Is an uninstalled, portable greenhouse used to farm tilapia fish for food exempt from New York sales and use tax under the farming exemption?

Plain-English summary

Brian Knox bought a greenhouse in New York on May 1, 1999, to farm organic tilapia — tropical, algae-eating fish sold as food. He built a "closed loop" system: a 17-by-70-foot in-ground pond, insulated and lined, seeded with spirulina algae, covered by the greenhouse. The pond water needs to stay around 80°F for the fish to grow and breed, achieved through a mix of solar heat from the greenhouse and a circulating gas hot-water system; sunlight through the greenhouse is also needed to grow the algae the fish eat. The greenhouse itself is simple and portable: two layers of clear agricultural plastic bolted to ground tubes, with air blown between the layers for rigidity against snow and wind — no fabric, glass, or wood — and it can be unbolted, dismantled, and reassembled without damage.

At the time of this 1999 purchase, New York's farming exemption covered tangible personal property used directly and predominantly in producing farm products for sale, but specifically excluded property that was "incorporated in a building or structure" — in other words, permanent construction didn't qualify, only genuinely portable/removable equipment did. The Department found two things in Knox's favor: first, raising fish for sale as food is squarely within the definition of "farming," with the production period running from the start of the animal's life cycle to when it's ready for sale; and second, because the greenhouse is bolted together rather than permanently built, and can be taken apart and reassembled without damaging itself or the land, it counts as portable — nonpermanent — property rather than a "building or structure." That combination meant the greenhouse qualified for the farming exemption as the law stood on the 1999 purchase date.

The opinion also flags that the law has since changed: starting September 1, 2000, the farming exemption was broadened to cover property "whether or not incorporated into a building or structure," so materials that get permanently built into farm buildings can now also qualify — a purchase made today wouldn't even need to clear the portability hurdle this 1999 purchase had to.

What this means for you

Aquaculture and fish-farming operations

Raising fish (or other animals) for sale as food is treated as "farming" for New York tax purposes, and structures used to create the growing environment — greenhouses, temperature/lighting control structures — can qualify for the farming exemption if they meet the applicable permanence test for the purchase date.

Farmers evaluating older purchases against the pre-2000 permanence test

If you bought farm-related structures before September 1, 2000, check whether they were "incorporated into a building or structure" (taxable) or genuinely portable/removable (exempt) — the answer turns on installation method (bolted/removable vs. permanently affixed), not on the structure's function.

Accountants and tax professionals

Note the law-change date carefully: pre-September 2000 purchases need the portability analysis from this ruling, while post-September 2000 purchases are exempt under the broadened rule even if incorporated into a permanent building or structure, as long as they're used predominantly in farm production.

Common questions

Q: Does raising fish count as "farming" for New York sales tax purposes?
A: Yes — breeding, raising, and feeding animals (including fish) that are themselves sold as a food product falls within the regulatory definition of farming.

Q: Would a permanently built greenhouse qualify for the same exemption today?
A: Under the law as it stood in 1999, no — only portable/removable structures qualified. But for purchases on or after September 1, 2000, the exemption was broadened to cover property incorporated into a building or structure too, as long as it's used predominantly in farm production.

Q: What made this greenhouse "portable" rather than a permanent structure?
A: It's built from plastic sheeting bolted to ground tubes (no fabric, glass, or wood), and can be unbolted, dismantled, and reassembled without damaging itself or the land — the same test applied in an earlier ruling involving similar shelter systems.

Citations and references

Statutes and regulations:

• Tax Law § 1105(a) (retail sales tax); § 1110(a) (compensating use tax)
• Tax Law § 1115(a)(6) (farming exemption, as in effect prior to September 1, 2000)
• 20 NYCRR § 528.7(b) (definition of farming); § 528.7(c)(1)(ii) (farm production period for animals); § 528.7(d) (directly and predominantly test)

Prior rulings referenced:

• Cover-All Shelter Systems of New York, Inc., TSB-A-99(50)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2002.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a02_33s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-02(33)S
Sales Tax
July 25, 2002

