How did Georgia's manufacturing and agricultural exemptions apply to a poultry processor's refrigerated trailers and sanitizing chemicals?

Plain-English summary

The result depended on which exemption the poultry processor elected for a location and on the purchase date:

• Refrigerated trailers requiring highway registration did not qualify as manufacturing machinery, including under the older 2009–2012 rules or the post-2013 manufacturing exemption.
• Beginning in 2013, those trailers qualified as agricultural machinery when a qualified producer used them to transport agricultural products.
• Chemicals used to sanitize manufacturing equipment were taxable consumable supplies before July 1, 2014, but became exempt manufacturing equipment on that date.
• The agricultural exemption did not cover sanitizing chemicals because they were consumable supplies rather than qualifying agricultural inputs or equipment.

For any one location in a calendar year, the taxpayer could use either the manufacturing exemptions or the agricultural exemptions, but not both.

Common questions

Q: Could the processor exempt both trailers and sanitizers at one location in the same year?

A: Not by mixing the two exemption systems. The location had to elect manufacturing or agriculture for the calendar year.

Q: Did incidental chemical contact with chicken make sanitizers industrial materials?

A: No. Their primary purpose was cleaning equipment, and any product contact was incidental.

Citations and references

• O.C.G.A. § 48-8-3.2(a)-(b) -- manufacturing equipment and consumable supplies
• O.C.G.A. § 48-8-3.3(a)-(b) -- agricultural equipment and inputs
• Ga. Comp. R. & Regs. r. 560-12-2-.62(7) -- annual election between exemptions

Source

• Landing page: Georgia Sales & Use Tax Letter Rulings
• Original PDF: LR SUT-2014-04

Original ruling text

Date Issued:
July 14, 2014
Georgia Letter Ruling: LR SUT-2014-04
Topic: Agriculture
This letter is in response to your request for guidance related to the appropriate application of Georgia sales and use
tax to purchases made by a farm.
Facts as presented by Taxpayer
Taxpayer is a poultry processer with locations in Georgia. Historically, Taxpayer qualified for certain Georgia sales
and use tax exemptions as a manufacturer. Taxpayer has now received a Georgia Agriculture Tax Exemption
(“GATE”) certificate, and qualifies for the sales and use tax exemptions extended to agricultural producers.
Refrigerated Trailers
During production, refrigerated trailers are used to transport chicken between plants. Refrigerated trailers are also
used to store chicken during the production process.
Sanitizing Chemicals
Sanitizing chemicals are sprayed on processing equipment at the end of the work day. The chemicals are not
removed, which results in chicken coming into contact with these chemicals the following day when the process
begins. The “primary purpose” of the sanitizing chemicals is to clean the equipment and any contact with the
chicken during the production process is incidental.
Issues
1.

During the period of January 1, 2009 through December 31, 2012, were refrigerated trailers used to transport
and store chicken exempt from the tax as qualifying manufacturing machinery and equipment?

2.

As of January 1, 2013, do the sales and use tax exemptions for manufacturers contained in O.C.G.A. § 48-8-3.2
exempt refrigerated trailers used to transport and store chicken from the tax?

3.

Are refrigerated trailers used by a qualified agriculture producer exempt from the tax?

4.

Are chemicals used to sanitize manufacturing machinery and equipment exempt from the tax?

5.

Are chemicals used to sanitize agricultural machinery and equipment exempt from the tax?

Analysis
Georgia levies and imposes a tax (subject to certain specific exemptions) on the retail purchase, retail sale, storage,
use, or consumption of tangible personal property and certain enumerated services. 1
Manufacturing Exemptions
“The sale, use, or storage of machinery or equipment which is necessary and integral to the manufacture of tangible
personal property and the sale, use, storage, or consumption of industrial materials or packaging supplies shall be
exempt from all sales and use taxation.” 2 While specific exemptions apply to the sale, use, or storage of machinery
and equipment necessary and integral to the manufacture of tangible personal property, industrial materials, and
packaging supplies, these exemptions did not historically extend to consumable supplies used by a manufacturer.

1
2

O.C.G.A. §§ 48-8-1 and 48-8-30(a).
O.C.G.A. § 48-8-3.2(b), effective 1/1/2013.

