Did a riding mower qualify for Texas' agricultural sales-tax exemption when it was used in pastures and in a garden?

Plain-English summary

The riding mower did not qualify for the agricultural sales-tax exemption on the facts the Comptroller understood.

Rule 3.296 exempted machinery and equipment used on farms or ranches exclusively to produce food, animal feed, or other agricultural products sold in the regular course of business. Equipment used exclusively to build or maintain roads and water facilities could also qualify.

The taxpayer used the mower in pasture areas that a regular mower or shredder could not reach and in a garden before tilling. The Comptroller said mowing pasture weeds could be exempt productive use, as could mowing grass for hay or other food production. But mowing for appearance, lawns, or areas around barns and similar structures was not exempt. Garden use was exempt only if the food products were sold in the regular course of business. Because the Comptroller understood that the garden condition was not met, it concluded that the mower could not qualify.

STAR also warns that a 2011 law change added a Comptroller-issued registration-number requirement for certain agricultural and timber exemptions beginning January 1, 2012.

What this means for you

The equipment's exact and exclusive use controlled. Productive pasture management could qualify, while aesthetic or nonproduction mowing could defeat the exemption. Current claimants must also account for the later registration requirement identified by STAR.

Common questions

Did mowing pasture weeds qualify? It could, when done as part of agricultural production.

Did mowing lawns or around barns qualify? No. The letter treated those as nonproduction uses.

Could garden use qualify? Only if the garden's food products were sold in the regular course of business.

Could the taxpayer issue an exemption certificate? The letter said one could be issued for a specific qualifying use, but concluded this mower did not qualify on the understood facts.

Citations and references

• 34 Tex. Admin. Code Rule 3.296
• H.B. 268, 82nd Texas Legislature, Regular Session (2011), as described in STAR's alert

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9204L1166G09

Original ruling text

ALERT: This document may be affected by changes to the Tax Code which was amended by H.B. 268, 82nd Reg. Legislative Session, 2011. The amendment required persons claiming a sales tax exemption for certain agricultural and timber products to apply for and provide a registration number issued by the Comptroller, effective 01/01/2012.

April 30, 1992

Dear **:

This letter is in response to our telephone conversation
regarding your purchase of a riding mower.

Rule 3.296 (Agriculture, Animal Life, Feed, Seed, Plants,
and Fertilizer) provides for an exemption for machinery and
equipment used on farms or ranches exclusively in the
production of food for human consumption, the production of
grass or feed for any form of animal life, or other
agricultural products to be sold in the regular course of
business.

The exemption also applies to equipment used exclusively for
building or maintaining roads and water facilities.

You mentioned that you used the mower for mowing in areas of
pastures that your regular mower/shredder could not reach.
You also stated that the mower was used in a garden area
prior to tilling the earth in preparation for planting.

Use of the mower in a garden is not exempt agricultural use
unless the food products from the garden are sold in the
regular course of business.

Use of a mower exclusively to mow grass for hay or for other
food production would be an exempt agricultural use. Mowing
to control weed growth in a pasture area would also qualify,
and an exemption certificate with a description of the
specific use of the mower could be issued in lieu of paying
tax. However, mowing areas of pastures for aesthetic
purposes or mowing non-production areas such as lawns or
areas around barns or similar structures on farms or ranches
are not exempt uses of the equipment.

If my understanding of our conversation concerning the
garden is correct, the mower could not qualify for an
agricultural exemption.

If the facts and circumstances are different from the ones I
have outlined or if you have any questions, please write me
at the Tax Administration Division or call me toll free at
1-800-531-5441, extension 3-4565.

Sincerely,

Larry Koenig
Tax Administration Division