Is GPS-based precision-farming tower equipment exempt from Kansas sales tax as farm equipment?

Plain-English summary

A taxpayer asked whether the components that make up a Real Time Kinematic (RTK) tower — some mounted on grain elevators, some free-standing — are exempt from Kansas sales tax. The listed items were a Starfire 3000 receiver, an SF1-to-SF2 receiver upgrade, an RTK receiver activation, an RTK radio, a Greenstar harness, an RTK antenna, a radio-to-antenna cable, electrical boxes, and a receiver stand. The equipment is used exclusively to send and receive signals for precision-farming guidance systems — tractor auto-steer, strip tillage, precision fertilizer placement, field-drainage management, and planting and harvesting — and cannot be used for any other purpose.

The Department ruled the equipment is exempt from Kansas sales tax under K.S.A. 2011 Supp. 79-3606(t) as "precision farming equipment," which the statute describes as items used only in computer-assisted farming — global positioning and mapping systems, guiding systems, data-communication equipment, and any necessary mounting hardware, wire, and antennas. As with any farm-equipment exemption, the buyer must certify in writing on the invoice or sales ticket (retained by the seller) that the equipment will be used only in farming, ranching, or aquaculture production.

What this means for you

Farmers and ag-tech buyers

GPS guidance systems, RTK towers, and their antennas, cables, and mounting hardware bought for use only in precision farming are exempt farm equipment in Kansas. Give the seller a signed exemption certification stating the equipment will be used only in agricultural production.

Dealers of precision-farming equipment

You can sell qualifying precision-farming components exempt, but you must obtain and keep the buyer's written certification of exempt agricultural use.

Common questions

Q: Is GPS guidance and RTK-tower equipment exempt from Kansas sales tax?
A: Yes. The Department ruled these components are "precision farming equipment" exempt under K.S.A. 79-3606(t) when used only in farming, ranching, or aquaculture production.

Q: Does the exemption cover antennas, cables, and mounting hardware?
A: Yes. The statute's definition of precision farming equipment includes guiding and mapping systems, data-communication equipment, and any necessary mounting hardware, wire, and antennas.

Q: What does the buyer have to do to claim it?
A: Certify in writing on the invoice or sales ticket, retained by the seller, that the equipment will be used only in farming, ranching, or aquaculture production.

Q: Can another taxpayer rely on this ruling?
A: No. A Kansas private letter ruling binds the Department only as to the requesting taxpayer's facts and cannot be cited as precedent by anyone else.

Citations and references

• K.S.A. 2011 Supp. 79-3606(t) — the Kansas sales tax exemption for farm machinery and equipment, which includes "precision farming equipment" (global positioning and mapping systems, guiding systems, data-communication equipment, and necessary mounting hardware, wire, and antennas) used in agricultural production; the basis for exempting the RTK-tower components. The statute also requires the purchaser to certify exempt agricultural use in writing.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2012-002

Original ruling text

Private Letter Ruling

Body:

Office of Policy and Research

May 3, 2012

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Private Letter Ruling

Re: Exemption on Purchase of Farm Machinery and Equipment; Precision Farming Equipment.

Dear XXXXX:

In your letter, received by this office on March 29, 2012, you request Private Letter Ruling as to whether the Kansas sales and compensating tax law would exempt the purchase of certain items of machinery and equipment under K.S.A. 2011 Supp. 79-3606(t).

Your letter states in pertinent part:

“[T]he following items of tangible personal property include the components it takes to build an RTK [(“Real Time Kinematic”)] tower some of which are installed on elevators and some of which are free standing:

1. Starfire 3000 Receiver SF1
2. Receiver SF1 to SF2 Upgrade
3. RTK Receiver Activation
4. RTK Radio (900)
5. Greenstar Harness
6. RTK Antenna (OMNI 9 db)
7. Radio to Antenna Ext. Cable
8. Electrical Boxes (2)
9. Receiver Stand (6 ft.)

The equipment in question is used exclusively to receive and send signals to precision farming equipment operating within the state of Kansas. Precision farming would not be able to be conducted in the absence of the equipment. The listed equipment is used for agricultural guidance systems that provide tractor auto-steering allowing farmers to utilize strip, tillage, precision fertilizer placement, field drainage management as well as the planting and harvesting of crops. The equipment is incapable of being used for any other purpose and therefore, is inextricably connected to precision farming.” (Emphasis added)

You asked whether the above-listed equipment purchased for such exclusive use and purpose would be exempted from Kansas sales tax under K.S.A. 79-3606(t).

The listed properties are deemed to be precision farming equipment and therefore, are exempt from sales tax under K.S.A. 2011 Supp. 79-3606(t). (“precision farming equipment” includes the flowing items used only in computer-assisted farming, ranching…global positioning and mapping systems, guiding systems,…data communication equipment and any necessary mounting hardware, wire and antennas.”).

Please, remember that each purchaser of farm machinery and equipment must certify in writing on a copy of the invoice or sales ticket to be retained by the seller that the precision farming equipment will be used only in farming, ranching or aquaculture production. See id.

This is a private letter ruling pursuant to Kansas Administrative Regulation 92-19-59. This private letter ruling is based solely on the facts provide 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,

Mark D. Ciardullo
Tax Specialist/Policy & Research

cc: Legal Services Bureau
Audit Services Bureau

WJL

Date Composed: 05/08/2012 Date Modified: 05/08/2012

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