Is welding rod a farmer buys to repair or maintain farm machinery exempt from Kansas sales tax?

Plain-English summary

A farmer asked whether welding rod bought "to repair or maintain farm machinery and equipment" is exempt from Kansas retailers' sales tax.

The exemption relied on. K.S.A. 79-3606(t) exempts "all sales of farm machinery and equipment or aquaculture machinery and equipment, repair and replacement parts therefor and services performed in the repair and maintenance of such equipment," excluding specified on-road vehicles other than a farm trailer.

The holding. "It is the opinion of the Kansas Department of Revenue that equipment used to maintain farm machinery and equipment does not qualify for exemption as 'farm machinery and equipment.' Neither a welding machine nor welding rod is farm machinery or equipment or a repair or replacement part for farm machinery or equipment. The purchase of said items by a farmer or rancher are subject to Kansas retailers' sales tax or compensating tax."

Why it does not qualify. The exemption reaches the farm machinery itself, its parts, and the services to repair it — not the tools and supplies a farmer uses to do the repairs. Welding rod is a consumable welding supply, and a welding machine is a tool; neither is the farm equipment nor a repair/replacement part for it.

Bottom line: the welding rod is taxable. This is consistent with the Department's treatment of the same issue elsewhere (see, e.g., P-1999-162, reaching the same result for welding rod used to repair farm machinery).

What this means for you

Welding rod and welding machines are taxable to the farmer

Even though they are used on exempt farm machinery, welding rod and welding machines are taxable purchases. They are supplies and tools, not the farm equipment itself or a part that goes into it.

The exemption covers parts and repair services, not the repair supplies

K.S.A. 79-3606(t) exempts the farm machinery, its repair and replacement parts, and the services performed to repair and maintain it. Consumables and tools used to perform the work — like welding rod — are a step removed and are not exempt.

Sales tax or use tax will apply

If the seller charges Kansas tax, that is retailers' sales tax; if the farmer buys the welding rod without Kansas tax (for example, out of state), Kansas compensating use tax applies instead. Either way the purchase is taxed.

Keep repair supplies separate from exempt parts

When buying for a repair job, distinguish exempt repair/replacement parts for the machinery (which qualify) from taxable supplies like welding rod, grinding discs, and shop consumables (which do not).

Common questions

Q: Is welding rod for repairing my farm equipment exempt?
A: No. The Department ruled that welding rod is not farm machinery, not farm equipment, and not a repair or replacement part, so it is taxable.

Q: What about the welding machine itself?
A: Also taxable. A welding machine is a tool used to maintain farm machinery, and equipment used to maintain farm machinery does not itself qualify for the exemption.

Q: Do repair parts for my tractor still qualify?
A: Yes. K.S.A. 79-3606(t) exempts repair and replacement parts for qualifying farm machinery and the services to repair and maintain it — the welding-rod result is about the supplies used to do the work, not the parts installed.

Citations and references

• K.S.A. 79-3606(t) — exempts sales of farm machinery and equipment, repair and replacement parts, and repair/maintenance services; the Department held that welding rod and welding machines are none of these, so they are taxable.
• K.A.R. 92-19-59 — the regulation authorizing private letter rulings; this ruling was issued under it and binds the Department only as to the requesting taxpayer.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-1999-123

Original ruling text

Private Letter Ruling

Body:

Office of Policy and Research

May 14, 1999

XXXXXXXXXXX
XXXXXXXXXXX
XXXXXXXXXXX

Dear XXXXXXX:

I have been asked to respond to your letter dated April 10, 1999. In it, you ask for guidance in the application sales tax.

You stated that you are a farmer and asked if the purchase of welding rod used to repair or maintain farm machinery and equipment is exempt from Kansas retailers’ sales tax.

K.S.A. 79-3606(t) exempts from sales tax: “all sales of farm machinery and equipment or aquaculture machinery and equipment, repair and replacement parts therefor and services performed in the repair and maintenance of such equipment. For purposes of this subsection the term “farm machinery and equipment or aquaculture machinery and equipment” shall include machinery and equipment used in the operation of Christmas tree farming but shall not include any passenger vehicle, truck, truck tractor, trailer, semitrailer or pole trailer, other than a farm trailer, as such terms are defined by K.S.A. 8-126 and amendments thereto. . .”

It is the opinion of the Kansas Department of Revenue that equipment used to maintain farm machinery and equipment does not qualify for exemption as “farm machinery and equipment.” Neither a welding machine nor welding rod is farm machinery or equipment or a repair or replacement part for farm machinery or equipment. The purchase of said items by a farmer or rancher are subject to Kansas retailers’ sales tax or compensating tax.

This is a private letter ruling pursuant to K.A.R. 92-19-59. It is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to an accurate determination by the department, this ruling is null and void. This ruling will be revoked by operation of law without further department action if there is a change in the controlling statutes, administrative regulations, revenue rulings or case law that materially effects this determination.

Sincerely,

Mark D. Ciardullo
Tax Specialist

MDC

Date Composed: 05/27/1999 Date Modified: 10/11/2001

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