Am I a farmer.

Asked December 20, 2016, 6:02 PM EST

We own 5 ewes for breeding. We have a barn and own 3/4 of an acre. We have a fenced in pasture of approximately 1/2 acre. Are we considered a farm and may we provide vendors with a blanket exempt form and purchase feed and other items free of sales tax. The lambs born on our property are sold at auction or to individuals.

Guernsey County Ohio

1 Response

IRS defines farm as:

You are in the business of farming if you cultivate, operate, or manage a farm for profit, either as owner or tenant. A farm includes livestock, dairy, poultry, fish, fruit, and truck farms. It also includes plantations, ranches, ranges, and orchards and groves.

IRS also expects there to be a profit on occasion – farming should not be a tax write off. If there is no profit potential you may want to follow hobby farm rules for the IRS which allows you to deduct expenses up to the level of farm income but not allow you to show operating losses (see https://www.agecon.purdue.edu/extension/pubs/faq/FAQ_14.pdf). There are no size requirements for IRS. If you are a farm with profit motive, you should be completing a schedule F return.

Ohio’s definition for farm is different based on the program.

For property tax purposes, farmland devoted exclusively to commercial agriculture may be valued according to its current use rather than at its "highest and best" potential use. This provision of Ohio law is known as the Current Agricultural Use Value (CAUV) program. By permitting values to be set well below true market values, the CAUV normally results in a substantially lower tax bill for working farmers.

To qualify for the CAUV, land must meet one of the following requirements during the three years preceding an application for the CAUV:

•Ten or more acres must be devoted exclusively to commercial agricultural use; or

•If under ten acres are devoted exclusively to commercial agricultural use, the farm must produce an average yearly gross income of at least $2,500.

To claim tax exempt for farm use, the definition for farm is similar to the IRS and can be found at this link http://ohioline.osu.edu/factsheet/OAM-2 along with some other useful information.

Exemption Certificates

The following forms have been provided by the Ohio Department of Taxation for use by Ohio consumers when making exempt purchases.

Unit Exemption Certificate. This exemption certificate is used to claim exemption or exception on a single purchase.

Blanket Exemption Certificate. This certificate is used to make a continuing claim of exemption or exception on purchases from the same vendor or seller.

More information about the Ohio Sales Tax Exemption for Agricultural Producers can be found on the Ohio Department of Taxation web site located at: www.tax.ohio.gov. The form can be found at that site under the forms link titled STEC-B and STEC-U

It would be useful and easier to defend if I met the definition for all uses. However, it is my opinion that it is not necessary to do so. Based on what you have said, you would qualify for the state sales tax exemption. I would recommend keeping good records of purchases and the agricultural use of those. There are certain items that the state department of taxation has been scrutinizing such as ATV’s. These never met the definition for tax exempt although many were sold that way in the past. It is the buyer’s responsibility to make sure the items qualify, not the sellers. If there is an audit, the burden of proof lies on the buyer, along with any fines and penalties.