Can a motorcycle/ATV dealer accept a farmer's or rancher's sales-tax exemption certificate for an all-terrain vehicle without first getting Comptroller approval?
Apply this to your situation
This page answers the general question as of 1994. Ezel answers yours, under current Texas tax law, with citations.
Plain-English summary
ALERT: This 1994 notice is outdated on one key point. Effective January 1, 2012, H.B. 268 (82nd Legislature, 2011) added a requirement that anyone claiming this agricultural/timber sales-tax exemption must first apply for and obtain a registration number from the Comptroller and include it on the exemption certificate. This 1994 notice predates that requirement and does not mention it.
As originally issued, this document is not a typical single-taxpayer letter ruling. It consists of two parts preserved together: (1) an internal May 1994 Comptroller staff memo announcing that a policy notice was about to be mailed to 231 motorcycle/ATV dealers statewide, and (2) the text of that dealer notice itself, signed by then-Comptroller John Sharp. The notice announced a procedural change: dealers could now accept a sales-tax exemption certificate directly from a farmer or rancher purchasing an all-terrain vehicle (with or without accessories) for use in agricultural production, without the customer first having to contact the Comptroller's office for prior approval. Before this change, farmers and ranchers reportedly needed the Comptroller's sign-off before a dealer could treat the ATV sale as exempt.
What this means for you
ATV and motorcycle dealers
If a customer presents a properly completed agricultural exemption certificate at the time of purchase for an ATV to be used in agricultural production, you may accept it and treat the sale as exempt without seeking prior Comptroller approval. Keep in mind the 2012 update noted above: current law requires the customer's certificate to include a valid ag/timber registration number issued by the Comptroller, so confirm your exemption-certificate practices reflect that later requirement rather than relying solely on this 1994 notice.
Farmers and ranchers
This notice reflects the original 1994 policy that let you claim the ATV agricultural exemption at the point of sale rather than needing advance Comptroller approval. Today, you must also have applied for and hold a Comptroller-issued agricultural/timber registration number (required since 01/01/2012) and provide it on the exemption certificate you give the dealer.
Anyone relying on this document today
Because of the H.B. 268 change, treat this notice as historical background on how the point-of-sale exemption process began, not as a complete statement of current exemption-certificate requirements. Verify current Tex. Tax Code § 151.316 exemption-certificate and registration-number rules before relying on this for a current transaction.
Common questions
Q: Could a dealer in 1994 sell an ATV tax-exempt to a farmer without Comptroller pre-approval?
A: Yes -- this notice announced that, effective immediately in May 1994, dealers could accept an exemption certificate from farmers and ranchers purchasing ATVs for agricultural production directly at the time of sale, without prior Comptroller approval.
Q: Does the exemption cover ATVs bought with accessories?
A: Yes, the notice specifically states the exemption applies to ATVs purchased with or without accessories.
Q: Is a Comptroller registration number required today for this exemption?
A: Yes -- unlike what this 1994 notice describes, H.B. 268 (82nd Legislature, 2011) requires an agricultural/timber registration number on the exemption certificate, effective 01/01/2012. This 1994 notice does not reflect that later requirement.
Q: Why does this document include a list of Comptroller staff names?
A: The preserved original text includes an internal 1994 distribution memo (with a routing list of Comptroller division staff) that accompanied the dealer notice when it was mailed. It's retained here for historical completeness but has no bearing on the substantive tax rule.
Citations and references
- Tex. Tax Code § 151.316 (agricultural exemption for machinery/equipment used in agricultural production, referenced by subject matter)
- H.B. 268, 82nd Legislature (2011) (added agricultural/timber registration number requirement for this exemption, effective 01/01/2012 -- per STAR currency 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/9405283L
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.
DATE: May 4,1994
TO: Distribution List
FROM: Becky Seale
SUBJECT: All Terrain Vehicle Letter
Attached is a copy of the letter that will be sent to 231 motorcycle dealers.
This letter notifies the dealers of the change in the policy regarding farmers
and ranchers ATV's. It is scheduled for mailing on Friday May 6, 1994.
If you need any additional information, my number is 5-0198.
Thank you.
Distribution List:
Wayne Akridge, Acct Maintenance
Sandra Joseph, Open Rcds/Disclosure
John Neel, Adm. Law Judges
Isaac Jackson, Res. & Intergov't Svcs.
Jean Atkinson, ASD
Toni Lopez, Research
Harold Lee, Audit Division Hdqtrs.
Tom Ellis, Revenue Accounting
Linda Pava, Central Administration
Dovie Ellis, Revenue Administration
Greg Hartman, Communications
Mike Reissig, Revenue Estimating
Loyd Cates, Data Services
Otis Fields, Revenue Processing
Jody Kniejski, Economic Assistance
Jewel Hunter, Revenue Processing
Jeff Wiginton, Executive Administration
Glen Hunt, Tax Administration
Mary Buckley, Executive Assistance
Wade Anderson, Tax Administration
Jim Teaver, Enforcement
Chuck Johnstone, Tax Administration
Bill Clemmer, Enforcement
Tom Poole, Tax Administration
Rick Farias, Enforcement
Karen Specht, Tax Administration
Irma Valles, Enforcement
Linda Rogers, Tax Administration
T. C. Mallett, Fiscal Management
Mona Shoemate, Tax Administration
George Tarnayo, Funds Accounting
Loreto Espinoza, Tax Administration
Ray Bonilla, General Counsel
Adina Whitemore, Tax Administration
Martin Cherry, General Law
Barbara Chavis, Tax Assistance
Andy Welch, Information Services
TAD Supervisors
Leo Aguirre, Internal Services
TAD, Technical Support Staff
Mike Borkland, Legal Services
Tax Assistance Supervisors
Bob Bearden, Local Govt. Assistance
cc: John Sharp
Tom Duffy
Billy Hamilton
May 6, 1994
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Dear ______:
We have changed our procedures to make it easier for your customers to claim a
tax exemption when they purchase an all-terrain vehicle to be used in
agricultural production on a farm or ranch.
Effective immediately, you may accept an exemption certificate from farmers and
ranchers when they purchase all-terrain vehicles for use in agricultural
production. This includes ATV's purchased with or without accessories
Farmers and ranchers are no longer required to contact this office for approval
of the exemption.
If you have any questions concerning this matter or additional sales tax
questions, please call one of our tax specialists toll free at 1-800-252-5555.
The Austin number is 512/463-4600. From a Telecommunications Device for the
Deaf (TDD) ONLY, call 1-800-248-4099 toll free. Our Austin TDD number is
512/463-4621. For written responses, please direct your letter to the Tax
Administration Division at the above address.
Sincerely,
JOHN SHARP
Comptroller of Public Accounts
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