Are specially manufactured farrowing crates — used to house sows giving birth in hog confinement facilities — exempt from Tennessee sales and use tax as farm equipment, and does it matter whether they're sold assembled or disassembled?

Subject

Whether farrowing crates qualify for the farm equipment sales tax exemption, assembled or disassembled.

Plain-English summary

The Tennessee Department of Revenue ruled that farrowing crates — specially manufactured confined areas where sows give birth and nurse piglets in hog confinement facilities — qualify as exempt "farm equipment" under Tennessee's sales and use tax law, whether sold to farmers assembled or in pieces for on-site assembly.

Tennessee exempts "farm equipment and machinery" priced over $250 per single article when it's used directly and principally to produce agricultural products for off-premises sale, excluding vehicles, household appliances, and anything that becomes part of real property once installed. The farrowing crates checked every box: they directly touch both the sow and piglets (satisfying the "directly" requirement), they have no purpose other than facilitating safe births and preventing piglets from being trampled (satisfying "principally"), the resulting pigs are sold off the farm once grown, and each crate sells for well over $250. The crates are bolted to the floor with easily removable T-bolts or J-bolts — explicitly designed to be removed rather than become a permanent fixture — so they don't fall into the real-property exclusion either.

The assembled-vs-disassembled question mattered because the exemption's dollar threshold applies per "single article," and a farrowing crate is sometimes shipped as a kit of individual parts rather than a fully built unit. The Department resolved this by relying on a 1973 Tennessee Attorney General opinion: an item sold in a disassembled state, made of multiple parts, is still treated as one single article (not as separate taxable/non-taxable components) as long as assembling it doesn't change its fundamental character as personal property. Since a farrowing crate is the same functional item whether shipped whole or in pieces for buyer assembly, it counts as one single article either way — meeting the exemption's price threshold and qualifying for exemption regardless of shipping format.

What this means for you

Farm equipment manufacturers and dealers

Tennessee's farm equipment exemption applies a strict four-part test (direct use, principal use, off-premises production purpose, and the $250 single-article threshold) — but shipping format (assembled vs. disassembled/kit form) doesn't change the analysis as long as the item's essential character survives assembly. If you sell farm equipment that's sometimes shipped in pieces to reduce freight costs, this precedent supports treating it as one single article for the exemption threshold either way.

Tennessee farmers purchasing exempt equipment

To actually claim this exemption at the point of sale, you must provide the seller a signed statement (using the Department's pre-printed form) confirming the equipment will be used directly and principally to produce agricultural products and will not become attached to real property.

Accountants and tax professionals

This ruling applies the four-factor test under Tenn. Code Ann. § 67-6-102(a)(15) cleanly to a confinement-farming fact pattern, and is a useful citation for the "single article despite being sold disassembled" principle from Op. Tenn. Att'y Gen. 22 (1973) whenever a client sells kit-form or ship-in-pieces farm/industrial equipment. Note the ruling's own footnote flagging that Streamlined Sales and Use Tax Agreement conforming legislation (effective originally targeted for July 1, 2007) was expected to affect the farm equipment exemption — verify current law before relying on this 2006 analysis for a live transaction.

Common questions

Q: Does a piece of farm equipment have to touch the animals or crops directly to qualify for the exemption?
A: The "directly" requirement was satisfied here because the crates physically contact both the sow and piglets — equipment with a more indirect role in production would need separate analysis under the same four-factor test.

Q: Does selling equipment disassembled (in a kit) change whether it meets the $250 single-article threshold?
A: No. As long as assembling the item doesn't change its fundamental character as personal property, it's still treated as one single article whether shipped whole or in pieces.

Q: What does a farmer need to do to actually buy exempt farm equipment tax-free?
A: Provide the seller a signed statement (the Department has a pre-printed form) attesting the equipment will be used directly and principally to produce agricultural products and won't become attached to real property.

Q: Does equipment that becomes permanently attached to the farm building still qualify for this exemption?
A: No. The farm equipment exemption specifically excludes property that becomes real property when erected or installed — which is part of why the crates' easily-removable bolt attachment mattered to this ruling's analysis.

Q: Does this ruling apply to other farm equipment sellers?
A: No. A Tennessee letter ruling binds the Department only for the specific taxpayer and facts addressed and cannot be relied on by others, and note the ruling itself flags pending Streamlined Sales and Use Tax Agreement changes that may have since affected this exemption — verify current law.

Citations and references

Statutes, rules, and opinions:

• Tenn. Code Ann. § 67-6-207 (farm equipment and machinery sales tax exemption)
• Tenn. Code Ann. § 67-6-102(a)(15) (definition of "farm equipment and machinery": direct + principal use, off-premises production, over $250 single article, excludes real property fixtures)
• TENN. COMP. R. & REGS. 1320-5-1-.111(1) (farmer's signed exemption certificate requirement)
• Op. Tenn. Att'y Gen. 22 (July 5, 1973) (item sold disassembled in multiple parts still treated as one single article of personal property)

Source

• Landing page: https://www.tn.gov/revenue/tax-resources/legal-resources/tax-rulings.html
• Original PDF: https://www.tn.gov/content/dam/tn/revenue/documents/rulings/sales/06-11.pdf

Original ruling text

TENNESSEE DEPARTMENT OF REVENUE
LETTER RULING #06-11

WARNING
Letter rulings are binding on the Department only with respect to the individual
taxpayer being addressed in the ruling. This presentation of the ruling in a redacted
form is informational only. Rulings are made in response to particular facts
presented and are not intended necessarily as statements of Department policy.

