New Sales Tax Exemption Registration for Agriculture and Timber Operators

Beginning Jan. 1, 2012, farm, ranch and timber operators who produce agricultural and timber products for sale will need a special registration number to claim a sales tax exemption on taxable products used in those businesses. Texas Comptroller Susan Combs announced they can get a registration number through either a mail-in application or an online application that begins Oct. 3.

Registration is required by House Bill 268 passed in the recent legislative session and supported by retailers and agriculture groups.

“Beginning Jan. 1, anyone who wants to claim the agriculture or timber sales tax exemptions for qualifying products will need a registration number to show retailers, instead of simply signing an exemption certificate at the time of purchase,” Combs said. “The new registration process takes the burden off retailers to verify whether a purchaser is eligible for exemption. And it narrows the pool of purchasers claiming the sales tax exemption to those actually involved in production of agriculture and timber products for sale.”

The new legislation requires a registration number to claim tax exemptions when buying items such as machinery and equipment; fertilizers; insecticides; irrigation equipment; and off-road motor vehicles used for farming and timber production. Those entitled to make tax-free purchases of taxable qualifying products include groups such as:

• farmers and ranchers who raise agricultural products to sell to others;
• fish farmers and bee keepers who sell the products they raise;
• custom harvesters;
• crop dusters;
• commercial nurseries engaged in fostering growth of plants for sale; and
• timber producers, including contract lumberjacks.

Products such as feed for livestock and wildlife, seeds and annual plants are always tax-exempt and would not require a registration number.

The primary owner or operator of a farm, ranch or timber operation may obtain one registration number that can be used by anyone authorized by the registrant – including family members or employees – to make tax exempt purchases of qualifying products for the business.

The application for a registration number should take less than 10 minutes to complete. Online registration begins Oct. 3 at Online applicants will receive a registration number immediately. If you prefer, you may download a paper application form from the website or call 1-800-252-5555 to receive a form by mail.