Farm Tax Number

[Dan Hunter]

I'm about to purchase my tractor. I don't presently have a farm tax number and am contemplating whether it's of benefit and even applicable.

I have about 80 acres and the nature of the land is that farming it on any scale would be impractical. The soil is quite sandy and with the rugged terrain, cattle isn't that great an option plus - and I know this sounds bizarre - but I don't really like cows. My neighbor's cows occupied the place for a brief time while the fenceline was down I didn't like what they did to the native grasses, pond edge...oh, and cow pies....

The first issue is reducing tax liability. I'm buying the tractor to accelerate the removal of red cedar primarily. Though avoiding the sales tax would obviously be a plus, I'm not interested in the property tax issues.

The second issue is whether it really applies to me. Though there are immeasurable numbers of people with a sense of entitlement and no integrity, I don't want something I don't deserve.

I'm inclined to just pay my taxes and move on quietly. Thoughts?

 

[clemsonfor]

I'm about to purchase my tractor. I don't presently have a farm tax number and am contemplating whether it's of benefit and even applicable.

I have about 80 acres and the nature of the land is that farming it on any scale would be impractical. The soil is quite sandy and with the rugged terrain, cattle isn't that great an option plus - and I know this sounds bizarre - but I don't really like cows. My neighbor's cows occupied the place for a brief time while the fenceline was down I didn't like what they did to the native grasses, pond edge...oh, and cow pies....

The first issue is reducing tax liability. I'm buying the tractor to accelerate the removal of red cedar primarily. Though avoiding the sales tax would obviously be a plus, I'm not interested in the property tax issues.

The second issue is whether it really applies to me. Though there are immeasurable numbers of people with a sense of entitlement and no integrity, I don't want something I don't deserve.

I'm inclined to just pay my taxes and move on quietly. Thoughts?

Depends on where you live and your state. In SC i said i was taxexempt and did not pay and filled out the form. I got a letter about a year later saying i owed taxes and penalty. I honestly thought cause i was going to file federal farm status for the expenses occured for my property (for the sole purpose of timber growth) i was state exempt. ANyway i was able to get out of the penalty as i paid the past due bill and the interest, with an explanation why i did what i did, i was honest. They responded to my phone call saying the only tax exempt purchases were basically row crop operations if i understood it correctly. Anyway, check your state tax structure and what it allows first before the trouble. I was not allowed to do it even though i have 130 acres and it in ag status and use federal Ag form whatever on my taxes.

 

[smstonypoint]

Dan,

I'm not exactly clear from your post whether you are talking about a Federal Tax ID or a state-issued farm sales tax exemption number. Because you mentioned sales tax, I assume you are talking about a state-issued number.

I'm sure that there are differences across states regarding their sales tax exemptions, so you need to check with your state's Department of Revenue. I obtained an exemption for my farm in NC based on my timber sales.

I would not be so quick to ignore the property tax issue. Again there are differences across states, but most allow use-value assessment for agricultural and forestry use if the property qualifies. For example, NC allows forest-value use assessment if the property contains 20 or more contiguous forested acres covered by an approved forest management plan. My farm is covered by such a plan and I pay just over $1/acre/year in property taxes (excluding the homestead). I shudder to think what the property taxes would be otherwise.

If you are talking about Federal income taxes, you would be filing a Schedule F. You have to be running your farm as a business -- hobby farming doesn't hack it. Here's an IRS publication that discusses Federal income taxes for farmers: Publication 225 (2011), Farmer's Tax Guide

Good luck.

Steve

 

[Dan Hunter]

Thanks for the responses and therein lies the rub. I can't honestly say I'm running the place as a business.

I'm inclined to see whether the state will give my a farm tax number without filing a 1040 F and be very direct as to my intent on land use and see what happens but be prepared to pay the taxes.

 

[grsthegreat]

Here in Idaho i tried to get an exemption as my tractor would never leave the 30 acres i have... no go. I had to show with old tax records that i made a living from my place as a farm.. couldnt do. had to pay tax.