SUBJECT
Whether farrowing crates are exempt from sales and use tax as farm equipment.

SCOPE
This letter ruling is an interpretation and application of the tax law as it relates to a
specific set of existing facts furnished to the department by the taxpayer. The rulings
herein are binding upon the Department and are applicable only to the individual
taxpayer being addressed.
This letter ruling may be revoked or modified by the Commissioner at any time.
Such revocation or modification shall be effective retroactively unless the following
conditions are met, in which case the revocation shall be prospective only:
(A) The taxpayer must not have misstated or omitted material facts
involved in the transaction;
(B) Facts that develop later must not be materially different from the facts
upon which the ruling was based;
(G) The applicable law must not have been changed or amended;
(D) The ruling must have been issued originally with respect to a
prospective or proposed transaction; and
(E) The taxpayer directly involved must have acted in good faith in relying
upon the ruling; and a retroactive revocation of the ruling must inure to the
taxpayer's detriment.

FACTS
[TAXPAYER], is based in [STATE-NOT TENNESSEE] and is qualified to do business
in Tennessee. It manufactures equipment used in total confinement hog raising facilities
and sells this product to Tennessee hog farmers. The company also contracts to turnkey
these facilities.

The Taxpayer is currently selling farrowing crates to Tennessee farmers that are used in
confinement type hog raising facilities. The farrowing crates are small confined areas
where the sows give birth. The farrowing crates have been specially manufactured to
accommodate and facilitate the care of the sow as well as the birth and care of the piglets
through the infant stage. The crates provide for the health and safety of the sows and
piglets. The crates are anchored to a wire, cast iron, plastic or concrete slatted type
flooring by use of a T-bolt or J bolt which allows the crate to be easily replaced or
removed. They weigh approximately 240 pounds and sell for in excess of $250. The
estimated useful life is 7-10 years. The crates are sold assembled or disassembled based
on the customer’s preference and the number of crates being shipped.

ISSUE
Are the farrowing crates exempt from sales and use tax as farm equipment pursuant to
Tenn. Code Ann. § 67-6-102(a)(15)?

RULING
Yes. The farrowing crates qualify as farm equipment and are exempt from sales and use
tax if sold to a farmer who presents appropriate documentation as described in this ruling.

ANALYSIS
Tenn. Code Ann. § 67-6-2071 exempts farm equipment and machinery from Tennessee
sales and use tax. “Farm equipment and machinery” is defined, in pertinent part, as:
[A]ny appliance used directly and principally for the purpose of producing
agricultural products…for sale and use or consumption off the premises,
the retail price of which, for any such single article, exceeds two hundred
fifty dollars ($250), but does not include an automobile, truck, household
appliances or property which becomes real property when erected or
installed.
Tenn. Code Ann. § 67-6-102(a)(15).
In order for a piece of equipment to be exempt as farm equipment, it must fulfill four
requirements: 1) it must be used directly to produce agricultural products, 2) it must be
used principally to produce agricultural products, 3) its purpose must be the production of

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Public Chapter 311 of 2005 makes July 1, 2007 the effective date of Tennessee’s legislation to conform to
the provisions of the Streamlined Sales and Use Tax Agreement (SSUTA). When it goes into effect, the
conforming legislation will impact the treatment of farm equipment and machinery. The Department of
Revenue will make every reasonable attempt to notify impacted parties of these changes. We encourage
you to visit our website at www.tennessee.gov/revenue for updates.

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agricultural products for sale and use or consumption off the premises, and 4) it must be a
single article having a retail price greater than two hundred and fifty dollars ($250).
The farrowing crates are used directly to produce agricultural products. The agricultural
products are the pigs, and the crates directly touch both the sow and the piglets. The
crates are used principally for the purpose of aiding the process of birthing piglets; they
have no other use. The purpose of the crates is to aid in the production of piglets; they
provide a safe place for the sows to give birth and for the piglets to feed without the risk
of being trampled by other animals. Furthermore, once the pigs reach a certain age and
size, they are sold for consumption off the premises. The crates have a retail price of
more than $250 each, so the last requirement is satisfied so long as the crate constitutes a
single article.
There is a question regarding whether the crate constitutes a single article since it can be
sold either as an assembled crate or in a dissembled state. An Attorney General’s
Opinion analyzed this issue and concluded that:
where [a single item] consists of several individual parts when
disassembled and is sold as a unit in a disassembled state, the [item] and
not its constituent parts should be treated as a single article of personal
property where assembly of the [item] does not destroy its character as
personal property.
Op. Tenn. Atty. Gen. 22 (July 5, 1973). In accordance with this Opinion, a farrowing
crate, regardless if sold assembled or disassembled, would constitute one single article.
Since the farrowing crates fulfill all of the requirements of Tenn. Code Ann. § 67-6102(a)(15), they qualify as farm equipment and are exempt from sales and use tax
pursuant to Tenn. Code Ann. § 67-6-207. A farmer wanting to purchase a farrowing
crate must submit a signed statement averring that the item purchased will be used
directly and principally for the purpose of producing agricultural products and that it will
not become attached to realty. Tenn. Comp. R. & Regs. 1320-5-1-.111(1). For the
convenience of taxpayers, the Department has a pre-printed form for this purpose, a copy
of which is attached to this ruling.

Deborah A. Toon
Tax Counsel

APPROVED: Loren L. Chumley
Commissioner
DATE:

4/28/06

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