TX 8910L0965D13 Sales and/or Use Tax (State,Local,MTA) 1989-10-31

Were bags used by harvesters to pick citrus exempt from Texas sales and use tax as agricultural machinery or equipment?

Short answer: Yes. Because the bags were used in the actual harvesting of food for human consumption produced for sale, they qualified as exempt agricultural machinery or equipment. STAR flags a later registration-number requirement effective January 1, 2012.

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This page answers the general question as of 1989. Ezel answers yours, under current Texas tax law, with citations.

Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

Bags used by harvesters to pick citrus were exempt because they were used in the actual harvesting operation.

Rule 3.296(a)(5) exempted machinery or equipment used exclusively on farms or ranches to produce food for human consumption for sale in the regular course of business. Harvesting was part of that production, so the picking bags qualified.

STAR warns that H.B. 268 later required a Comptroller registration number for certain agricultural and timber exemptions effective January 1, 2012.

Common questions

Were citrus-picking bags exempt? Yes.

Why? They were machinery or equipment used in actual harvesting.

Citations and references

34 Tex. Admin. Code Rule 3.296(a)(5)

Source

STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
Opinion: https://star.comptroller.texas.gov/view/8910L0965D13

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

October 31, 1989

Dear *:

Thank you for your letter concerning the taxability of bags used
by harvesters to pick citrus. The bags are exempt from sales and
use tax because they are used in the actual harvesting operation.

Sales tax is not due on machinery or equipment used or employed on
farms or ranches exclusively in the production of food for human
consumption to be sold in the regular course of business. See the
enclosed Rule 3.296, relating to agriculture, section (a)(5).
Harvesting is considered an activity in the production of food for
human consumption; therefore, the bags would qualify under this
exemption as machinery or equipment.

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

If you have any questions, please contact Tax Correspondence. You
may call toll free 1-800-252-5555, or our regular number is
512/463-4600. My extension is 3-4658.

Sincerely,
Sherry Buckley
Tax Correspondence

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