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Farmers, Timber Harvesters and Nurserymen Sales Tax Exemption

The Department of Revenue’s Taxpayer and Vehicle Services Division is in the process of educating and registering qualified farmers, nursery operators and timber harvesters regarding upcoming changes in Tennessee’s agricultural exemptions from sales and use tax. Effective Jan. 1, 2008, those purchasing qualified farm equipment, seed and other tax-exempt farm and nursery supplies must present proof of their status as an exempt farmer, nursery operator or timber harvester by providing, directly to the seller, a copy of their Agricultural Sales and Use Tax Certificate of Exemption.

A copy of the Agricultural Sales and Use Tax Certificate of Exemption issued by the Department of Revenue, a copy of a wallet-sized exemption card also provided by Revenue or a fully completed Streamlined Sales and Use Tax Certificate of Exemption, which includes the exemption number on the certificate or card issued by the department, must be provided when making purchases after Jan. 1, 2008. Sellers must keep copies of one of these documents on file and include the buyer’s name, address and description of tax-exempt purchases on each invoice. Farmer’s affidavits will no longer be valid after Jan. 1, 2008.

The department mailed Agricultural Sales and Use Tax Certificates of Exemption to those who were determined automatically to qualify for the exemption. Those who have already received their certificate do not need to fill out an application or file additional documentation with the department. Receipt of a certificate serves as the notice of sales tax exempt status.

For those who have not received a certificate, please print and fill out an application and file it with the department to receive a certificate authorizing tax-exempt purchases. Please see below for links to other important information.

Items that are exempt from sales and use tax per Public Chapter 602, Section 79, when sold to persons who have received an Agricultural Sales and Use Tax Certificate of Exemption, include:

  • Any appliance used directly and principally for producing agricultural products (does not include autos, trucks, household appliances or property that becomes real property, such as barns, sheds and fencing)
  • Grain bins and attachments
  • Aircraft designed for crop dusting
  • Equipment used for harvesting timber (does not include trailers and trucks for transporting)
  • Livestock trailers
  • Self-propelled fertilizer or chemical application equipment
  • Systems for environment control, feeding, watering and egg conveyance for poultry
  • Replacement parts and labor for previously qualifying equipment
  • Gas or diesel fuel used for agricultural purposes (does not include pre-mixed gas and oil of one gallon or less)
  • Seed, seedlings, plants, fertilizer and pesticides used to produce food or fiber, including tobacco, for human or animal consumption
  • Farm containers and plastic or canvas covers used in raising plants, including tobacco, for human or animal consumption
  • Feeds and drugs for livestock
  • Agri-sawdust
  • Electricity, gas, propane, coal, wood and fuel oil used in the production of food or fiber for human or animal consumption or in the production of nursery and greenhouse crops

The new law allows for total, rather than partial, exemption for specific qualifying purchases and keeps current exemptions in place. The new exemption will make transactions more convenient for farmers who can enjoy automatic tax-free purchases, instead of filing refunds with the department for taxed purchases.