July 14, 2014
LR SUT-2014-04
Agriculture
Page 2 of 5

O.C.G.A. § 40-2-20 requires that every owner of a motor vehicle, including a tractor or motorcycle, or a trailer must
register the vehicle and obtain a license to operate it for the 12 month period until the next registration period.
Refrigerated trailers must be registered for operation on public highways. Motor vehicles that are required to be
registered for operation on public highways do not qualify as manufacturing machinery and equipment necessary
and integral to the manufacture of tangible personal property at any time. 3 Because refrigerated trailers must be
registered for operation on public highways, these trailers are not manufacturing machinery and equipment at any
time.
“Consumable supplies” means tangible personal property, other than machinery, equipment, and industrial
materials, that is consumed or expended during the manufacture of tangible personal property. The term includes,
but is not limited to, water treatment chemicals for use in, on, or in conjunction with machinery or equipment and
items that are readily disposable. The term excludes packaging supplies and energy. 4 Sanitizing chemicals are used
and consumed in the sanitizing process and thus are consumable supplies.
“Equipment” means tangible personal property other than machinery and industrial materials. The term includes
durable devices and apparatuses that are generally designed for long-term continuous or repetitive use. Effective
July 1, 2014 the term also includes consumable supplies. 5 Consequently, beginning July 1, 2014, sanitizing
chemicals used to sanitize manufacturing machinery and equipment are exempt from the tax when purchased by a
qualifying manufacturer.
“Industrial materials” means materials for future processing, manufacture, or conversion into articles of tangible
personal property for resale when the industrial materials become a component part of the finished product. The
term also means materials that are coated upon or impregnated into the product at any stage of its processing,
manufacture, or conversion, even though such materials do not remain a component part of the finished product for
sale. The term includes raw materials. 6 Sanitizing chemicals do not become a component part of the finished
product, and any contact with chicken during processing is purely incidental. Accordingly, sanitizing chemicals are
not industrial materials.
Agricultural Exemptions
“The sales and use taxes levied or imposed . . . shall not apply to sales to, or use by, a qualified agriculture producer
of agricultural production inputs, energy used in agriculture, and agricultural machinery and equipment.” 7 Specific
exemptions apply to sales to, or use by, a qualified agriculture producer of agricultural production inputs, energy
used in agriculture, and agricultural machinery and equipment. The exemption does not extend to consumable
supplies.
A qualified agriculture producer means a person defined as such by the Georgia Department of Agriculture. 8
Taxpayer has received a GATE certificate from the Georgia Department of Agriculture making Taxpayer a qualified
agriculture producer.
“Agricultural machinery and equipment” means machinery and equipment used in the production of agricultural
products, including, but not limited to . . . trailers used to transport agricultural products; … 9 Trailers used to
transport agricultural products are “agricultural machinery and equipment”.

3

Ga. Comp. R. & Regs. r. 560-12-2-.62, effective 1/1/2009 and 1/1/2013.
O.C.G.A. § 48-8-3.2(a) (1). Pursuant to House Bill 900, signed by Governor Deal on April 15, 2014, effective July
1, 2014 consumable supplies are manufacturing equipment.
5
Id.
6
O.C.G.A. § 48-8-3.2(a) (5).
7
O.C.G.A. § 48-8-3.3(b).
8
Ga. Comp. R. & Regs. r. 560-12-2-.03(2) (n).
9
O.C.G.A. § 48-8-3.3(a)(1)(A)(B).
4

July 14, 2014
LR SUT-2014-04
Agriculture
Page 3 of 5

“Agricultural production inputs” means:
[S]eed; seedlings; plants grown from seed, cuttings, or liners; fertilizers; insecticides; livestock
and poultry feeds, drugs, and instruments used for the administration of such drugs; fencing
products and materials used to produce agricultural products; fungicides; rodenticides; herbicides;
defoliants; soil fumigants; plant growth regulating chemicals; desiccants, including, but not
limited to, shavings and sawdust from wood, peanut hulls, fuller's earth, straw, and hay; feed for
animals, including, but not limited to, livestock, fish, equine, hogs, or poultry; sugar used as food
for honeybees kept for the commercial production of honey, beeswax, and honeybees; cattle, hogs,
sheep, equine, poultry, or bees when sold for breeding purposes; ice or other refrigerants,
including, but not limited to, nitrogen, carbon dioxide, ammonia, and propylene glycol used in the
processing for market or the chilling of agricultural products in storage facilities, rooms,
compartments, or delivery trucks; materials, containers, crates, boxes, labels, sacks, bags, or
bottles used for packaging agricultural products when the product is either sold in the containers,
sacks, bags, or bottles directly to the consumer or when such use is incidental to the sale of the
product for resale; and containers, plastic, canvas, and other fabrics used in the care and raising of
agricultural products or canvas used in covering feed bins, silos, greenhouses, and other similar
storage structures. 10
Chemicals used to sanitize agricultural machinery and equipment are not qualifying agricultural inputs.
“Consumable supplies” means tangible personal property, other than machinery, equipment, agricultural production
inputs, and energy, that is readily disposable, or is immediately consumed or expended during an agricultural
operation. 11 Because they are readily disposable and immediately consumed, sanitizing chemicals are consumable
supplies.

