Sales Tax Exemption Changes

— Written By Jenn Beck

There are some upcoming changes to sales tax exemption regulation for farmers. Most farmers currently hold an “Agriculture Exemption” certificate from the NC Department of Revenue (NC DOR) that exempts them from paying tax on agricultural related products such as pesticide, fertilizer, plastic mulch, seed, lime, grain, feed, and machinery. Farmers completed form E595-EA with NC DOR and received a certificate that began with the number 1. This certificate number was given to retailers when making purchases. These numbers will no longer be valid after October 1, 2014.

Farmers must now reapply for a “Qualified Farmer Exemption” certificate with the NC DOR. In order to qualify for the new sales tax exemption you must have $10,000 or more of gross farm income in the previous calendar year or you must have an average of $10,000 in gross farm income for the previous three calendar years. In order to apply for the qualified farmer exemption certificate you must complete NC DOR Form E595-QF. The processing time for these certificates may take up to 60-90 days so we suggest you apply as soon as possible. The new tax exemption certificate for Qualified Farmers will begin with the number 7 and will be required for sales tax exemption after October 1, 2014.
Application for Qualifying Farmer Exemption Certificate Number for Qualified Purchases can be found at http://www.dornc.com/downloads/e595qf.pdf

Beginning farmers that do not have $10,000 of gross income from previous years are eligible for a conditional exemption. This conditional exemption is valid for the year it was issued plus the next two more years. This exemption is not renewable. Essentially this conditional exemption gives beginning farmers three years to bring their production level up to $10,000 gross income so they may then apply for a Qualified Farmer exemption. In order to apply for the conditional farmer exemption certificate you must complete NC DOR Form E595-CF. The new tax exemption certificate for Conditional Farmers will begin with the number 8 and will be required for sales tax exemption after October 1, 2014.
Application for Conditional Farmer Exemption Certificate Number for Qualified Purchases can be found at http://www.dornc.com/downloads/e595cf.pdf

Unfortunately this new legislation will exclude many small farms in Madison County that do not meet the minimum gross income. These farms are still able to make sales tax exempt agriculture purchases through October 1, 2014.

We realize that not everyone has access to the online forms. If you would like to receive a printed copy of the form via postal mail, please call our office at 649-2411.

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