 

[Western]

I haven't done it in a while, but here in Texas all I ever used was my SSN, as long as it was "farm use". I do make sure if something is bought as farm use, I can prove it. Most of the retailers here are familiar with what qualifies. I know your SSN follows you everywhere.

 

[Gary51]

I haven't done it in a while, but here in Texas all I ever used was my SSN, as long as it was "farm use". I do make sure if something is bought as farm use, I can prove it. Most of the retailers here are familiar with what qualifies. I know your SSN follows you everywhere.

For Texas residents only, beginning 1/1/2012 you will have to have a tax exempt card to present to the retailer in order to make a tax free purchase. You can apply for this online and print the card out at home very quickly.
You can apply at this website:

Get Ready Texas - Agriculture and Timber Producers

No card, no tax exemption 1/1/2012.

 

[clemsonfor]

Because he says it needs to be run as a business dosent mean you need to live off the income. Business is a loose term for anything. This can be a formal corporation or a small part time venture that you do on the side.

My property is a timber tract. I derive none of my income right now from it. I have filed schudule F last year for it. What i list on there is fuel for tractors and to get there (other side of state) it is used to keep the roads clear and pastures open. I am listed as timber so i dont have to have animals or row crops. Any expense i have for the tract i list. Mostly fuel or parts for the tractor for there, which is the only use for my tractor. I can also write off buldozer work if i paid for any or rental of equiptment. But i will also have to write down when i sell timber as income on the farm as i will actually see a profit that year, mostlikely. And if i was not a forester any work that would be done leading up to a harvest including any burning or herbicide work is tax deductable. But me being a forester i wont have these costs. ANd since i have hardwood they have a long rotation age in most places so its possible and my goal to never have a final harvest on the property. I will ahve some small harvests planned for wildlife openings and thinnings to open it up, but my goal is to not make money off this tract intensively managing it. Its family land that i really am just taking care of for the time that i own it untill i pass it on. I also love to deer hunt and its my personal hunt club!

 

[CTPhil]

In CT you have to prove $2500 in farm income to get the tax exempt.

 

[KYErik]

Like others have said, read your state's rules.

Here in KY, I file a schedule F and get the sales tax exemption on farm supplies, livestock feed, parts for tractor repair etc. even though my main commodity is hay- and I only sell about $100 of that each year. This year I'll be selling a steer so I'll have a bit more farm income.

In KY, the place of business that you apply for a tax free account has a special form that you fill out that forces you to check boxes beside the farm products that you currently market or plan to market shortly. If your state is similar, take a look at the form and answer it honestly and see if you mark any boxes. If you are selling the red cedar to others or plan to plant trees that you will market in the future, you might qualify as a farm.

 

[Western]

For Texas residents only, beginning 1/1/2012 you will have to have a tax exempt card to present to the retailer in order to make a tax free purchase. You can apply for this online and print the card out at home very quickly.
You can apply at this website:

Get Ready Texas - Agriculture and Timber Producers

No card, no tax exemption 1/1/2012.

Gary, thanks for the heads up!

 

[blueriver]

I think here you got to have at least 20 acres ... what ya do with it is up to you.

 

[MossRoad]

I'm about to purchase my tractor. I don't presently have a farm tax number and am contemplating whether it's of benefit and even applicable.

I have about 80 acres and the nature of the land is that farming it on any scale would be impractical. The soil is quite sandy and with the rugged terrain, cattle isn't that great an option plus - and I know this sounds bizarre - but I don't really like cows. My neighbor's cows occupied the place for a brief time while the fenceline was down I didn't like what they did to the native grasses, pond edge...oh, and cow pies....

The first issue is reducing tax liability. I'm buying the tractor to accelerate the removal of red cedar primarily. Though avoiding the sales tax would obviously be a plus, I'm not interested in the property tax issues.

The second issue is whether it really applies to me. Though there are immeasurable numbers of people with a sense of entitlement and no integrity, I don't want something I don't deserve.

I'm inclined to just pay my taxes and move on quietly. Thoughts?

We have a farm number. We pay farm rate taxes on our vacant land. We have a tree farm. The crop is due for harvest around 2089.

 

[ustmd]

Thanks for the responses and therein lies the rub. I can't honestly say I'm running the place as a business.

