When did a farm or ranch computer qualify for the agricultural sales-tax exemption?

Plain-English summary

A computer was exempt when used exclusively in producing, processing, packing, or marketing agricultural products.

The letter treated dairy records, crop records, and feeding and breeding uses as qualifying agricultural uses. It said a purchaser using the computer that way could give the seller an exemption certificate.

A computer used for a farmer's or rancher's household expenses, payroll, tax reporting, or similar functions was not exempt. Because the letter required exclusive qualifying use, mixing those administrative or household tasks with agricultural functions would fall outside the stated answer.

STAR adds an alert that H.B. 268 amended the Tax Code and, effective January 1, 2012, required people claiming exemptions for certain agricultural and timber products to apply for and provide a Comptroller-issued registration number.

Common questions

Did farm ownership alone make the computer exempt? No. The letter required exclusive qualifying use. Were dairy and crop records qualifying uses? Yes. Were payroll and tax reporting qualifying uses? No. Are the 1985 documentation steps complete today? STAR's 2012 alert says later registration-number requirements may apply.

Citations and references

The reproduced letter cites no numbered statute or rule. Its STAR alert identifies H.B. 268 from the 82nd Regular Legislative Session and a January 1, 2012 effective date.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8502L0627D09

Original ruling text

ALERT: This document may be affected by changes to the Tax Code which was amended by H.B. 268, 82nd Reg. Legislative Session, 2011. The amendment required persons claiming a sales tax exemption for certain agricultural and timber products to apply for and provide a registration number issued by the Comptroller, effective 01/01/2012.

February 25, 1985

Dear ***:

Thank you for your letter of February 20, 1985, concerning the taxability
of computers for on farm use.

A computer being used exclusively in either producing, processing, packing
or marketing agricultural products is exempt from sales tax.

If a computer is used for keeping up with a farmer/rancher's household
expenses, payroll, tax reporting, etc., the computer would not be exempt.

Since dairy records, crop records and feeding and breeding are exempt uses,
you may give an exemption certificate when purchasing a computer. Enclosed
is an exemption certificate for your use.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, Please call us at 1-800
-252-5555 toll free from anywhere in Texas. You may write us at the Tax
Administration Division.

Sincerely,

Tax Policy Section
Tax Administration Division