NAIS, and they said it wasn't coming...

Discussion in 'Homesteading Questions' started by Cheryl in SD, Sep 28, 2006.

  1. Cheryl in SD

    Cheryl in SD Living in the Hills Supporter

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    I went to Runnings to buy feed Sunday and I was told that in order to recieve the tax exempt I would have to fill out a little form. I asked why, they said, new policy. I called the state today. They directed me to their webiste and the form. It says....

    "H. - Agricultural products - Purchasers of products and services that are exempt when used exclusively by the purchaser for agricultural pruposes must complete an excemption certificate if there is doubt as to the intended use."

    I called the store. They told me that the state told them they must have everyone fill that our even if there is no doubt of intended use i.e. chicken feed. I asked what they did with these certificates. "They are kept on file and available for the state to come inspect & verify at any time."

    I quoted the form, the manager said, I was right, & he would love to help me, but last year he sold animal feed (obvioius use) tax excempt to everyone, and ended up paying a $10,000 fine because they couldn't collect the information on who was buying that feed.

    Am I being paranoid to think that someone at state level is collecting animal owners names & addresses???

    The forms records the name, address, DLN/SS#, county & why you are purchasing these items.

    The manager did say that if all he sold was feed/seed he could sell it to me without the certificate. I guess the small guy has my business from now on.
     
  2. Beeman

    Beeman Well-Known Member

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    Is this feed for animals that will be sold? If so then it is a business and you should be registered for tax exempt status. If it is for pets or animals for personal consumption why should the feed be tax free? In my business to buy supplies without paying sales tax I had to have a tax resale #.

    Who said NAIS wasn't coming?
     

  3. bill not in oh

    bill not in oh Well-Known Member

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    Hi Cheryl

    That's S.O.P. (standard operating procedure) in most states for purchasing things exempt from sales tax. It's more correctly referred to as sales and use tax. If you purchase something that is used exclusively for the 'manufacture' of something else, it can be tax exempt (theory being that the finished 'product' will be a value added product and taxed at a higher value when sold at retail. The form registers your intent to use those items as a part of the finished product. Items purchased and used in the process, but not as an integral part of the finished product feeders, waterers, fencing, etc) are not eligible for tax-exempt status. If you USE these things rather than incorporate them as raw materials in the finished product and have purchased them tax exempt, then you are liable for the sales [and use] tax on them at the end of the accounting period (usually quarterly). This will vary from state to state (and possibly county/city/township depending on who all has their fingers in the sales tax pie). It probably has nothing to do with NAIS or anything else with the Fed, simply someone with the state deciding that the enforcement has become lax and is costing the state $$$$$.
     
  4. Cheryl in SD

    Cheryl in SD Living in the Hills Supporter

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    In South Dakota, feed purchased for livestock is tax excempt without a sales tax license. It is considered part of the supplies for the end product, which you would then sell wholesale. If you sell retail, then yes, you have to have a sales tax license, but as long as you are not marketing your product to the consumer, you are considered a producer. Why should there be a sales tax on it until it is a finished product??? If it is something that could be used for another purpose, other than producing the product, then yes, it would need to be identified. For example, parts to repair your manure spreader, or compressor for your milk room, in those cases the use would be in doubt & an exception certificate would be required. HOWEVER, the instructions on the form CLEARLY state that it is only required IF there is doubt as to use. Chicken feed is for chickens, there is no doubt in most people's minds as to its intended use.
     
  5. kasilofhome

    kasilofhome Well-Known Member

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  6. Cheryl in SD

    Cheryl in SD Living in the Hills Supporter

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    Sigh, for the second time today, I have been shown the error in my thinking by you all. I was so taken aback by the demand to fill out the form, that I did not completely think it through. I still don't understand why, & this was confirmed all around, by the State Dept.. of Revenue, Runnings and the feed store, I am legally charged sales tax in a store who isn't mainly a feed store, but, and again legally, not charged in a store that is a feed store. That makes no sense to me, but I will stop being paranoid, ok???

