Form Pub. Ks-1550 - Kansas Business Taxes For The Agrcultural Industry Page 14
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32handling equipment are exempt as farm machinery and
Extended warranties or maintenance
equipment. A tarp used to cover the top of an
agreements purchased for exempt farm
agricultural gravity or hopper box is also exempt.
machinery or equipment (combines,
milking machines, etc.) are also exempt.
The extended warranty on your pickup is taxable
IRRIGATION EQUIPMENT
because the pickup is taxable. (See Vehicles & Trailers,
page 16.)
Irrigation equipment has two components for sales
tax purposes – the parts that are considered to be farm
OTHER BUSINESS EQUIPMENT
machinery and equipment, and the items that are
improvements to real property. The parts of an irrigation
system that are considered to be farm machinery and
Aside from the farm machinery and equipment sales
equipment are exempt if purchased for farm use (i.e.,
tax exemption, farmers and ranchers must usually pay
none of the water pumped is used for human
sales tax on all other items purchased for use in their
consumption and/or sanitation). Services to assemble
farming and ranching operations. Therefore your
or repair irrigation equipment for farm use are also not
purchases of boots, building materials, CB radios, cell
subject to sales tax.
phones, fencing materials, gloves, hand tools, hay
tarps, office supplies, work clothes, vehicles etc., are
Following are representative (but not exclusive) lists
subject to sales tax.
of exempt and taxable irrigation and well-related items.
Computers and Software
EXEMPT (as farm machinery and equipment):
Pivot system, heat exchanger, flowmeter, gear drive,
Computers and software used by farmers and
bowl units, column pipe, tubing and shaft assembly,
ranchers do not qualify as farm machinery and
check valve, and the discharge head, as well as
equipment, even though these items perform a valuable
submersible pumps and motors, gate and check valves
and necessary part of your operation and are tailored
and drop pipe.
to agribusiness. The purchase of computer hardware,
software, repair and replacement parts and the labor
The repair parts (including tires) and labor to install,
to install or maintain the hardware and software are
repair or maintain these exempt components of irrigation
taxable. Also taxable is the sale of warranty or
equipment are also exempt from sales or use tax.
maintenance agreements on these items.
TAXABLE (improvements to real property): The
Portable computers or computers that are installed
cement base, underground discharge pipe, and
or purchased to be installed on farm machinery and
underground plastic PVC irrigation pipe, along with the
equipment are exempt from sales tax when used only in
pressure tank, galvanized nipples and fittings, well pits
computer-assisted farming, ranching or aquaculture
and lids, well seals, and pitless units and/or adapters.
production operations.
The labor to repair a taxable item is also taxable.
The bunkreader and veterinary record
keeping software used to track cattle
Any labor services performed in or on irrigation wells
feeding operations is not exempt as farm
are subject to sales tax, unless the service of installing
machinery and equipment.
or applying tangible personal property is in connection
with the original construction of the irrigation well. Original
Repair Equipment
construction might be either the first or initial construction
of the well, or the reconstruction or repair of a well
Equipment purchased by a farmer or rancher in
damaged by fire, flood, tornado, lightening, explosion,
order to repair, maintain or service farm machinery and
windstorm, ice loading and attendant winds, terrorism,
equipment is NOT exempt. The exemption for farm
or earthquake. A windstorm means straight line winds
machinery and equipment extends only to the items
of at least 80 miles per hour as determined by a
actually used in the production process. Equipment
recognized meterorlogical reporting agency or
used to repair or clean production equipment is not used
organization. See also Wells on page 18.
directly in the production process, and is therefore not
exempt.
MAINTENANCE AGREEMENTS
You purchase tire repair equipment to
mount and repair the tires on your
irrigation equipment. You must pay sales
G
R
: I
ENERAL
ULE
F THE TANGIBLE PERSONAL
tax on the tire repair equipment, as well
,
PROPERTY IS SUBJECT TO SALES TAX
THEN ANY
as any repair or replacement parts or labor on the tire
MAINTENANCE AGREEMENT OR EXTENDED WARRANTY FOR
.
repair equipment.
THAT PROPERTY IS ALSO SUBJECT TO SALES TAX
14
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