ATV Not Tax Exempt For Lack of Being Used Predominantly In Ag Production Activities.

The petitioner, an elderly Iowa farmer, purchased an ATV to use on his farm.  He paid $439.12 in sales tax and sought a refund on the basis that the ATV was exempt from sales tax as farm machinery and equipment.  Iowa Code Sec. 423.1(18) defined "farm machinery and equipment" as equipment used in ag production and exempts it from sales tax if it is directly and primarily used in the production of agricultural products.  The petitioner testified that he used the ATV 25 percent of the time to carry salt and minerals to livestock, 15 percent to carry corn to feed livestock, 25 percent to check cows and calves, 25% to check fence and 10% to check his crops and hay field.  The Iowa Department of Revenue (IDOR) denied the exemption on the basis that only 40 percent of the petitioner's use of the ATV was in direct ag production activities (25 percent to carry salt and minerals to livestock and 15 percent to carry corn to feed livestock) and that the predominant use of the ATV was therefore not in direct ag production activities.  In re Phillips, No. 14DORFC005 (Iowa Dept. of Inspection and Appeals Proposed Decision (Aug. 13, 2014).

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