Did an aircraft used primarily for crop scouting and field maintenance qualify for Illinois's farm machinery exemption?

Plain-English summary

A farmer bought an aircraft to carry cameras for crop scouting, crop-progress records, land-condition records, and field maintenance. Those were to be its primary uses.

Illinois exempted machinery and equipment used primarily in production agriculture. But the regulatory definition expressly excluded crop scouting and field-maintenance activities.

IDOR therefore said an aircraft can qualify when used primarily for included production-agriculture work, but this aircraft would not qualify because its stated primary uses were excluded.

What this means for you

The asset type does not decide the exemption; primary use does. Keep usage records distinguishing qualifying production work from scouting, maintenance, transportation, and other excluded activity.

Common questions

Can an aircraft ever qualify? Yes, if used primarily in qualifying production agriculture.

Did crop scouting qualify? No.

Citations and references

• 35 ILCS 120/2-35.
• 86 Ill. Adm. Code 130.305.
• Compliance Alert 2007-03.

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/sales-tax/2016.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/sales-tax/2016/st-16-0060-gil.pdf

Original ruling text

ST 16-0060-GIL 11/02/2016

FARM MACHINERY AND EQUIPMENT

An aircraft used primarily in production agriculture may qualify for the farm machinery
and equipment exemption. See 86 Ill. Adm. Code 130.305. (This is a GIL.)

November 2, 2016
Dear Xxxxx:
This letter is in response to your letter, in which you requested 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 who recently purchased an aircraft. My intentions are to use it for
crop scouting and field maintenance operations. It will have cameras attached
so I can keep detailed records of crop progress and land conditions. This will be
the airplane’s primary use. I decided to go this route instead of drone because I
am a private pilot.
I spoke with PERSON. (ref. XXXXX). He thought this would be O.K. after
hearing my explanation intention for the use of the aircraft.
I am nearing the time when this tax will be due so a prompt reply will be
appreciated.
DEPARTMENT’S RESPONSE:
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 incur Retailers’ Occupation
Tax on those sales. See 86 Ill. Adm. Code 130.101.
In certain cases, the sale of tangible personal property used in production agriculture is
not subject to Illinois Retailers’ Occupation Tax and Use Tax. Under 86 Ill. Adm. Code
130.305 “Farm Machinery and Equipment,” Illinois sales tax does not apply to the sale of
machinery and equipment, both new and used and including that manufactured on special

ST 16-0060-GIL

order, used or leased for use primarily in production agriculture or for use in State or Federal
agricultural programs. The sale of individual replacement parts for such machinery and
equipment is also exempt. In order to obtain the exemption, the purchaser must certify to the
use primarily in production agriculture of the equipment or machinery. See Section
130.305(a).
Production agriculture is defined under the Retailers’ Occupation Tax Act as “the raising
of or propagation of livestock; crops for sale for human consumption; crops for livestock
consumption; and production seed stock grown for the propagation of feed grains and the
husbandry of animals or for the purpose of providing a food product, including the husbandry
of blood stock as a main source of providing a food product. Production Agriculture also
means animal husbandry, floriculture, aquaculture, horticulture, and viticulture.” See 35 ILCS
120/2-35. Further, production agriculture, with respect to crops, includes mapping fields,
applying farm chemicals, as well as activities necessary in tilling the soil, planting, irrigating,
cultivating, applying herbicide, insecticide, or fertilizer, as well as, harvesting and drying of
crops. Activities such as the clearing of land, mowing of fence rows or ditches, creation of
ponds or drainage facilities, scouting crops and tile mapping are not included, nor are the
operations involved in the storing or transporting of crops and produce, Section 130.305(f).
An aircraft used in production agriculture may qualify for the farm machinery and
equipment exemption if the aircraft is used primarily in a qualifying manner, as described
above. However, if it were used, for example, primarily for crop scouting and field
maintenance activities, it would not qualify. Please see Compliance Alert 2007-03 regarding
the use of other equipment to perform these activities.
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:bkl

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