Did Texas's agricultural exemption cover a ranch water-softening system used by ranch hands rather than exclusively for livestock watering or crop irrigation?

Plain-English summary

The ranch water-softening system was taxable because it served ranch hands rather than being used exclusively in qualifying agricultural operations.

The letter said equipment had to be used exclusively for activities such as watering livestock or irrigating crops sold in the regular course of business. Materials used to build or operate a ranch house did not qualify for the agricultural exemption.

STAR now places an alert above the 1990 letter stating that House Bill 268 amended the Tax Code in 2011 and required registration numbers for certain agricultural and timber exemptions effective January 1, 2012.

Common questions

Did ranch location alone make the system exempt? No.

What uses could qualify under the letter? Exclusive agricultural use for livestock watering or crop irrigation for sale.

Was ranch-hand use exempt? No.

Is the 1990 procedure current without qualification? STAR warns of later registration-number requirements.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9008L1038B07

Original ruling text

ALERT: This document may be affected by changes to the Tax Code which was amended by H.B. 268, 82 nd 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

BOB BULLOCK
Comptroller

August 17, 1990

Dear **:

Thank you for your letter concerning the installation of a water
softening system on your ranch.

In order for equipment to qualify for exemption it would need to
be used exclusively in agriculture operations for watering live-
stock and irrigation of crops for sale in the regular course of
business.

Although many items used on a ranch qualify for exemption, none
of the materials used to build or operate a ranch house come
within the exemption. There is no exemption for a water soften-
ing system for ranch hand use. Therefore, your purchase of the
water softening system is taxable. I have enclosed a copy of our
agricultural rule for your reference.

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, please contact Tax Correspondence or
you may write to me at the above address. You may call toll free
1-800-252-5555, or our regular number is 512/463-4600. My exten-
sion is 3-4728.

Sincerely,
Onofre Guerra
Tax Correspondence