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S010221A

On February 21, 2001, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Brian Knox, 527 S. Richard Street, Bedford, PA 15522. Petitioner, Brian
Knox, provided additional information pertaining to the Petition on March 2, 2001.
The issue raised by Petitioner is whether its purchase on May 1, 1999, of an uninstalled
greenhouse is subject to sales or compensating use tax.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner purchased a greenhouse in New York State on May 1, 1999, for the purpose of
farming organic tilapia fish which are sold as food products. Tilapia are tropical fish that eat algae.
They are bred in Petitioner’s sustainable “closed loop” system which consists of the greenhouse at
issue erected over a 17' x 70' in-ground pond. The pond is insulated, lined, filled with water, and
seeded with spirulina algae.
In order for the fish to grow and breed, the pond water temperature must be maintained at
80 degrees Fahrenheit. The pond water is heated by a combination of solar input provided by the
greenhouse and a circulating gas hot water system. The exposure to sunlight allowed by the
greenhouse is also required for the growth of the algae.
The greenhouse is portable in nature. Petitioner assembled it himself. It is made of two
layers of clear agricultural plastic bolted to tubes that are placed in the ground. Air is blown in
between the layers to make it rigid enough to keep off the snow and wind. No fabric, canvas, glass,
or wood is a part of the greenhouse. It can easily be unbolted, dismantled and reassembled.
Applicable Law and Regulations
Section 1105(a) of the Tax Law imposes sales tax on the receipts from every retail sale of
tangible personal property, except as otherwise provided.
Section 1110(a) of the Tax Law provides, in part:
Except to the extent that property or services have already been or will be
subject to the sales tax under this article, there is hereby imposed on every person a
use tax for the use within this state . . . except as otherwise exempted under this
article, (A) of any tangible personal property purchased at retail. . . .

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Sales Tax
July 25, 2002

Section 1115(a)(6) of the Tax Law, prior to September 1, 2000, exempted from the sales tax
imposed by Section 1105(a) and from the compensating use tax imposed under Section 1110:
Tangible personal property, except property incorporated in a building or
structure . . . for use or consumption directly and predominantly in the production for
sale of tangible personal property by farming, including stock, dairy, poultry, fruit,
fur bearing animal, graping and truck farming. The term farming shall also include
ranching, operating nurseries, greenhouses, vineyard trellises or other similar
structures used primarily for the raising of agricultural, horticultural, vinicultural,
viticultural or floricultural commodities, and operating orchards. In addition,
tangible personal property for use in erecting, adding to, altering or improving a silo
used in farming to make and store silage on a farm, provided such tangible personal
property is to become an integral component part of such silo.
Section 528.7 of the Sales and Use Tax Regulations provides, in part:
*

*

*

(b) Farming. The term farming means and includes the following types of
farming and activities:
(1) raising stock, poultry or furbearing animals . . .
*
Example 1:

*

*

Breeding, raising and feeding livestock, poultry, or other
animals, which produce a product for sale or are themselves
a food product, is farming.

(c)(1)(ii) Farm production begins . . . in the case of animals, from the
beginning of the life cycle. Production ceases when the product is ready for sale in
its natural state. . . .
*

*

*

(d) Directly and predominantly. (1) Directly means the tangible personal
property must, during the production phase of farming:
(i) act upon or effect a change in material to form the product to be sold; or

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(ii) have an active causal relationship in the production of the product to be
sold. . . .
*

*

*

(2) Predominantly means that tangible personal property must be used more
than 50 percent of the time directly in the production phase of farming.
Opinion
Section 1115(a)(6) of the Tax Law, as in effect on the date in question, May 1, 1999,
provided a sales and use tax exemption with respect to all tangible personal property purchased for
use or consumption directly and predominantly in the production of tangible personal property
for sale by farming, except tangible personal property incorporated into a building or structure. The
taxability of tangible personal property is determined according to its use and method of installation
(permanent vs. nonpermanent), with property which is either portable in nature or is installed to be
removable without substantial damage to the property (e.g., attached via removable bolts, etc.) being
generally recognized as nonpermanent and thus, eligible for the exemption. See Cover-All Shelter
Systems of New York, Inc., Adv Op Comm T&F, November 17, 1999, TSB-A-99(50)S.
Petitioner’s growing, feeding, and raising of tilapia fish for sale as food products is included
within the scope of farming. See Section 528.7(b) of the Sales and Use Tax Regulations. In the case
of animals, production begins with the beginning of the life cycle and ends when the product is
ready for sale. A greenhouse used to house tilapia fish being raised for sale as food products and
to create conditions necessary for their growth is considered to be used directly and predominantly
(more than 50%) in production by farming. See Section 528.7(d) of the Sales and Use Tax
Regulations. The greenhouse in question, similar to the shelters in Cover-All Shelter Systems of
New York, Inc., supra, is designed to be portable and can easily be unbolted, dismantled, and
reassembled after installation without damage to itself or the realty. Therefore, Petitioner’s purchase
of the greenhouse on May 1, 1999, under the law in effect at that time, was exempt from sales and
compensating use tax under Section 1115(a)(6) of the Tax Law (see Cover-All Shelter Systems of
New York, Inc., supra).
It is noted that the above opinion is based on the law in effect prior to the enactment of
Chapter 63 of the Laws of 2000. Beginning September 1, 2000, purchases by farmers of tangible
personal property, whether or not incorporated into a building or structure, if used or consumed
predominantly either in farm production or in a commercial horse boarding operation, or in both,

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are exempt under Section 1115(a)(6) of the Tax Law. The materials that are incorporated into
buildings and structures may now qualify for the exemption.

DATED: July 25, 2002

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.