Is a farm bale-hauling attachment taxable when bought separately versus when mounted on a pickup before delivery, and are its repair parts taxable?

Plain-English summary

The requester wanted a clear understanding of the agricultural exemption for a farm bale-hauling attachment. The scenario: a farmer buys a larger pickup and plans to mount an attachment on it to haul bales on the farm — but the farmer sometimes drives the truck to town for personal use, so the pickup is not used exclusively for farm use. The Department answered a series of questions. The result depends on whether the attachment is a separate sale or mounted on the truck before delivery.

The pickup is taxable. Because the pickup is not used exclusively for farming, the farmer should be charged sales tax when he buys it.

The attachment bought separately is exempt. When the farmer buys the bale attachment as its own purchase, he does not pay sales tax on it — it qualifies as exempt farm equipment.

But if it's mounted before delivery, it follows the truck. If the purchase is not two separate sales — for example, the dealership arranges with the attachment's manufacturer to order the item in and attach it to the pickup before the customer takes delivery — then under Kansas Administrative Regulation 92-19-30a, "any equipment attached to the vehicle is part of the vehicle and must be taxed, if the sale of the vehicle is taxed." So the attachment becomes taxable along with the taxable truck.

Repair parts are exempt. Later, if the bale-hauling attachment needs repair parts, the farmer is not taxed on those repair parts.

Bottom line: the farm bale attachment is exempt when bought as a separate sale (and its repair parts are exempt), but if a dealer mounts it on a taxable pickup before delivery, it is treated as part of the vehicle and taxed with it under K.A.R. 92-19-30a.

What this means for you

Farmers buying equipment and a vehicle together

Keep your farm attachment purchase separate from a taxable vehicle purchase if you want the attachment to stay exempt. A pickup not used exclusively for farming is taxable, and if the attachment is mounted before delivery, it rides along as a taxable part of the vehicle.

Motor vehicle and equipment dealers

Under K.A.R. 92-19-30a, equipment you attach to a vehicle becomes part of the vehicle and is taxed whenever the vehicle sale is taxed. Structure and invoice a genuinely separate sale of exempt farm equipment if the customer is entitled to the agricultural exemption on that item.

Repair parts for exempt farm equipment

Repair parts for the qualifying farm attachment are not taxed — the exemption follows the equipment into its repair-parts purchases, even though the vehicle it may ride on is taxable.

Common questions

Q: Is a bale-hauling attachment taxable if I buy it by itself?
A: No. Bought as a separate sale, the farm attachment is exempt, and its repair parts are exempt too.

Q: What if the dealer mounts the attachment on my pickup before I take delivery?
A: Then it is treated as part of the vehicle under K.A.R. 92-19-30a and must be taxed, because the pickup's sale is taxable.

Q: Is the pickup itself exempt because I'll use it on the farm?
A: No. Because the pickup is not used exclusively for farming, it is taxable when purchased.

Citations and references

• K.A.R. 92-19-30a — provides that any equipment attached to a vehicle is part of the vehicle and must be taxed if the sale of the vehicle is taxed; the basis for taxing a bale attachment mounted on a taxable pickup before delivery, while a separately purchased attachment (and its repair parts) remains exempt.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2001-057

Original ruling text

Private Letter Ruling

Body:

Office of Policy & Research

June 19, 2001

XXXXXXXXXXXXXX
XXXXXXXXXXXXXX

Dear XXXXXXX:

The purpose of this letter is to respond to your letter dated May 29, 2001. In it, you seek advice on the application of Kansas retailers’ sales tax on the purchase of farm equipment that is attached or purchased separately from a motor vehicle.

In your letter you stated:

Mr. Browne - earlier this month you had answered a sales tax question I had submitted to Ron Grant. (I had attended a seminar in Hays at which he spoke to our group)

I was wanting to arrive at a clear understanding as to the Ag exemption Cert.

If a farmer purchases a larger pickup and is going to have an attachment mounted to this truck to haul bales on the farm (note the farmer does sometimes drive the truck to town for personal purchases - pickup not used EXCLUSIVELY for farm use).

Your letter continues with a series of questions:

When the farmer purchases the pickup - should he be charged sales tax?

Answer: Yes.

When he purchases the bale attachment should he pay sales tax on this unit?

Answer: No.

What if they aren't purchased as two separate sales? Suppose the dealership selling the pickup makes arrangements with the manufacturer of the bale haul attachment and orders this item in to be attached to the pickup prior to the customer taking delivery?

Answer: According to Kansas Administrative Regulation 92-19-30a, [see Appendix] any equipment attached to the vehicle is part of the vehicle and must be taxed, if the sale of the vehicle is taxed.

Then down the road, if the attachment for hauling the bales needs repair parts, should the farmer be taxed on the sale of these repair parts?

Answer: No.

This private letter ruling is based solely on the facts provided in your request. If it is determined that undisclosed facts were material or necessary to make an accurate determination by the department, this ruling is null and void. This private letter ruling will be revoked in the future by operation of law without further department action if there is a change in the statutes, administrative regulations, or case law, or a published revenue ruling, that materially affects this private letter ruling.

Sincerely,

Mark D. Ciardullo
Tax Specialist

MDC

Date Composed: 06/25/2001 Date Modified: 10/11/2001

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