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SALES AND USE TAX APPLICATION TO FARMING, TIMBER HARVESTING, NURSERY OPERATIONS, AND AGRITOURISM

Sales of Agricultural Products

49. Are farmers and nursery operators who buy and sell agricultural products, including livestock, required

to present the certificate of exemption to buy agricultural products, including livestock, tax exempt or obtain

copies of purchasers’ exemption certificates to sell agricultural products tax exempt?

No. Agricultural products grown and produced by a farmer and purchased directly from the farmer that grew or

produced the agricultural products are not subject to sales or use tax. The farmer is not required to obtain the

Agricultural Sales and Use Tax Certificate of Exemption to make tax-exempt sales of agricultural products that the

farmer grew or produced. The Agricultural Sales and Use Tax Certificate of Exemption is required to make tax-

exempt purchases of machinery, repairs, and certain supplies for use by a qualified farmer, timber harvester, or

nursery operator.

Agritourism

50. Would a riding trail operator qualify for the agricultural certificate of exemption?

No. Providing riding trails is not one of the criteria that will qualify for the agricultural certificate of exemption. It

should be noted that, according to Tenn. Code Ann. Section 67-6-212, charges for using riding trails or for providing

horses to ride are considered fees or charges for an amusement, entertainment, or recreational activity that are

subject to tax, and the seller must collect the tax on charges for trail riding or providing horses to ride.

51. I have a “corn maze” cut in a 100 acre cornfield. I charge $8 for people to enter and try to find their way

out. Should I charge sales tax on the $8?

Yes; under Tenn. Code Ann. Section 67-6-212, this is considered to be an amusement, recreation, or entertainment

activity subject to the state and local sales tax.

52. Occasionally I will have a hayride, where members of the local community, school classes, churches, civic

organizations, etc., will pay me to conduct the hay ride on my farm. I may include picnics, local country band

entertainment, etc. Are the charges subject to the sales tax?

Yes; again as an amusement, recreation or entertainment activity. In some circumstances, you may be paid by a

church, school or other organization qualified for sales tax exemption. If you are paid directly by the organization

and obtain the organization’s exemption certificate, you will not be required to collect the tax.

53. When in season, I may sell my farm produce to attendees to these events. Will the farm produce then

become taxable?

As long as the farm products are grown or produced by the farmer or 50% or more of the produce sold by the farmer

is grown or produced by the farmer, the sale of the farm produce is not subject to tax. The charges for the non-

taxable farm produce must be separate from the charges for the taxable amusement, recreation, and entertainment

activity.

54. In conjunction with the agritourism event, I provide food that my family has cooked from my own farm

produce. Should I charge tax on the prepared food?

To the extent that the cooked food is entirely from your own produce and there is a separate charge for the prepared

food from the amusement, recreation, and entertainment activity, the sales of the prepared food are exempt from tax.

However, combining the charge for the non-taxable prepared food with that of the taxable entertainment activity into

one ‘bundled’ charge will subject the total bundled charge to tax. It should also be pointed out that your sales of

beverages, (soft drinks, beer, tea, etc.) produced by others are taxable.

55. I cut the trees from my own farm, have the lumber sawed, and my family makes birdhouses, baskets, and

similar crafts. Should I charge the tax on these items?

Form Rv-F1308401 - Application For Registration Agricultural Sales And Use Tax Certificate Of Exemption - 2009 Page 16