Ag Certificate Requirement Likely To Anger Those Not Eligible Anymore

State lawmakers are expecting some angry calls this month, from Tennesseans who no longer quality for a sales tax exemption on farm products.

For years, Tennessee has offered exemptions to the state’s sales tax on items such as feed, equipment, seed, and fertilizer, but never demanded any proof that the people buying the items were actually farmers, timber harvesters or nursery workers.

On January 1, Tennessee began requiring retailers to ask for a state-issued certificate in order buy ag products tax free. To qualify for the “Agricultural Sales and Use Certificate” you must own or lease land that generates at least a thousand dollars worth of ag products during the year, work on a farm, or file an IRS form for farm income.

At a legislative hearing last month, State Representative Philip Pinion said lawmakers will likely receive plenty of calls from those who no longer qualify.

“I want the state to legitimately collect the money. If they’re raising horses for pleasure they should pay sales tax on feed, but if they’re raising horses and selling ’em they shouldn’t pay it. That could be a catch-22 for us. A lot of us legislators may be hearing from a lot of folks after the first of the year who are going to be upset when they go to buy their horse feed, and now they have to pay nine and three-quarter cents sales tax on it.”

State revenue officials say they sent out more than 75,000 applications for the certificate and a have a five day turnaround on applications. Anyone who qualifies for, but doesn’t yet have a certificate is eligible for a sales tax refund on farm items.