    Maybe tomorrow will be a better day????

    humbly,
     
  7. Bearfootfarm

    Bearfootfarm Hello, hello....is there anybody in there.....? Supporter

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    So how would they know if you put the "wrong" information? Do you have to show an ID to get it?
     
  8. Nature_Lover

    Nature_Lover Well-Known Member

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    I'm not sure of this, but it sounds to me like the guy selling tax-free bird feed got caught selling it to people who should have paid taxes on it.

    If your birds don't produce a taxable product, then you are considered an end user and are required to pay sales taxes on supplies and feed.

    If you are entitled to buy tax-free bird feed because you sell chickens or eggs, you are required to fill out the form so the tax-man can make sure you are collecting taxes on any income if you exceed your statutory tax-exempt income limit.

    I bet that "doubt as to the intended use." in your quote (in message one) refers to whether you intend to sell the products produced by the feed, or you are an end-user.
    I don't think that "doubt" refers to what eats it.
     
  9. rambler

    rambler Well-Known Member Supporter

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    If you don't understand it, then you are doing it right. It's taxes, after all! :)

    I buy salt for the cattle. Typical 50 lb salt block. Tax free if I ask (happen to have a Runnings here in MN too). Well they were out of generic salt blocks. I needed one.

    So I see their Deer Salt Blocks are on sale, makes them close to the generic white blocks. So I get one of those.

    Get charged tax on it.

    Hey, wait - I'm using it on the farm??????

    Don't matter. Because the label on the block of salt says 'deer' on it, it gets taxed. Period.

    Minnesota has a _very_ convolted way of doing all this. They will allow hardware/ supply stores to let some things go, but not others.

    Period.

    Then you go to a dedicated farm dealer or feed store, and pretty much nothing is taxed.

    It does _NOT_ make any sense, but that is how it is.

    Bought a snowblower years ago, big 7 foot on the back of the tractor. The dealer said, as soon as I sat down - I _have_ to charge full sales tax on snow blowers, it doesn't matter where you use it. State rule. Period. At that time, all farm machinery used for ag production was taxed 4% less than everything else.

    Now, why was there any sales tax on farm machinery at all, and why full tax on snow blowers especially, and......

    No, it doesn't make any sense at all.

    I read on a different forum that a fellow got a bill from his dealership for $400 in state taxes. For a tractor he bought in 2004! Seems the dealership was supposed to charge it, state came snooping around. Others said if he didn't pay, next letter would be from the state demanding the taxes.

    It's a complicated game. Sales taxes are supposed to be on end users, not producers of wholesale products.

    Both big & small farms are in a funny grey area in between, where we consum some stuff personally, and sell some stuff wholesale.

    Taxes get pretty grey & odd too for us.


    Looks like your state is catching up to most of the rest.

    --->Paul
     
  10. BaronsMom

    BaronsMom Well-Known Member

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    If you claim tax exempt in our state, you have to fill out a form. I didn't realize other don't have to do it - learned something new today!
     
  11. anniew

    anniew keep it simple and honest Supporter

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    All states seem to have different rules. In PA, there are lists of stuff that CAN be tax exempt if you are a farmer, and things that are not. However, for feed, if you are a farmer, they are tax exempt, even though the eggs and/or chickens are also not taxed, as food is not taxed YET in this Commonwealth. If I were just growing food products, I don't even have to have a sales tax number since no food is taxed. Since I also grow plants and cut flowers, I need the tax number so I can collect tax on product sold to the end consumer...those sold wholesale or for resale are also not taxed by me, but I must have the wholesaler's number on file.
    It pays to know the laws, including the rules and regs where you live and not depend on information in other areas.
    NAIS IS another problem!
    Ann
     
  12. kesoaps

    kesoaps Well-Known Member

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    Ann's right; each state is different. I don't need a tax ID number as a farmer, but if the product itself is being resold then I do. I think that most clerks don't understand the laws, either, which is where we all end up banging our heads. (But nais is coming...most likely you'll experience bio-security proceedures for your feeds first.)
     
