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Ezel / Tax Rulings / CT
CT Ruling 89-227 Sales and Use Taxes 1989-11-21

Could a farmer obtain Connecticut's agricultural sales-tax exemption permit without at least $2,500 of agricultural-product sales in the preceding year?

Short answer: No under this historical ruling. DRS could issue the permit only when the farmer reported at least $2,500 of agricultural-product sales for the preceding calendar year. The law provided no startup exception or later refund, so the request was denied.

Apply this to your situation

This page answers the general question as of 1989. Ezel answers yours, under current Connecticut tax law, with citations.

Currency note: this ruling is from 1989
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official 1989 Connecticut Department of Revenue Services Ruling applying the agricultural exemption-permit requirements then in effect. Its denial depended on the statutory $2,500 prior-year gross-income threshold described in the ruling and the absence of a startup or refund provision; another farmer should not assume those historical rules remain current. Connecticut imposes sales and use tax solely at the state level: there are no local or municipal sales taxes. This summary is informational only and is not legal or tax advice. Consult a licensed Connecticut tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

The agricultural exemption covered tangible personal property used exclusively in agricultural production, but DRS could issue an exemption permit only if the farmer had at least $2,500 of gross income from agricultural-product sales in the preceding calendar year, as reported for federal income tax purposes.

The ruling said the law created no exception for startup farms or existing farms below the threshold, and no right to a refund after the farm later reached $2,500. Because tax exemptions had to be strictly construed and the Commissioner could not extend the legislature's limits, the permit request was denied.

What this means for you

Under the historical rule, future or current-year sales could not substitute for the required preceding-year income. The published ruling does not identify the statute number, so the threshold should not be assumed current.

Common questions

What prior-year income was required? At least $2,500 of gross income from agricultural-product sales.

Did startup farms have an exception? No.

Could a farm claim a refund after later reaching the threshold? No provision allowed that under the ruling.

What happened to the permit request? It was denied.

Citations and references

  • The published ruling text does not identify the statute number for the agricultural exemption or permit threshold.

Source

Original ruling text

Ruling 89-227, Agricultural Production

Ruling 89-227

Agricultural Production

In granting this exemption for tangible personal property used exclusively in agricultural production, the General Assembly included in the law the requirement that the Department of Revenue Services could issue an agricultural sales tax exemption permit only when a farmer's gross income from sales of agricultural products was $2,500 or more in the preceding calendar year, as reported for federal income tax purposes.

In setting the $2,500 threshold amount for qualification for the exemption, the legislature made no provision either for "start-up" farm businesses or for current farm businesses with gross income of less than $2,500 to apply to this Department for refunds once the $2,500 threshold was attained.

It is a well-known principle of statutory construction that exemptions from taxation are to be strictly construed. As exemptions from taxation are matters of legislative grace, I do not have the authority to extend the limitations imposed by the General Assembly on the scope of this exemption. Accordingly, I must deny your request for a farmer tax exemption permit.

TIMOTHY F. BANNON

COMMISSIONER

November 21, 1989

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