10
11

O.C.G.A. § 48-8-3.3(3).
Ga. Comp. R. & Regs. r. 560-12-2-.03.

July 14, 2014
LR SUT-2014-04
Agriculture
Page 4 of 5

Dealers Performing both Manufacturing and Agricultural Operations
“A dealer that performs both manufacturing and agricultural operations at a single place of business may avail itself
of the exemptions under either O.C.G.A. § 48-8-3.2 or O.C.G.A. § 48-8-3.3, but not both, for that place of business
in any one calendar year.” 12 Taxpayer may thus take advantage of either the manufacturing exemptions or
agricultural exemptions, but not both, for any one location in any one calendar year.

Rulings
Refrigerated trailers must be registered for operation on public highways and thus are not qualifying manufacturing
machinery at any time. Before July 1, 2014, consumable supplies did not fall within the scope of the exemptions for
manufacturers. Thus, if Taxpayer elects to take advantage of the manufacturer exemptions in O.C.G.A. § 48-8-3.2,
Taxpayer’s purchases before July 1, 2014 of refrigerated trailers and sanitizing chemicals are subject to the tax.
However, beginning July 1, 2014, sanitizing chemicals purchased by a manufacturer are qualifying manufacturing
equipment and exempt from the tax.
While Georgia’s agricultural sales and use tax exemptions include non-motorized trailers used to transport
agricultural products, the exemption does not extend to consumable supplies. Thus, if Taxpayer elects to take
advantage of the agricultural exemptions and not the manufacturing exemptions, Taxpayer may purchase
refrigerated trailers used to transport agricultural products exempt from the tax. Taxpayer is liable for the tax on all
purchases of consumable supplies including sanitizing chemicals used to clean agricultural machinery and
equipment.
Taxpayer may take advantage of either the manufacturing exemptions or the agricultural exemptions, but not both,
for any one location in any one calendar year.
1.

During the period of January 1, 2009 through December 31, 2012, Georgia’s manufacturing exemptions did not
extend to motor vehicles for which registration was required for operation on public highways. For sales and
use tax purposes, refrigerated trailers used to transport and store chicken are motor vehicles that require
registration for operation on public highways and, thus, such trailers did not qualify as exempt manufacturing
machinery and equipment. Consequently, Taxpayer is liable for the tax on any purchases of refrigerated trailers
made during that time period.

2.

The exemptions for manufacturers contained in O.C.G.A. § 48-8-3.2 that became effective January 1, 2013 do
not include refrigerated trailers used to transport and store chicken and, thus, manufacturers may not purchase
such equipment exempt from sales and use tax.

3.

Since January 1, 2013, refrigerated trailers are agricultural machinery and equipment when used by a qualified
agricultural producer to transport agricultural products and are exempt. As a qualified agricultural producer,
Taxpayer may purchase refrigerated trailers without payment of the tax.

12

Ga. Comp. R. & Regs. r. 560-12-2-.62(7).

July 14, 2014
LR SUT-2014-04
Agriculture
Page 5 of 5

4.

Before July 1, 2014, Georgia’s manufacturing exemptions did not extend to consumable supplies such as
chemicals used to sanitize manufacturing machinery and equipment. Thus, Taxpayer’s purchases before that
date of chemicals used to sanitize manufacturing machinery and equipment are subject to the tax. However,
effective July 1, 2014 consumable supplies are exempt from the tax as qualifying manufacturing equipment and,
thus, if in any given year Taxpayer elects to take advantage of the exemptions for manufacturers contained in
O.C.G.A. § 48-8-3.2 instead of the exemptions for agriculture producers contained in O.C.G.A. § 48-8-3.3,
Taxpayer may purchase chemicals used to sanitize manufacturing machinery exempt from the tax.

5.

Georgia’s agricultural exemptions do not extend to consumable supplies including chemicals used to sanitize
agricultural machinery and equipment. Thus, in any year in which Taxpayer takes advantage of the agricultural
exemptions rather than the manufacturing exemptions, Taxpayer is liable for the tax on its purchases of
chemicals used to sanitize agricultural machinery and equipment.

The opinions expressed in this ruling are based upon the information contained in your request and limited to the
specific transactions, facts, circumstances, and taxpayer in question. Should the circumstances regarding the
transactions change, or differ materially from those represented, then this ruling may become invalid. In addition,
please be advised that subsequent statutory or administrative rule changes or judicial interpretations of the Statutes
or Rules upon which this advice is based may subject similar future transactions to a different tax treatment than that
expressed in this response.