Act 100 of 2016 changed the exemption around agricultural machinery and equipment. The phrase “directly and exclusively” was changed to be “predominately,” defined as 75% or more of the time the equipment is in use.
The exemption available to agricultural and horticultural entities for machinery and equipment is a use-based exemption. That means that items available under the exemption are only available as exempt if the purchaser will use the equipment 75% or more of the time for exempt uses. This declaration is made at the time of purchase by filling out Form S-3A, Agricultural Fertilizers, Pesticides, Supplies Machinery & Equipment.
Q: I am an equipment dealer who sells to farmers. I’m worried that if I accept one of these exemption certificates that turns out to be incorrect I will be charged penalties and interest if I’m audited?