Are weed-control chemicals used on prairie-grass fields enrolled in wildlife conservation programs exempt Illinois farm chemicals?

Plain-English summary

A farmer asked about weed-control chemicals for prairie-grass fields enrolled in conservation programs and used as wildlife food plots. Illinois did not issue specific permission for exemption.

Farm chemicals used in production agriculture could be exempt when the resulting products were to be sold, or when used to produce or care for animals that would be sold or whose products would be sold.

Chemicals used to raise grass, crops, or other plants that the purchaser did not resell were taxable retail sales. The rule therefore turned on resale of the crop, not simply use on a farm or participation in a Department of Agriculture contract.

What this means for you

Conservation-program participants

Do not assume chemicals are exempt because the acreage is farmed or under a government conservation contract. Determine whether the plants are produced for resale within the farm-chemical rule.

Chemical retailers

Collect tax when the purchaser uses the chemicals to grow plants that are not resold, unless another specific exemption applies.

Common questions

Q: Are all farm weed-control chemicals exempt?
A: No.

Q: Does growing wildlife food plots establish production for resale?
A: The GIL did not say so; it emphasized whether the grass or crops were resold.

Q: Did Illinois issue the requested exemption permission?
A: No.

Citations and references

• 86 Ill. Adm. Code 130.1955 — qualifying farm chemicals.
• 86 Ill. Adm. Code 130.2110 — chemicals used in raising crops for resale versus plants not resold.

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2011.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2011/st-11-0061.pdf

Original ruling text

ST 11-0061-GIL 08/11/2011 SALE AT RETAIL
This letter concerns sales of chemicals for weed control in fields. See 86 Ill. Adm. Code
130.1955. (This is a GIL.)

August 11, 2011

Dear Xxxxx:
This letter is in response to your letter dated July 1, 2011, in which you request information.
The Department issues two types of letter rulings. Private Letter Rulings (“PLRs”) are issued by the
Department in response to specific taxpayer inquiries concerning the application of a tax statute or
rule to a particular fact situation. A PLR is binding on the Department, but only as to the taxpayer
who is the subject of the request for ruling and only to the extent the facts recited in the PLR are
correct and complete. Persons seeking PLRs must comply with the procedures for PLRs found in the
Department’s regulations at 2 Ill. Adm. Code 1200.110. The purpose of a General Information Letter
(“GIL”) is to direct taxpayers to Department regulations or other sources of information regarding the
topic about which they have inquired. A GIL is not a statement of Department policy and is not
binding on the Department. See 2 Ill. Adm. Code 1200.120. You may access our website at
www.tax.illinois.gov to review regulations, letter rulings and other types of information relevant to your
inquiry.
The nature of your inquiry and the information you have provided require that we respond with
a GIL. In your letter you have stated and made inquiry as follows:
I am a farmer in the CITY, Illinois area with some fields on my farm that are enrolled in
the FSA CRP and CREPT programs. In these fields I have to grow both cool season
and warm season native prairie grasses.
To maintain weed control in these fields I need to purchase chemicals from my local
ABC plants for post spraying. For some reason they are saying I have to pay sales tax
on these chemicals but for all other crops they are tax exempt.
Since this is a contract program with the department of Agriculture to grow these
grasses as food plots for wildlife my CPA thinks these should be tax exempt.
Will you please give me permission to be tax exempt? Annual purchases will range
from $200-$500.00.

DEPARTMENT’S RESPONSE:
Although we cannot give you a specific answer in the form of a General Information Letter, we
hope you find the following helpful.

In general, the Illinois Retailers’ Occupation Tax is imposed upon the total gross receipts
received by retailers who make sales of tangible personal property to Illinois end users. Unless the
sales are specifically exempted, such retailers must collect and remit the sales tax. See 86 Ill. Adm.
Code 130.101.
Farm chemicals are statutorily exempt from Sales and Use Taxes in Illinois. The Department’s
regulation regarding the farm chemicals exemption may be found at 86 Ill. Adm. Code 130.1955. This
regulation describes the kinds of farm chemicals that qualify for the exemption. In general, farm
chemicals include chemical products used in production agriculture, the products of which are to be
sold, or in the production or care of animals that are to be sold or the products of which are to be sold.
When persons sell chemicals to purchasers who use the chemicals in raising crops that they
will resell, the sale of chemicals is not taxable as a sale for resale. However, when persons sell
chemicals to purchasers who use the chemicals in raising grass, crops, or other plants that they do
not resell, such vendors are engaged in the business of making retail sales of the chemicals and are
required to remit Retailers’ Occupation Tax to the Department on their gross receipts from such sales.
See 86 Ill. Adm. Code 130.2110.
I hope this information is helpful. If you require additional information, please visit our website
at www.tax.illinois.gov or contact the Department’s Taxpayer Information Division at (217) 782-3336.
Very truly yours,

Debra M. Boggess
Associate Counsel
DMB:msk