LR 8223
Taxability of a High Tunnel for Agricultural Use
December 30, 2022
Dear Applicant:
This is a letter ruling issued by the Director of Revenue under Section 536.021.10, RSMo, and Missouri Code of State Regulations 12 CSR 10-1.020, in response to your letter dated November 3, 2022.
The facts as presented in your letter ruling request are summarized as follows:
Applicant is purchasing a structure called a high tunnel from a Missouri farm and feed store. A high tunnel is similar to a greenhouse, but is usually considered more of a temporary and/or movable piece of equipment without a foundation or a rigid plastic covering, using clear and flexible plastic sheeting instead. High tunnels are used to extend the growing season of crops into the fall and/or winter, to over-winter crops, or to plant crops earlier than they would normally be allowed if planted outside due to weather. Crops are typically planted in the soil within the high tunnel footprint using mounded soil, enclosed "beds," or as row crops. High tunnels can also prevent insects from damaging crops, and generally help to control environmental conditions to increase the likelihood of successful production. High tunnels are often used to trellis the crops grown under them to increase yield by attaching strings to the cross bracing that extends across the high tunnel over 5 or 6 feet. High tunnels can be removed from the soil and relocated to a new location, without leaving a foundation or footing behind.
ISSUE:
Is Applicant's purchase of a high tunnel from a Missouri farm and feed store subject to sales tax?
RESPONSE:
No. Applicant's purchase of a high tunnel from a Missouri farm and feed store is not subject to sales tax if the high tunnel is used for any agricultural purpose.
Section 144.020, RSMo, imposes a sales tax on the privilege of making retail sales of tangible personal property or providing certain taxable services in this state.
Section 144.030.2(22), RSMo, in pertinent part, exempts from sales tax "all sales of farm machinery and equipment, other than airplanes, motor vehicles and trailers[.]" The statute defines "farm machinery and equipment" as:
...new or used farm tractors and such other new or used farm machinery and equipment, including utility vehicles used for any agricultural use, and repair or replacement parts thereon and any accessories for and upgrades to such farm machinery and equipment and rotary mowers used for any agricultural purposes. For the purposes of this subdivision, "utility vehicle" shall mean any motorized vehicle manufactured and used exclusively for off-highway use which is more than fifty inches but no more than eighty inches in width, measured from outside of tire rim to outside of tire rim, with an unladen dry weight of three thousand five hundred pounds or less, traveling on four or six wheels;
(b) Supplies and lubricants used exclusively, solely, and directly for producing crops, raising and feeding livestock, fish, poultry, pheasants, chukar, quail, or for producing milk for ultimate sale at retail, including field drain tile; and
(c) One-half of each purchaser's purchase of diesel fuel therefor which is:
a. Used exclusively for agricultural purposes;
b. Used on land owned or leased for the purpose of producing farm products; and
c. Used directly in producing farm products to be sold ultimately in processed form or otherwise at retail or in producing farm products to be fed to livestock or poultry to be sold ultimately in processed form at retail;
Section 144.045.1, RSMo, in the pertinent part, provides that:
"The department of revenue shall, for purposes of administrative interpretation, consider as nontaxable any machinery or equipment meeting the definition of "farm machinery" under subdivision (22) of subsection 2 of section 144.030, whether or not such machinery or equipment is attached to a vehicle or real property."
The Missouri Code of State Regulations 12 CSR 10-110.900(2)(A) defines "equipment" as:
"[d]evices that have a degree of permanence to the business, contribute to multiple processing cycles over time, and generally constitute fixed assets, other than land and buildings, that are capitalized and depreciated for purposes of business and accounting practices. "
Applicant is purchasing the high tunnel to be used directly for producing crops. The high tunnels have a degree of permanence and can contribute to multiple crop cycles. If Applicant purchases the high tunnel to be used for any agricultural purpose, the high tunnel constitutes "farm machinery and equipment" for purposes of Section 144.030.2(22), RSMo.
This letter ruling is binding upon the Department of Revenue with respect to the Applicant for three (3) years from the date of this letter and is subject only to statutory changes by the General Assembly and to changes in the interpretation of law by the courts or administrative tribunals. If a change occurs, the taxpayer who relies upon an outdated interpretation may be subject to additional taxes, interest and penalties, which may be imposed prospectively from the date of the change. For this reason, the interpretation set forth above should be reviewed on a regular basis. Please note that any change in or deviation from the facts as presented will render this ruling inapplicable.
Should additional information be needed, please contact Legal Counsel J. Ross Shelton, General Counsel's Office, Post Office Box 475, Jefferson City, Missouri 65105-0475, phone (573) 751-0961.
Sincerely,
Wayne Wallingford
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