New York Advisory Opinion TSB-A-96(33)S: Are the fees a farmer charges to board and care for horses kept on his farm for breeding purposes subject to New York sales tax?

Plain-English summary

A farmer boards horses belonging to outside owners on his farm solely for breeding purposes -- he doesn't board any non-breeding horses at all. He charges a monthly fee based on his daily cost to feed, bed, and exercise the horses, billed to recoup his expenses. His accountants (Pattison, Koskey & Rath, PC) asked the Department whether these boarding fees are subject to New York sales tax.

Horses count as tangible personal property under New York's sales tax law, and boarding -- feeding and exercising -- is legally the service of "maintaining" that property, which is ordinarily taxable under Tax Law § 1105(c)(3). But there's a farming carve-out: maintenance services are exempt when performed on property used directly and predominantly in the production for sale of tangible personal property by farming, and the Department confirmed that breeding horses for sale counts as "farming" under 20 NYCRR 528.7(b) (which specifically lists breeding, raising, and feeding livestock or other animals that produce a product for sale). So if the boarded horses are used by their owners predominantly to breed horses for sale, the horses themselves qualify for the farming exemption under Tax Law § 1115(a)(6), and the farmer's boarding/maintenance charges for those horses are correspondingly exempt under § 1105(c)(3)(vi). To claim the exemption, each horse's owner must give the farmer a properly completed Form ST-125 Farmer's Exemption Certificate. Two important limits: this state/local exemption does NOT reach the separate New York City local tax imposed under Tax Law § 1107, and if a particular boarded horse is NOT used predominantly for breeding horses for sale (e.g., a pleasure or show horse), the boarding fee for that horse is fully taxable regardless of what other horses on the same farm are used for.

What this means for you

Farms boarding horses for breeding clients

Get a Form ST-125 Farmer's Exemption Certificate from each horse owner before treating boarding charges as exempt, and confirm the horse is genuinely used predominantly to breed horses for sale (not merely housed on a breeding farm) -- the exemption applies horse-by-horse based on actual use, not based on the farm's overall business. Remember the New York City local tax still applies even to otherwise-exempt boarding.

Horse owners paying for breeding-horse boarding

Provide your boarding farm with a completed Farmer's Exemption Certificate if your horse is used predominantly for breeding for sale -- without it, the farm may need to charge you sales tax even on an otherwise-qualifying horse.

Common questions

Q: Why does breeding horses for sale count as "farming"?
A: New York's farming definition specifically includes "raising stock" and gives breeding, raising, and feeding livestock or other animals that produce a product for sale as an explicit example of farming -- horses bred for sale fit squarely within that definition.

Q: What if a boarded horse is used for riding lessons or showing rather than breeding for sale?
A: The exemption doesn't apply to that horse's boarding fee -- the Department was explicit that if a horse isn't used predominantly for breeding horses for sale, the farmer's fee for feeding, bedding, and exercising it is subject to sales and use tax like any other maintenance service.

Q: Does the farmer need paperwork to skip charging tax?
A: Yes -- the horse owner must furnish the farmer with a properly completed Form ST-125 Farmer's Exemption Certificate to support the exempt treatment.

Q: Is boarding a breeding horse in New York City still tax-free?
A: Not entirely -- the state/local farming exemption specifically does not apply to the separate sales tax New York City imposes under Tax Law § 1107, so boarding charges in the City remain subject to that local tax even for a qualifying breeding horse.

Citations and references

Statutes and regulations:

• Tax Law § 1105(c)(3), (c)(3)(vi) (maintenance service tax and farming exemption)
• Tax Law § 1107 (New York City local tax)
• Tax Law § 1115(a)(6) (farming property exemption)
• 20 NYCRR 527.5 (installing/maintaining/servicing/repairing defined)
• 20 NYCRR 528.7(a)(1), (a)(2) (farming property and services exemption)
• 20 NYCRR 528.7(b) (definition of farming)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1996.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a96_33s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-96 (33)S
Sales Tax
May 23, 1996

