Could a rotary cutter used exclusively to mow weeds in a commercial pecan orchard qualify for Texas's agricultural machinery exemption?

Plain-English summary

The requester bought a Bush-Hog GT42 rotary cutter to use exclusively for mowing weeds in a pecan orchard. Rule 3.296 exempted machinery used exclusively on a farm or ranch to produce food for human consumption for sale in the regular course of business.

The Comptroller gave a conditional answer: if the orchard use fell within that exemption, the buyer could give the seller an exemption certificate.

The Comptroller could not directly refund the tax already paid because the seller, rather than the buyer, had remitted it. STAR also adds a later alert that H.B. 268 imposed a registration-number requirement for certain agricultural and timber exemptions effective January 1, 2012.

What this means for you

The letter does not declare every orchard mower exempt. The equipment had to be used exclusively in a qualifying farm or ranch operation producing food for sale, and current registration and refund procedures must be checked.

Common questions

Did the letter definitively exempt the cutter? It said the exemption applied if the stated situation met Rule 3.296.

What documentation did it identify? An exemption certificate given to the seller.

Could the Comptroller directly refund the tax? Not under the described payment path because the seller had remitted it.

Can the 1988 procedure be used today? Not without checking current law; STAR flags a registration-number change effective in 2012.

Citations and references

• 34 Tex. Admin. Code Rule 3.296(A)(5) — farm and ranch machinery exemption cited by the letter.
• H.B. 268, 82nd Regular Legislative Session (2011) — later registration-number change identified 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/8802L0863E08

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.

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774

February 1, 1988

Dear ***:

On behalf of Mr. Bullock, I hope you'll accept my apology for the delay
in answering your question involving changes in the sales tax law. This
isn't the way we normally do business.

Our people were, and still are, swamped by a deluge of inquiries as they
attempted to interpret provisions of the new law and draft rules which
would not adversely impact businesses. In many instances, an answer to a
question just wasn't available when the question arrived.

You have asked for a ruling regarding your purchase of Bush-Hog GT42
rotary cutter to be used "exclusively for mowing weeds in my pecan
orchard". Enclosed is a copy of Rule 3.296 which does exempt machinery
exclusively used on a farm or ranch in the production of food for human
consumption to be sold in the regular course of business. See subsection
(A)(5). If your situation falls within that exemption, you should be
entitled to give an exemption certificate to the person who sold you the
cutter. We cannot directly refund you the tax paid because it was
remitted
to us by the seller rather than directly by you.

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

Please feel free to contact me if you have additional questions. You may
write me, call toll free 1-800-531-5441 from anywhere in the U.S., or
phone
(512) 463-4600.

Sincerely,
Al Van Allen
Tax Policy Division