Does an agricultural retailer owe sales tax on a wheel loader it uses to move fertilizer around its own warehouse?

Plain-English summary

The Missouri Department of Revenue ruled that a compact wheel loader purchased by an agricultural retailer -- to move fertilizer within its own warehouse and load it for delivery -- is subject to Missouri sales tax, not exempt as farm machinery and equipment.

Missouri's farm machinery exemption under Section 144.030.2(22), RSMo covers equipment used for an "agricultural purpose," which the Department defines as the actual raising of crops or farm animals. The retailer's customers -- farmers who buy the fertilizer -- do use it for that agricultural purpose once it reaches their land. But the retailer's own use of the wheel loader is a step removed: it's used to move fertilizer out of storage onto delivery trucks or into a blending hopper at the retailer's own facility, before the product ever leaves for a farm. Because the retailer itself isn't the one raising crops or farm animals, its equipment doesn't qualify for the exemption even though it ultimately serves farming customers. The Department also noted, separately, that the applicable sales tax rate should be based on the location of the retailer's own vendor (where it buys the loader), not the retailer's own location.

What this means for you

Farm supply and agricultural input retailers

Buying equipment that handles, moves, or blends products destined for a farm doesn't automatically qualify for Missouri's farm machinery exemption. The exemption is tied to who is actually engaged in raising crops or farm animals -- if that's your customer, not you, equipment you use at your own facility to prepare or move that product for sale is taxable, even if it never leaves the agricultural supply chain.

Businesses buying warehouse/material-handling equipment

The key question isn't whether the equipment touches an agricultural product -- it's whether the equipment is being used by someone actually engaged in the agricultural production itself. A retailer's internal logistics equipment (loaders, conveyors, blending machinery) generally doesn't qualify just because the end product is farm-related.

Accountants and tax professionals

When evaluating whether equipment qualifies for the farm machinery exemption, confirm who the taxpayer's customer is and where in the supply chain the equipment sits. This ruling draws a clear line between farmer-end-users (who can claim the exemption for equipment they use to farm) and retailers/processors upstream of them (who generally cannot, for their own handling equipment).

Common questions

Q: Does Missouri's farm machinery exemption cover any equipment involved with farm products?
A: No. It covers machinery and equipment used for an agricultural purpose -- meaning the actual raising of crops or farm animals. Equipment a retailer or distributor uses to move, store, or blend products before they reach the farm doesn't qualify, even if it's destined for agricultural use.

Q: Would this wheel loader be exempt if a farmer bought it directly instead?
A: This ruling doesn't decide that question -- it addresses the retailer's own purchase for use at its retail facility. A farmer's direct purchase of qualifying farm machinery and equipment used for an agricultural purpose is a separate analysis under Section 144.030.2(22), RSMo.

Q: What sales tax rate applies to a purchase like this?
A: The Department noted the applicable rate is based on the location of the vendor selling the equipment, not the buyer's own business location.

Q: Can another agricultural retailer rely on this ruling for a similar equipment purchase?
A: No. A Missouri letter ruling binds the Department only as to the requesting Applicant, only for three years, and only while the facts and law don't change. Another retailer would need its own ruling or should consult a tax professional about its specific equipment and use.

Citations and references

Statutes:

• Section 144.020.1, RSMo (imposition of sales tax on retail sales of tangible personal property)
• Section 144.030.2(22), RSMo (exemption for farm machinery and equipment used for an agricultural purpose)

Source

• Landing page: Missouri DOR Rulings Search
• Ruling: LR 8341

Original ruling text

Dear Applicant:

This is a letter ruling issued by the Director of Revenue under Section 536.021.10, RSMo, and Missouri Code of State Regulations 12 CSR 10-1.020, in response to your letter dated January 2, 2025.

The facts as presented in your letter ruling request are summarized as follows:

Applicant will be purchasing a 2024 John Deere 204 G-Tier Compact Wheel Loader. The Wheel Loader will include Bucket Dump Speed Control, Skid Steer Quick Connect, and a Quick Tach Coupler along with an additional year of warranty coverage. This is for Applicant’s retail location, where they sell agricultural seed, chemicals, and fertilizer to farmers who use these products directly on their farmland to produce farm products to be fed to livestock or sold ultimately at retail. Applicant will use the new loader to (1) move fertilizer out of the fertilizer house onto Applicant's truck, to be delivered directly to the farmer and his farmland, or to an airport from where the agricultural fertilizer will be applied to the farmer’s farmland via plane or (2) t o put agricultural fertilizer in the hopper, which delivers the fertilizer to Applicant's fertilizer blender; onc e the agricultural blend is mixed, a belt will take it to the back of a tender truck or fertilizer rig for delivery to the customer’s farmland.

ISSUE :

Is Applicant’s purchase of the Compact Wheel Loader subject to sales tax?

RESPONSE :

Yes. Applicant’s purchase of the Compact Wheel Loader is subject to Missouri sales tax.

Section 144.020.1, RSMo, imposes a tax upon all sales of tangible personal property or rendering a taxable service at retail.

Section 144.030.2(22), RSMo, provides an exemption for sales of farm machinery and equipment. It defines ‘farm machinery and equipment’ as “[n]ew or used farm tractors and such other new or used farm machinery and equipment, including utility vehicles used for any agricultural use[.]”

For the purpose of the exemption, “agricultural purpose” is the raising of crops or farm animals. While Applicant’s customers participate in agricultural purposes, Applicant’s use of the equipment is separated from the actual agricultural purpose described by the statute. Therefore, it is not exempt under Section 144.030.2(22), RSMo.

Additionally, Applicant’s tax rate should be based on the location of Applicant’s vendor.

This letter ruling is binding upon the Department of Revenue with respect to the Applicant for three (3) years from the date of this letter and is subject only to statutory changes by the General Assembly and to changes in the interpretation of law by the courts or administrative tribunals.   If a change occurs, the taxpayer who relies upon an outdated interpretation may be subject to additional taxes, interest and penalties, which may be imposed prospectively from the date of the change.   For this reason, the interpretation set forth above should be reviewed on a regular basis.   Please note that any change in or deviation from the facts as presented will render this ruling inapplicable.

Should additional information be needed, please contact Associate Counsel J. Ross Shelton, General Counsel’s Office, Post Office Box 475, Jefferson City, Missouri 65105-0475 (phone 573-751-0961), or me.

Sincerely,

Trish Vincent