Farmers Market Tax Arkansas

[Big Dave]

This was a hand-out at a Farmers Market conference in NW AR last week:

Since 1941, the provisions of Art. 26-52-401 have specifically exempted from the sales tax "raw products from the farm, orchard or garden, when the sale is made by the producer of the raw products directly to the consumer or user." An exception to the exception was made "when the producer sells . . . . at an established business located on his or her farm."
As far as I know, in the 65 years from 1941 to 2006, no government official ever suggested to anyone anywhere that producers had to collect sales tax on the sale of their produce at a farmers market.
However, in 2006 the Depart. of Finance and Admin promulgated a new set of regulations concerning the collection of the sales tax that included a provision (GR-41) which declares that the sale of raw products is not except if it is made from "an established business located off the farm." The regulation then goes on to provide that farmers markets that operate from an established place off the farm or in an established manner are deemed to be established businesses and specifically provides that products sold at farms markets off the farm are not eligible for the exception. In addition, the regulation specifically provides that sales of flowers, shrubs, and plants are not exempt.
This regulation is a direct assault on farmers markets and an unprecedented imposition of an extremely regressive tax. It is an expansion of the tax on food by an unelected state agency at a time when the trend of public policy is toward the elimination of the food tax. In my view, it is outrageous.
Legislation should be passed this session specifically exempting from the sales tax all raw products from the farm, orchard or garden, including flowers and plants, when the sale of that product is made by the producer to the consumer at a farmers market.
I will do all I can to help you with this task.

Larry Froelich
Attorney at Law
200 W. Center
Fayetteville, AR 72701
479-521-3939
larry froelich@g-mail

[MissKitty]

Hey Big Dave....Hidy!!!!-Talked to EIEIO this afternoon and she told me that you an ennis had made that journey....Glad to get informed on some of these new laws trying to go into effect....
Drop by and see us sometime....You still wanting some guineas???-MissKitty

[Razorback21]

Thanks for the info on this thread. We hope to move back down to Arkansas in the near future and that info will come in handy.

[Jenn]

An 'established' place oughtta have walls and plumbing. A parking lot occasionally filled with tents should not count as established.

[Big Dave]

Bumpity Bump

[Oldcountryboy]

Interesting, I need to check up on Oklahoma's laws. It's been a few years since I've sold any vegetables anywhere besides here. Probably about 8 years ago I checked into what it would take to sell on the roadside somewhere. The county extension agent then told me that I didn't need a sales permit if I sold at home, but I would need a $25 permit to sell on the roadside somewhere. Didn't have to charge customers tax at all.

Things may have changed since then. Good luck with your new adventure!

[suthin12]

Unfortunately "Farmers Markets" in many areas, are no longer Farmer's Markets, they are people renting a booth, buying produce, flowers, shrubs, and who knows what else from cell phone covers,to neckties, and very little is actually Farmer produced, at least no local farmers, perhaps its this situation that they gov't is trying to address.

[Big Dave]

Bumpity Bump...

[Raymond]

Here in MO they forced everyone that sells anything at farmers markets , fleamarkets or at thier home in a yardsale to get a state tax number and collect taxs on it as a result most of the fleamarkets and farmers markets have since shut down...To get the tax number you have to put up a $5000.00 bond with the state which you dont get back unless you leave state so that kills the small producer rather quickly as it takes alot of produce just to make up for that $5000.00 ...I know when i was selling my produce I didnt sell that much in a year.

[r93000]

Originally Posted by Raymond

Here in MO they forced everyone that sells anything at farmers markets , fleamarkets or at thier home in a yardsale to get a state tax number and collect taxs on it as a result most of the fleamarkets and farmers markets have since shut down...To get the tax number you have to put up a $5000.00 bond with the state which you dont get back unless you leave state so that kills the small producer rather quickly as it takes alot of produce just to make up for that $5000.00 ...I know when i was selling my produce I didnt sell that much in a year.

Someone may have given you faulty information, and I hate for you to lose income over a misunderstanding.

I personally do not support food taxes, however, you absolutely should not be needing a $5000 bond if you make less than $5000 per year. If you make less than $5000 per year your bond should only be $25! (Handy dandy bond calculator- http://dort.mo.gov/tax/calculators/bond/ ) Also, depending on how the farmer's market that you belong to is set up you may be able to pay taxes through their established number. Of course this would not work for an independent farmstand only if you are renting space through an established market. On the surface, yes it seems like a punishment, however they are only taxing "income" which is what we are to pay taxes on anyhow. As I said, I am against taxing food, but at this point all food is taxed so it makes sense that farmer's markets are not exempt.

From the MO Dept of Revenue:
Taxpayers registering to collect and remit sales tax must post a bond equal to three times their anticipated monthly liability. If the estimated liability is less than $500, the bond amount is $25. A registration form (Form 2643) must be submitted for each location that will transact sales.
http://dor.mo.gov/tax/business/faq/farmers.htm#q1

As for garage sales, you do not have to collect taxes if you are having a REGULAR garage sale- even with baked goods, some seasonal produce, etc. If you are conducting your garage sale as a BUSINESS (very frequently holding a sale, selling products bought specifically to make a profit, etc) then you do need a tax number since you are using it as a regular income source.
12 CSR 10-103.200 Isolated or Occasional Sale
http://www.sos.mo.gov/adrules/csr/cu.../12c10-103.pdf

[JIL]

Big Dave can you also post this in the garden forum? And am I understanding correct that if I sell from my farm I have to collect taxes? Any info will be and is greatly appreciated JIL