Does the sale, rental, or lease of a power washer used exclusively to clean exempt farm/ranch equipment qualify for Texas's agricultural sales tax exemption?

Plain-English summary

A company leasing out a pressure washer (with a $1.00 purchase option at lease maturity) received an exemption certificate from a customer describing the equipment's use as being "used exclusively on farm equipment for frequent washing to prevent hazardous fires caused by dust, oil, etc., to remove dirt to prevent corrosion to the equipment," claimed under the "agricultural production process" exemption. The lessor asked the Comptroller to confirm whether that use actually qualifies, and under what rule.

The Comptroller confirmed it does. The sale, rental, or lease of a power sprayer used to clean farm equipment that itself qualifies for the agricultural exemption is exempt from sales tax under Rule 3.296(g)(5), which extends the exemption to "machinery and equipment used exclusively to maintain equipment that qualifies for exemption" under that section. The farmer or rancher must issue the lessor a properly completed exemption certificate, as this customer did.

(Note: STAR carries an "ALERT" on this letter about a 2011 statutory amendment, H.B. 268, which later added an agricultural/timber registration-number requirement effective January 1, 2012. That amendment postdates this 1999 letter by over a decade and is a STAR-added cross-reference, not part of the original ruling text — flagged here rather than treated as part of the 1999 analysis.)

What this means for you

Equipment lessors and sellers serving farmers/ranchers

If a customer presents a properly completed agricultural exemption certificate for equipment used exclusively to clean or maintain their exempt farm equipment (like a power washer used against dust, oil, or corrosion buildup), you can sell, rent, or lease it tax-free under Rule 3.296(g)(5). Keep the certificate on file to document the exempt sale.

Farmers and ranchers

Equipment that exclusively maintains your other exempt farm equipment — not just the primary farm equipment itself — can also qualify for the agricultural exemption. Be prepared to issue a proper exemption certificate describing that exclusive maintenance use.

Accountants and tax professionals

Note the important caveat baked into the rule text and this letter: the exemption requires exclusive use in maintaining already-exempt equipment. If a power washer is also used for cleaning outside that exempt context, the "exclusively" requirement in Rule 3.296(g)(5) could be at issue. Also be aware that agricultural exemption paperwork requirements later tightened in 2012 (registration numbers), a change well after this letter's 1999 facts.

Common questions

Q: Can I lease a power washer to a farmer tax-free if it's used to clean exempt farm equipment?
A: Yes, provided the washer is used exclusively for that purpose and the farmer issues you a properly completed exemption certificate, per Rule 3.296(g)(5).

Q: What rule covers equipment used to maintain other exempt farm equipment?
A: Rule 3.296(g)(5) — Agriculture, Animal Life, Feed, Seed, Plants, and Fertilizer — extends the exemption to machinery/equipment used exclusively to maintain equipment that itself qualifies.

Q: Does this letter reflect current law?
A: STAR flags that a 2012 statutory change (from 2011's H.B. 268) added a registration-number requirement for agricultural exemption claims — confirm current registration requirements before relying on this 1999 letter's mechanics today.

Citations and references

Rule:

• 34 Tex. Admin. Code § 3.296(g)(5) (Agriculture, Animal Life, Feed, Seed, Plants, and Fertilizer)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9910785L

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.

October 18, 1999

Subject: agricultural exemption from sales/use tax on leased equipment

Dear **:

This is in response to your request for a ruling on the following fact
situation and questions:

I would like your advice in regards to an exemption certificate which was
submitted to our company. The customer is leasing a pressure washer with a
$1.00 option to purchase the equip at lease maturity. He submitted a Texas
Sales and Use Tax Exemption Certificate w/the following description on the
equipment use: " used exclusively on farm equipment for frequent washing to
prevent hazardous fires caused by dust, oil, etc., to remove dirt to prevent
corrosion to the equipment". Furthermore listed, that the reason for the
exemption: "agricultural production process" Does this type of a use qualify to
be exempt under agricultural production claim? If so, what section of the
regulation covers it?

Response: Yes. The sale, rental or lease of a power sprayer to clean exempt
farm equipment qualifies for exemption from sales tax. The farmer or rancher
must issue your company an exemption certificate as this customer did.
Subsection (g) (5) of Rule 3.296 - Agriculture, Animal Life, Feed, Seed,
Plants, and Fertilizer provides that the terms machinery or equipment,
qualifying for exemption from sales tax includes "machinery and equipment used
exclusively to maintain equipment that qualifies for exemption under this
section."

Sales tax rules are available on the Internet. Access the following site and
enter 34 for the Title Number, 1 for the Part Number and the last three digits
of the Rule number, i.e., 296 for Rule 3.296, after Rule):

The State Tax Automated Research system may be accessed on the Internet at:

This opinion is based on the facts presented. Other facts though similar may
provide a different result.

I hope this information answers your questions. If you need additional
information, please call me toll-free at 1-800-531-5441, extension 3-4502. The
direct line is 512/463-4502. You may also write to Tax Policy Division,
Comptroller of Public Accounts. You may also e-mail our tax help section at:

Gilbert Zamora

Tax Policy