On July 1, 2009, a new 1.5 percent sales tax rate for Mississippi farms went into effect. According to Hembree Brandon’s story for the Delta Farm Press, the new tax has caused confusion among the stakeholders as to how the tax is applied to purchases of farm equipment and parts.Certified public accountant Don Stallings spoke at the recent meeting of the Southern Cotton Ginners Association and the Delta Council Ginning and Cotton Quality Improvement Committee in Stoneville, MS and told the crowd that questions remain as to how to apply the tax to irrigation systems, farm tires, and other farm equipment. According to Brandon’s article, Stallings said, '“In a discussion with Greg Duke, chief of the Mississippi Sales Tax Division, Duke explained that the law has not changed, just the rate. For example, farm tractors that were subject to a 1 percent sales tax rate are now subject to the 1.5 percent rate. Implements that were subject to a 3 percent sales tax rate are now subject to the new 1.5 percent rate.”'
Currently, unless a farmer produces for each vendor a “notarized affidavit that the item qualifies as a tractor or implement,” the vendor will charge the maximum 7 percent rate. Affidavit copies can be downloaded from the Tax Commission’s website, and one notarized form can be Xeroxed to use on more than one purchase. Now, repairs, maintenance, and labor to a farm implement or equipment that qualifies are taxed at the 1.5 percent rate.
Here are some other items that are covered: combine, cotton picker, or module builder; center pivot systems, self-propelled spray rigs; and the list goes on and on. To see more covered items or to read the Delta Farm Press article click here. Stallings encourages farmers to share their questions and concerns with the Mississippi Tax Commission to help them make better-informed decisions as to what will be covered under the new rate. Additionally, anyone can request a “formal ruling on a particular question.”
Undoubtedly, issues involving this tax will continue to play out as farmers, accountants, and the tax commission work together to bring some clarity to what it, and what is not, covered at the new rate.
Posted: 08/26/09
