Could a Texas farm operator buy fertilizer for Bermuda grass in a livestock area and feed for pond fish without sales tax?

Plain-English summary

The farm operator could buy fertilizer tax-free for Bermuda grass planted in a livestock area after dam and spillway work. The fertilizer was used exclusively on a farm in producing food for animal life, so Rule 3.296(a)(4) applied. The purchaser had to give the seller an exemption certificate.

Feed for catfish, bass, and bream living in the stock pond was also exempt. Those fish controlled insects and vegetation, and the letter said their feed could be purchased tax-free without an exemption certificate.

STAR places a later-law alert on this document: H.B. 268 added a Comptroller registration-number requirement for persons claiming exemptions for certain agricultural and timber products, effective January 1, 2012. Current purchasers should not rely on the 1990 certificate procedure alone.

Common questions

Was the fertilizer exempt? Yes, on the stated farm and livestock facts.

Was an exemption certificate required for the fertilizer? Yes.

Was pond-fish feed exempt? Yes, without an exemption certificate under this letter.

Citations and references

• Comptroller Rule 3.296(a)(4).
• Comptroller Rule 3.287.
• H.B. 268, 82nd Legislature, Regular Session (2011), as described 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/9006L1028F14

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.

June 21, 1990

Dear **:

We received your letter questioning the taxability of fertilizer
and fish food.

According to your letter, a dam and spill way were replaced on
one of your farm stock ponds requiring sodding and re-seeding
with bermuda to hold the soil intact. The fertilizer you purchase
to go on the bermuda, which is in a livestock area, may be pur-
chased tax free because its used exclusively on a farm in the pro-
duction of food for animal life. See section (a)(4) of the enclosed
Rule 3.296 relating to agriculture.

You must issue an exemption certificate when purchasing the ferti-
lizer. Enclosed is a copy of Rule 3.287 relating to exemption
certificates.

Catfish, bass and bream live in the pond to control insects and
vegetation. You may purchase feed for the fish tax free without
an exemption certificate.

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

If you have any questions you may call or write 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