Farming And Ranching

Sections 63-3603, 63-3622, 63-3622D, 63-3622W, 63-3622X, 63-3622HH, Idaho Code This section illustrates the application of the production exemption to the farming and ranching industry and is based on the usual methods of doing business in the industry. In cases not covered by this section, the general principles of the production exemption apply. (7-1-26) 01. In General. Farming applies to a business operated with the intention of making a gain or profit. Farming doesn’t include operation of ranches or stables where the sole purpose is showing or racing horses, or the breeding of show or race horses. (7-1-26) 02. Transportation Activities. Equipment used to move farm produce to initial storage is exempt, even though it may be mounted on a vehicle which is mandated to be licensed and is taxable. Equipment qualifies for this exemption if: (7-1-26) a. It is readily removable from the vehicle on which it is mounted; (3-31-22) b. It is separately stated on the vendor’s invoice; and (3-31-22) c. It’s sold to a qualified farming operation. (7-1-26) 03. The Farming Exemption Doesn’t Include: (7-1-26) a. Property purchased to meet the personal needs of a farmer, a farmer’s family, or employees. Items excluded from the exemption include, but are not limited to, hand soap, toothpaste, shampoo, blankets, sheets, pillowcases, towels, washcloths, irrigation boots, coveralls, gloves, other clothing, and grocery items. (7-1-26) b. Food and supplies purchased for barnyard and household pets, such as cat and dog food, are taxable. Even though a dog may occasionally be used for herding livestock or a cat may control mice in the barn, the IDAHO ADMINISTRATIVE CODE IDAPA 35.01.02 State Tax Commission Idaho Sales & Use Tax Administrative Rules Section 084 Page 50 supplies purchased for their care and maintenance don’t qualify for the production exemption. Only when a dog’s SOLE purpose is the herding or protection of a rancher’s livestock may the food and supplies for the dog be purchased tax exempt under the production exemption. (7-1-26) c. Livestock trailers which may be attached to motor vehicles used to transport horses, cattle, sheep, or other farm animals on public roads are transportation equipment and are taxable. (3-31-22) d. Motor vehicles mandated to be licensed are taxable even when used exclusively in a farming operation. Motor vehicles purchased, but not licensed, by a farmer for use exclusively in an off-road production activity, such as a feed truck, are not taxable. (7-1-26) 04. Farmers. When farmers sell their grain, livestock, and other horticultural products for resale or processing, the sale isn’t taxable if the buyer provides a properly executed exemption certificate to the farmer. When farmers sell directly to consumers or users, they will obtain a seller’s permit, collect sales tax, and pay the tax on those sales to the Tax Commission. (7-1-26)