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SALES AND USE TAX APPLICATION TO FARMING, TIMBER HARVESTING, NURSERY OPERATIONS, AND AGRITOURISM

seed from the fiber, and sells the seed and cotton to others for further sale. Under these conditions, and upon

application to the Department of Revenue, the business may qualify as a manufacturer (processor) eligible for sales

tax exemption on machinery and equipment used to process the cotton and reduced tax rates on water and energy

fuel used by the manufacturer. This business is not providing for-hire services to process the farmers’ cotton and

therefore will not qualify for the agricultural certificate of exemption. The cotton gin, repair and replacement parts,

and repair labor for the cotton gin can be purchased exempt from tax if the business has qualified for and received

authorization as a manufacturer. The electricity, natural gas, liquefied gas, or fuel oil used to operate the cotton gin

will be subject to tax at the 1.5% tax rate on energy fuel sold to and used by qualified manufacturers.

43. Can persons that board horses or train horses qualify for the agricultural certificate of exemption?

Persons that board horses owned by others are providing for-hire services for raising an agricultural product.

Livestock feed, livestock drugs, and instruments used to administer the livestock drugs can be purchased tax exempt

by a horse boarder that has received the agricultural certificate of exemption. Training horses is a non-taxable

service in Tennessee. Trainers that are not also providing the boarding of horses owned by others do not meet any of

the criteria for qualifying for the agricultural certificate of exemption. Trainers are not providing for-hire services to

raise or process an agricultural product.

Application for the Agricultural Certificate of Exemption

44. Where can I find the agricultural application for sales tax exemption and information regarding the

exemption?

Information regarding the agricultural exemptions, the applications, and instructions for completing the application

can be found on the Department of Revenue’s web site at

or by calling (615) 253-0600

or, toll-free within Tennessee (800) 342-1003.

45. How long will it take to get the certificate of exemption?

In most cases, if necessary documents are provided with the application, it will take 3 – 5 days for the department to

process the application for exemption.

46. Can a dealer refuse to accept the agricultural certificate of exemption to make a sale tax exempt?

Yes. There is nothing in the sales tax statutes or regulations that mandate a dealer to recognize any exemption. Prior

to the new law, a seller could refuse to allow a purchaser to provide a farmer’s affidavit to make a tax-exempt

purchase. In either case, a seller would most likely refuse to allow the user of the agricultural certificate of

exemption or the farmer’s affidavit if the seller knew that the item would not qualify for the exemption. For

example, a seller should refuse to make a sale of a diamond ring tax exempt if the purchaser presents an agricultural

certificate of exemption as the basis for making the purchase tax exempt.

47. Once I receive the agricultural certificate of exemption, will I have to reapply or renew the certificate?

The statute provides that the exemption is good for four years or until the applicant is no longer qualified within the

four-year period. The methodology for renewal will be determined at that time.

48. Do I need multiple exemption certificates for each partnership?

If you individually qualify for the agricultural exemption certificate, you may provide a copy of your individual

agricultural exemption certificate to the supplier for each separate account your supplier has set up for each

partnership. The supplier should obtain a copy of each partner’s agricultural exemption certificate if the partner has

the authority to charge the purchase of items to the partnership account.

Form Rv-F1308401 - Application For Registration Agricultural Sales And Use Tax Certificate Of Exemption - 2009 Page 15