Were stock-trailer repair parts and labor exempt when a rancher used the trailer between tracts of land or to haul livestock to market?

Plain-English summary

Rule 3.296(a)(6) exempted qualifying machinery and equipment used exclusively on a farm or ranch to produce food or grass for human or animal consumption.

Repair or replacement parts and labor for a stock trailer qualified when the rancher used the trailer only to transport livestock from one tract of land to another. If the trailer hauled livestock to or from market, the exemption was lost.

STAR adds a later-law alert: H.B. 268, enacted in 2011, required people claiming exemptions for certain agricultural and timber products to obtain and provide a Comptroller registration number beginning January 1, 2012.

Common questions

Were repairs exempt for moving livestock between tracts? Yes, on the exclusive-use facts stated.

Were repairs exempt for market hauling? No.

Does the 1986 letter contain the current documentation rule? No. STAR flags the later registration-number requirement.

Citations and references

• 34 Tex. Admin. Code Rule 3.296(a)(6) — farm-and-ranch machinery and equipment.
• H.B. 268, 82nd Texas Legislature, 2011 — later registration requirement stated in STAR's alert.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8605L0739A01

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.

May 28, 1986

Dear ***:

Thank you for your letter of May 20, 1986 concerning the taxability of
repairs to stock trailers.

Rule 3.296 (a)(6) grants an exemption for machinery and equipment used
or employed exclusively on a farm or ranch in the production of food or
grass for human or animal consumption.

The repair and/or replacement parts and the labor will qualify for the
agricultural exemption if the rancher is only using the stock trailer to
transport livestock from one tract of land to another. If the trailer is
being used to haul livestock to and from the market, the exemption is lost.

Enclosed is our agricultural exemption brochure, exemption certificate
and Rule 3.296.

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