Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2014
 

Sales and Use Tax Annotations


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S

510.0000 SEEDS, PLANTS AND FERTILIZERS—Regulation 1588

Annotation 510.1230

(b) FERTILIZERS

510.1230 Pest Control Products and Growing Mediums. Neither pest control products such as pesticides, insecticides, germicides and biologically beneficial insects and organisms nor growing mediums such as compost, soil and soil amendments used in hydroponics growing systems qualify for the farm equipment and machinery partial sales tax exemption.

In order to qualify for the partial exemption from tax provided by Revenue and Taxation Code section 6356.5, three requirements must be met: 1) the purchaser must be a qualified person; 2) the property must qualify as farm equipment and machinery or parts thereof; and 3) that property must be primarily used in producing and harvesting agricultural products.

Regulation 1533.1(b)(1)(A) specifically excludes supply items not used in producing and harvesting agricultural products from the definition of "farm equipment and machinery." and regards chemicals (i.e., a substance obtained by or used in a chemical process) as supply items. Chemicals therefore do not qualify as farm equipment and machinery. Since pesticides, insecticides and germicides are generally chemicals, they similarly do not qualify as farm equipment and machinery.

Ladybugs, nematodes, or lacewings are beneficial insects that perform the type of activities commonly performed by agricultural chemicals such as pesticides. These insects do not constitute a "new or used tool, machine, equipment, appliance, device or apparatus used in the conduct of agricultural operations" and do not qualify as farm equipment and machinery.

While compost, soil or soil amendments are products used in producing and harvesting agricultural products they too are not tools, machines, equipment, appliances, devices or apparatuses and thus do not qualify as farm equipment and machinery. The partial tax exemption is not applicable to sales of these items. (10/22/03). (2004–2).