Changes in NC Sales Tax Exemption for Agriculture
Qualifications for exemption of North Carolina State sales tax on farm equipment purchases have recently changed. Effective July 1, 2014, purchases made on or after that date, provides that a “qualifying farmer” is a person who has an annual gross income for the preceding income tax year of ten thousand dollars ($10,000) or more from farming operations or who has an average annual gross income for the three preceding income tax years of ten thousand dollars ($10,000) or more from farming operations. A qualifying farmer includes a dairy operator, a poultry farmer, an egg producer, a livestock farmer, a farmer of crops, and a farmer of an aquatic species, as defined in N.C. Gen. Stat. § 106-758. Note that turf, forestry and landscape production are not specifically mentioned.
Any person that currently has and meets the new requirements for a qualifying farmer may continue to use the agricultural exemption certificate number for qualifying purchases made prior to October 1, 2014. Existing agricultural exemption certificate numbers will not be valid after this date. Thus, a new application is necessary. All qualifying individuals seeking such exemptions must file for a certificate by submitting Form E-595QF, Application for Qualifying Farmer Exemption Certificate Number for Qualified Purchases. Upon receipt of the qualifying farmer exemption certificate issued by the Department, the qualifying farmer must issue a new Form E-595E, Streamlined Sales and Use Tax Agreement Certificate of Exemption, or other exemption information required per N.C. Gen. Stat. § 105-164.28 to each retailer, which should include the qualifying farmer exemption certificate number in order to claim an exemption from sales and use tax on qualifying purchases for use in farming operations.
If a person is involved in agricultural production but does not meet the full definition of the term “qualifying farmer,” the individual may apply for a conditional farmer exemption certificate number. A person issued a conditional farmer exemption certificate may purchase qualifying items exempt from sales and use tax to the same extent as a “qualifying farmer.” Generally, conditions for such an exemption require annual submission of state and federal tax returns and other documentation in order to obtain this conditional farmer exemption. Refer to the notice below for full details.
The notice of these changes can be found at http://www.dornc.com/taxes/sales/impnotice062514_2.pdf
To download an application choose the appropriate link below.
Form E-595QF, Application for Qualifying Farmer Exemption Certificate Number for Qualified Purchases can be found at http://www.dornc.com/downloads/e595qf.pdf
Form E-595CF, Application for Conditional Farmer Exemption Certificate Number for Qualified Purchases can be found at http://www.dornc.com/downloads/e595cf.pdf
For assistance or questions, contact the Taxpayer Assistance and Collection Center at 1-877-252-3052 (toll-free).