Form St-403 - Commercial Farming Machinery & Equipment Sales Tax Exemption Certification
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1Commercial Farming Sales Tax Exemption
Arkansas Code Ann. §26-52-403 provides an exemption from
farming even while at the commercial farm (such as pleasure
sales tax for new and used farm machinery and equipment.
riding,
household
activities,
residential
yard
work,
“ Farm machinery and equipment” is defined as agricultural
gardening, hunting, fishing);
a machine purchased by a commercial farmer who also uses
implements used exclusively and directly for the agricultural
production of food or fiber as a commercial business.
the machine to produce food or fiber primarily for his own
Sometimes, purchasers improperly claim the exemption and
consumption;
attachments to and accessories not essential to the operation
fail to take into consideration that the exemption only applies to
those purchasers that are engaged in the business of
of the implement itself (except when sold as part of an
commercial farming.
assembled unit); or
repair labor and repair parts.
The most commonly misused exemption is for All Terrain
Vehicles (ATVs).
To purchase the machinery exempt from sales tax the purchaser
must certify in writing that he is engaged in the business of
For the purchase to be tax-exempt, the taxpayer must certify
commercial farming and that the farm machinery and
the machinery will be –
equipment will be used only in commercial farming. The seller
1. used exclusively in the agricultural production of food or
then must certify to the Department of Finance and
fiber as a retail business, AND;
Administration that the contract price of the item(s) has been
2. used directly in the actual agricultural production of food
reduced to grant the full benefit of the exemption. Any
or fiber to be sold in processed form or at retail, OR used
accessories not pre-assembled by the manufacturer are taxable,
directly in the agricultural production of farm products to be
even if purchased at the same time. Subsequent parts or repairs
fed to livestock or poultry which is to be sold ultimately in
are taxable sales.
processed form at retail. If the purchaser is not selling farm
products produced in the course of an ongoing farming
Violation of this regulation by the Purchaser or the Seller is a
business, the purchaser is not entitled to this exemption.
misdemeanor. Any taxpayer who wrongfully claims the farm
machinery exemption will be assessed tax, interest and penalty
Examples of Non-Exempt items would include –
upon audit by the Department of Finance and Administration.
a machine owned by a commercial farmer but also used at a
location other than the farming property (such as duck club
If you have a question or need additional information, please
or deer camp);
contact the Sales and Use Tax Section at (501) 682-7104.
a machine owned by a commercial farmer but also used for
any purpose at any time for activities other than commercial
Commercial Farming Machinery & Equipment Sales Tax Exemption Certification
I,
, am engaged in, or provide services for, the production of
(purchaser's name - please print)
(products grown or raised)
as a commercial farming business. The farm machinery and equipment I am purchasing will be used
exclusively and directly in the agricultural production of food and fiber to be sold in the commercial
marketplace OR used directly in the agricultural production of farm products to be fed to livestock or poultry
which will be sold in processed form at retail. I am aware that this claim for exemption will be reviewed by the
Department of Finance and Administration. I am also aware that any false representation made by me in an
attempt to purchase farm machinery and equipment free from Arkansas sales tax will result in the assessment
of tax, penalty, and interest against me and is punishable as a misdemeanor under Arkansas law.
Signature of Purchaser
Date
Telephone Number
Address
City
State
Zip
*These certificates shall be kept on file by the seller for six years from the date of sale for audit purposes.
Form ST-403
R 02/2007
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