultural production." This exemption does not exempt everything a farmer or rancher buys. For example, farmers and ranchers are required to pay sales tax on purchases of construction materials. This includes materials used to build fences, barns, roads, grain storage bins, corn cribs, silos, drainage-tile systems, confinement buildings, storage buildings, and other buildings and structures. Similarly, farmer and rancher must pay sales tax on repair equipment and tools they purchase even when such equipment is used to services exempt production farm machinery and equipment.

The equipment in question is used to repair damaged tires on farm machinery and equipment. This equipment is not exempt. What is exempt is equipment used in the field to till the soil, plant and harvest crops, spread fertilizer and pesticides, and non-field equipment that is used dry grain , handle grain, produce feed and handle feed for cattle operations. The exemption does not extend to equipment and tools that farmers buy and use to accomplish repairs or clean farm machinery and equipment. This includes tools, welding equipment, high pressure washers, and similar equipment. This type of equipment may be used to maintain and service production agricultural equipment but is not equipment that is used "only in farming, ranching, or agricultural production."

I hope that I have adequately answered your questions. If you have any additional questions, please call me at 785-296-3081. 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 make 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 affects this private letter ruling.

Sincerely,

Thomas E. Hatten
Attorney/Policy & Research

Date Composed: 03/18/2002 Date Modified: 03/18/2002

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