  13. MorrisonCorner

    MorrisonCorner Mansfield, VT for 200 yrs

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    Same here in VT.. I can't get over how "groceries" aren't taxed.. but garden seeds are. Go figure. My chicken feed is also taxed. Presumably if I bought it for a commercial use (filed a schedule F) I'd either get the tax back somehow, or have a tax exempt number. But taxing vegetable seeds, seed potatoes, onion sets, rhubarb roots.. this never made any sense to me. What.. "baby food" isn't going to grow up to be "real food?"
     
  14. ceresone

    ceresone Well-Known Member Supporter

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    Well, I can throw another into the debate-- if a kennel is producing puppies for resale, why do they have to pay sales tax on feed purchased for the puppies? and they do. and no, i dont raise dogs.
     
  15. Cheryl in SD

    Cheryl in SD Living in the Hills Supporter

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    Hi folks,

    Ok, your comments made me want to KNOW my law.

    10-45-18.5. Exemption for sale of feed for certain nondomestic animals. There are hereby specifically exempted from the provisions of this chapter and from the computation of the amount of tax imposed by it, gross receipts from the sale of feed for any nondomestic animal regulated by the Animal Industry Board pursuant to § 40-3-26, if the feed is to be used by a farmer or rancher who is regularly engaged in the breeding and raising of such animals.

    The nondomestic animals include all of my poultry, and goats as I am engaged in breeding and raising and I do sell off any excess. We don't have much land, but amount isn't an issue & we are actively engaged in growing our herds & taking steps to purchase a small farm. Therefore, according to the gal at the Rev. dept., I am considered agricultrual exempt (you just have to breed, raise & sell excess stock). So by law in SD, I can get it tax exempt.

    I can also sell tax exempt as long as I sell live birds & animals. If I butcher then sell I have to sell as a retailer & charge sales tax.

    There is no rule saying I have to fill out a form for this, however, I can see Runnings point, they can't afford to pay $10,000 a year so I don't have to either.

    At least this was a good learning experience.
     
  16. MullersLaneFarm

    MullersLaneFarm Well-Known Member

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    I'd pay the sales tax and forget filling out any forms that the state could use to 'voluntarily' register my premises.
     
  17. iocane

    iocane Active Member

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    Even if the intent is not to keep track of who has chickens, the goverment is in effect doing that.
     
  18. Cheryl in SD

    Cheryl in SD Living in the Hills Supporter

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    I guess this was what I was thinking, just didn't state it as well.

    :)
     
  19. rambler

    rambler Well-Known Member Supporter

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    Here in MN, some of the supply places require you to sign the sales slip (their copy) if you claim farming/no tax. These seem to allow more items to pass by no-tax. However it cost them more paperwork to handle all that.

    Runnings & other places seem to go with the state pre-appoved list of no-tax items, and have less paperwork to deal with but are not flexable as to what is actually farm-use.

    --->Paul
     
  20. kenuchelover

    kenuchelover Well-Known Member

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    A while back I did some googling re moonshiners.... no, I don't drink, but I WAS curious if any southern moonshiners might be growing the old traditional Southern Flint corn for moonshine production purposes.

    Sad to say, tradition has gone with the wind..... MODERN moonshiners make their product out of everything from chickenfeed (yes, CHICKENFEED) to dogfood, with a dash of storebought sugar to pep up the fermentation process. So if y'all want to drink moonshine, I hope y'all aren't the type to get squeamish over little stuff like what your 'shine came from (cat & dog food, chicken feed, insects, occasionally some chicken manure if the moonshiner is REALLY cheap & uses leftover feed he scooped up from a henhouse).

    Danged near everything can be put to more than one use.... the OKC bombing resulted in mucho red tape concerning purchase of fertilizer. Crystal meth resulted in restrictions on purchase of over the counter allergy meds. If Prohibition II ever comes around, dog & cat & CHICKEN feed will be scrutinized with a steely eye.