Taxpayer Services Division
Technical Services Bureau

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO.S960314A

On March 14, 1996, the Department of Taxation and Finance received a Petition for Advisory
Opinion from Pattison, Koskey & Rath, PC, 502 Union Street, Hudson, NY 12534.
The issue raised by Petitioner, Pattison, Koskey & Rath, PC, is whether fees paid to a farm
for the care of horses boarded at the farm for the purposes of breeding are subject to State and local
sales and use taxes.
Petitioner submits the following facts as the basis for this Advisory Opinion.
A farmer cares for horses that are boarded on his farm for the purpose of breeding. The
farmer charges a fee based on his daily cost to feed, bed and exercise the horses. He sends bills to
the owners of the horses each month to recoup his expenses. The farmer does not board any horses
on his farm that are not there for breeding purposes.
Section 1105(c) of the Tax Law imposes sales tax upon:
(c) The receipts from every sale, except for resale, of the following services:
*

*

*

(3) Installing tangible personal property, excluding a mobile home, or maintaining,
servicing or repairing tangible personal property, including a mobile home, not held for sale
in the regular course of business, whether or not the services are performed directly or by
means of coin-operated equipment or by any other means, and whether or not any tangible
personal property is transferred in conjunction therewith, except:
*

*

*

(vi) such services rendered on or after September first, nineteen hundred eighty-two
with respect to tangible personal property for use or consumption directly and predominantly
in the production for sale of tangible personal property by farming, as such tangible personal
property is specified in paragraph six of subdivision (a) of section eleven hundred fifteen of
this article. The exemption provided by this subparagraph (vi) shall not apply to the taxes
imposed pursuant to section eleven hundred seven of this article. (emphasis added)

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Sales Tax
May 23, 1996
Section 528.7 of the Sales and Use Tax Regulations provides, in part:
(a) Exemption. (1)(i) All tangible personal property for use or consumption directly and
predominantly in the production for sale of tangible personal property by farming, with the exception
of property which will be incorporated into a building or structure is exempt from the sales and
compensating use tax.
*

*

*

(2) Effective September 1, 1982, the services of installing, maintaining, servicing and
repairing the tangible personal property specified as exempt in paragraph (1) of this
subdivision are exempt from the New York State and local sales and compensating use taxes.
However, this exemption does not apply to the sales and compensating use taxes imposed
in New York City under section 1107 of the Tax Law. (See section 527.5 of this Title for
a description of the terms installing, maintaining, servicing and repairing.)
*

*

*

(b) Farming. The term farming means and includes the following types of farming and
activities:
(1)

raising stock, poultry or furbearing animals;

(2)

dairy, fruit or truck farming;

(3)

graping;

(4)

operating ranches, nurseries, orchards or vineyards; and

(5)

operating greenhouses or other similar structures used primarily for the
raising of agricultural, horticultural, vinicultural, viticultural or floricultural
commodities.
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. (emphasis added)

Horses, as well as other animals, are considered tangible personal property for New York
State and local sales and use taxes. Boarding, including feeding and exercising, horses is considered
the service of maintaining the horses. Pursuant to Section 1105(c)(3) of the Tax Law the
maintaining and servicing of tangible personal property are subject to sales tax. These services are
exempt from tax, however, if rendered with respect to tangible personal property for use or
consumption directly and predominantly in the production for sale of tangible personal property by
farming. Persons engaged in breeding horses for sale are considered engaged in farming. The horses
will qualify for exemption from tax under Section 1115(a)(6) of the Tax Law if used directly and

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TSB-A-96 (33)S
Sales Tax
May 23, 1996
predominantly for breeding purposes. Charges for boarding or maintenance of exempt horses will
also be exempt under Section ll05(c)(3)(vi) of the Tax Law. Accordingly, if the horses being boarded
for breeding purposes are used by their owners predominantly in breeding horses for sale, pursuant
to Section ll05(c)(3)(vi) of the Tax Law and Section 528.7(a)(2) of the Sales and Use Tax
Regulations, the fees charged by the farm for the care of the horses are not subject to State and local
sales and compensating use taxes. In order to claim this exemption, the owner of the horse must
furnish the provider of the service with a properly completed Form ST-125, Farmer's Exemption
Certificate. This exemption does not apply to the sales tax imposed under Section 1107 of the Tax
Law on charges for boarding horses in New York City. It is noted, however, that if the horse is not
used predominantly in breeding horses for sale, the fee charged by the farm for feeding, bedding and
exercising the horse is subject to sales and use taxes.

DATED: May 23, 1996

/s/
Doris S. Bauman
Director
Technical Services Bureau

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