Suggested Purchaser'S Exemption Certificate Electricity Used Directly Or Indirectly In Production Or Processing Of Agricultural Products On A Farm Form

TIP #07A01-05

DATE ISSUED: July 1, 2007

Electricity Used for Agricultural Purposes

Electricity used for the production or processing of farm products on a farm is exempt from

sales tax. Previously, the exemption was limited to electricity used "directly and

exclusively" for the production or processing of agricultural farm products on a farm.

The exemption was expanded and now applies to electricity used for indirect purposes in

the production or processing of farm products on a farm. Indirect use includes electricity

used to: supply power to facilities located on a farm used to repair farm equipment, supply

power to administrative offices located on the farm, and supply power for restroom facilities

located on a farm. Each of the examples listed must have some connection with producing

and processing farm products on a farm.

Examples of qualifying production equipment include irrigation pumps, milking machines,

potting equipment, feeding systems, aerators, and computerized monitoring equipment.

Examples of processing equipment include conveyors, chillers, freezers, packaging

equipment, and computerized processing equipment.

The exemption only applies if the electricity is separately metered from any electricity used

for non-production or non-processing purposes such as in a retail facility or other non-

exempt use. If the electricity is centrally metered and the electricity is used for both tax-

exempt and taxable purposes, the purchase of the electricity is taxable.

For purposes of this exemption, the following terms are defined:

Farmer means a person who is directly engaged in the business of producing crops,

livestock, or other agricultural commodities. The term includes, but is not limited to, horse

breeders, nurserymen, dairy farmers, poultry farmers, cattle ranchers, apiarists, and

persons raising fish. (Section 212.02(28), Florida Statutes)

Agricultural production means the production of plants and animals useful to humans,

including the preparation, planting, cultivating, or harvesting of these products or any other

practices necessary to accomplish production through the harvest phase, and includes

aquaculture, horticulture, floriculture, viticulture, forestry, dairy, livestock, poultry, bees,

and any and all forms of farm products and farm production. (Section 212.02(32), Florida

Statutes)

Processing means the act of changing or converting the nature of a product after it has

been harvested. (Rule 12A-1.087(2)(g), Florida Administrative Code)

Electricity that is separately metered and used to supply power to greenhouses, poultry

houses, dairy barns, horse stables, and processing facilities located on a farm is also tax

exempt.

To qualify for the exemption, the purchaser must furnish the utility provider with an

exemption certificate stating that the electricity will be used for the production or

processing of agricultural farm products on a farm. In instances where the utility provider

accepts an exemption certificate in good faith, the Department will look to the purchaser

for any applicable tax, penalty, or interest due. A suggested format of an exemption

certificate is attached.

Suggested Purchaser'S Exemption Certificate Electricity Used Directly Or Indirectly In Production Or Processing Of Agricultural Products On A Farm Form - Florida