Forestry and Wood Products Machinery, Equipment, and Repair Parts
Beginning July 1, 2017, specific types of equipment and repair parts are exempt from the Vermont Sales and Use Tax. This is a new exemption created by Acts 75 and 77 of 2017 targeting the types of machinery and equipment specifically used in timber cutting, timber removal, and the processing of timber or other solid wood forest products intended to be sold at retail.
The exemption for machinery and equipment is a product-based exemption. That means the purchase of those specific types of machinery and equipment do not require an exemption certificate at the time of purchase - they are exempt no matter who is making the purchase. Since many parts can be used on both taxable and exempt purchases, sellers will require a completed S-3W: Vermont Sales Tax Exemption Certificate for Forestry and Wood Products Machinery, Equipment and Repair Parts for each specific type of machinery or equipment for which you are purchasing parts.
More information can be found in our fact sheet, the FAQs below, and the instructions in Form S-3W, Vermont Sales Tax Exemption Certificate for Forestry and Wood Products Machinery, Equipment, and Repair Parts. Please contact the Business Tax Section if you have additional questions.
What is eligible for the exemption?
Under this exemption, only the following machinery is exempt from sales and use tax:
- Skidders with grapple and cable
- Feller bunchers
- Cut-to-length processors
- Loader slashers
- Log loaders
- Whole-tree chippers
- Stationary screening systems
- Firewood processors, elevators, and screens
These types of machinery and equipment are exempt from sales tax, no matter who is purchasing the item. Additionally, repair parts to be used in these types of machinery and equipment are also exempt from sales tax, with a properly completed S-3W.
How do I claim this exemption?
All purchases of this type of equipment are exempt from sales tax, regardless of who is purchasing them. Some retailers may ask for you to complete the Form S-3W when purchasing equipment. However, it is not considered required by the Department when purchasing the eligible equipment.
Since the parts used for these types of equipment can also be used for non-exempt equipment, an exemption certificate will be required for purchases of the parts eligible for this exemption. A purchaser must fill out an S-3W and present it for all parts eligible for the exemption.
What if a retailer does not grant the exemption?
If a seller is not willing to grant the exemption on either the parts or the equipment, the Department recommends paying the sales tax at the time of purchase and then requesting a refund from the Department directly. You can file for a refund using Form REF-620, Application for Refund of VT Sales and Use Tax or Meals and Rooms Tax.
What about fuel used in this machinery?
Dyed diesel (commonly referred to as "off-road dyed diesel") used in these types of machinery and equipment is exempt from sales tax. If you are using dyed diesel in other types of machinery, it is exempt if it is used to propel the machinery or equipment. To make sure it is being used for forestry equipment, your fuel dealer will ask you to complete a form S-3F, the exemption certificate for fuel or electricity.