I'm inclined to see whether the state will give my a farm tax number without filing a 1040 F and be very direct as to my intent on land use and see what happens but be prepared to pay the taxes.

Dan, I am with you on this one. We do not try to get Agi exemption or Tax exemption on our property because we are not running a real business. It is a hobby/intentional choice for us and we should not ask other people to subsidize our hobbies.

While this may get me burned at the stake here, people who take advantage of the Agi/tax exemption (and are not really making an effort to run a business) are no different than any other tax cheats or corporations who relocate their headquarters to the post office box in the Caribbean to avoid paying taxes.

 

[randy41]

if you don't have a farming business then there will probably be no tax exemption available. if you don't know whether you have a farming business or not then you don't.

 

[5030]

Here in Michigan, when you buy equipment that's ag related (I don't mean a CUT either) it's automatic but it has to be an ag tractor or related implement.

Of course you don't buy 100 horsepower tractors for mowing the lawn......:laughing:

 

[clemsonfor]

Dan, I am with you on this one. We do not try to get Agi exemption or Tax exemption on our property because we are not running a real business. It is a hobby/intentional choice for us and we should not ask other people to subsidize our hobbies.

While this may get me burned at the stake here, people who take advantage of the Agi/tax exemption (and are not really making an effort to run a business) are no different than any other tax cheats or corporations who relocate their headquarters to the post office box in the Caribbean to avoid paying taxes.

I dont think your referring to me, but im not going to burn you. I pay all my taxes that are due. It does just so happen that i own 130 acres listed by the county as AG. Of this 130 probably 115 are timbered. Timber is a Ag related crop federaly and state wide at least in SC. After all Timber is our #1 agricultural crop in the state. Providing the most dollars and jobs. This is the reason why the US Forest Service is Under the Dept of Agriculture!

I am not cheating anybody, i am taking advantages of all the deductions that i am allowed under the law. If one chooses to ingnore his deductions thats up to him. I would ask this do you claim your student loan intrest of you or your childs loan, how about your mortgage? Ignoring a tax break on my timber land is no different than ignoring your morgage interest deduction, whick in my case it way more than any farm related deductions!

 

[JamesHW]

New york state does not have an acreage limit on farms to get the exemption, but does want to see $10,000.00 a year in sales to qualify for the exemption ($2,000 of which can be forestry related). They do have a provision for transititioning hobby farms to commercial operations over a 3-5 year period. Apparently you just have to submit a completed form to the vendor to get the exemption, but the vendor is not required to give it to you, in which case you would need to apply for a refund.

It's pretty clearly laid out here.

Apparently what is considered Agriculture is fairly broad:

Farms that undertake commercial activity in one of the following areas are eligible for the exemption:
Agriculture; including livestock, dairy, poultry
Floriculture
Horticulture; includes nursery stock, ornamental shrubs, ornamental trees & flowers
Viniculture
Viticulture
Aquaculture; including fish, fish products, water plants & shellfish
Silviculture; including the growing & harvesting of trees, bushes & shrubs
Commercial horse boarding operations are also included. They are defined as enterprises of at least 7 acres and 10 boarding horses that receive $10,000 or more in gross receipts annually from the boarding of horses. This does not include facilities that are primarily used for horse racing.

 

[EddieWalker]

I just heard about the new rules for TX. My land is in timber, as is most of the land in my area. I already have a tax id number to buy red diesel, but it sounds like I'm going to need this new number and card to buy some of the basics like feed for animals and fencing materials without paying sales tax.

Eddie

 

[Bird]

Yep, it's different in different states and I think even in different counties within a state, and of course the rules are always changing. In 1995, I asked our county tax appraisor about an ag appraisal when we bought 10 acres. Planning to sell a few pecans, fruit, and produce off the property wouldn't do it, but he said if I had one cow on it . . .. I told him the neighbor right behind me had already insisted on giving me $50 to let his cows use my pasture. I got the ag appraisal. And the first year I filed a Schedule F, I took everything to an accountant and he didn't even charge me; said I already had it all done correctly. But I don't think the same situation would work now.:laughing: