When could sellers accept resale or agricultural-exemption certificates for horseshoeing supplies, horseshoes, halters, and bridles?

Plain-English summary

The seller served resale stores, professional horseshoers, and horse owners. The Comptroller gave different treatment to each transaction:

• Feed and hardware stores buying for resale could give a resale certificate under Rule 3.285.
• Horseshoers who charged a lump sum for labor and materials were not entitled to the agricultural exemption and had to pay tax on the supplies and equipment they bought.
• A horseshoer buying an item for separate resale, such as a halter, could give a valid resale certificate and then had to collect tax or obtain an appropriate exemption certificate from the customer.
• Horseshoes, halters, and bridles qualified for the agricultural exemption when used exclusively on a farm or ranch to produce agricultural products sold in the regular course of business.
• Those items were taxable when used for rodeo, race, or show horses.

What this means for you

The historical result turned on the purchaser's use and whether an item was consumed in a lump-sum horseshoeing job or separately resold. STAR's later alert adds a registration-number requirement effective January 1, 2012 for certain agricultural and timber exemptions.

Common questions

Could a resale store buy without paying tax? Yes, with a resale certificate.

Could a horseshoer claim the agricultural exemption for job supplies? No, under the facts described.

When did horse equipment qualify for the agricultural exemption? When used exclusively on a farm or ranch in producing agricultural products for sale.

What uses were taxable? Use for rodeo, race, or show horses.

Citations and references

• 34 Tex. Admin. Code Rule 3.285 — resale certificates.
• H.B. 268, 82nd Texas Legislature, Regular Session (2011) — agricultural-registration amendment 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/8802L0864G13

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, 78774

February 29, 1988

Dear ****:

Thank you for your letter concerning collection of sales tax on
horseshoeing and blacksmithing supplies.

As I understand, you sell to resale stores (feed and hardware stores), to
professional horseshoer's and to horse owners.

A resale certificate may be accepted in lieu of sales tax from the resale
stores. Please refer to Rule 3.285.

Horseshoers normally charge a lump sum fee for materials and labor. They
are not entitled to the agriculture exemption and must pay tax on the supplies
and equipment at the time of purchase. If the horseshoer purchases items for
resale such as halters, a complete and valid resale certificate can be accepted
in lieu of the tax. The horseshoer is then responsible for collecting tax or
obtaining an exemption certificate form the customer if appropriate.

Horseshoes, halters and bridles qualify for the agricultural exemption if
used exclusively on a farm or ranch in the production of agricultural products
to be sold in the regular course of business. These items are taxable if used
for rodeo, race or show horses.

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 our
toll-free number
1-800-531-5441. The regular number is 512/463-4600. You may write me at
the Tax Policy Division.

Sincerely,
(Mrs.) Jo Ann Dieck
Tax Policy Division