Nebraska Sales Tax and Exemptions for Agriculture (March 11, 2021 Webinar)

Department of Agricultural Economics Author

03/12/2021 Added

114 Plays

Description

With: Austin Duerfeldt, southeast regional agricultural economist, Nebraska Extension. The webinar is a refresher for those new to or wising to brush up on ag exemptions from state sales tax. It will cover the regulations set forth in 2014 legislation, many providing perspective from the side of the consumer farmer/rancher. Agricultural exemptions, auctions and occasional sales will be covered. This is the third in a monthly series of webinars geared toward helping agricultural producers better understand their finances.

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[00:00:10.320]Jessica Groskopf: Well, good afternoon, and thanks for joining our webinar today i'm JESSICA gross cough and nebraska extension educator and regional economist for the panhandle area.
[00:00:21.090]Jessica Groskopf: This is a part of our extension farm and ranch management teams weekly webinar series find a complete schedule of current find a complete schedule and past recordings at farm you and l.edu.
[00:00:34.200]Jessica Groskopf: we'd like to point out that the nebraska rule response hotline remains a great resource for ag professionals across the state for writing mental health counseling.
[00:00:43.170]Jessica Groskopf: information regarding legal assistance financial clinics mediation and more the hotlines toll free number is 1-800-464-0258.
[00:00:54.360]Jessica Groskopf: We also have a wealth of resources related to stress and wellness at rule wellness.ul.edu.
[00:01:01.410]Jessica Groskopf: today's webinar is a refresher For those of you who are new to or wishing to brush up on ag exemptions for state sales tax our guest is Austin or felt he will cover regulation set forth in the 2014 legislation many providing perspectives from the side of both the consumer farmer rancher.
[00:01:22.290]Jessica Groskopf: Agricultural exemptions auctions and occasional sales will be covered, please help me in welcoming southeast regional extension economist Austin deerfield thanks for joining us Austin.
[00:01:33.360]Austin Duerfeldt: Thanks JESSICA hope everybody's doing alright today, so I want to take a stab at covering how nebraska sales tax works for the air cultural industry here.
[00:01:42.240]Austin Duerfeldt: This isn't a whole lot of new information it's more of a refresher refresher course I still get quite a few calls with some confusion dealing with the 2014 lb 96.
[00:01:53.100]Austin Duerfeldt: And the best that I can do to describe what this conversation is probably going to boil down to is is going to boil down to an it depends conversation.
[00:02:01.770]Austin Duerfeldt: Many part of the parts of the agricultural sales tax in nebraska is a situational issue during our conversation.
[00:02:10.650]Austin Duerfeldt: I will try and post some web links into the chat box of relevant relevant websites discussing the topic that is currently being discussed.
[00:02:20.190]Austin Duerfeldt: Those web links and also any questions that we don't get addressed during the webinar will be available on the farm w and l.edu website with recording after the presentation.
[00:02:31.410]Austin Duerfeldt: So, to begin the conversation, probably the best thing that i've found is to try and tackle this as a step by step, or a layered approach and the first thing that.
[00:02:42.060]Austin Duerfeldt: you're gonna find in the chat is a link to the nebraska Chapter one sales and use tax regulation.
[00:02:49.620]Austin Duerfeldt: When we're talking about the agriculture exemption there's kind of two different things that you need to look at and the first one is and what i'm going to call layer one or your first hurdle.
[00:03:01.290]Austin Duerfeldt: is to look to see and make sure that you match the definition of what commercial agriculture is.
[00:03:06.780]Austin Duerfeldt: And the way that the stash degrees and the way the nebraska department of revenue handles, it is the definition is must be producing food product or raising or caring for animals that can be sold or used by farmers and ranchers to produce other products for sale.
[00:03:25.350]Austin Duerfeldt: As you hear that definition you're probably already running through your head and you're thinking well.
[00:03:29.970]Austin Duerfeldt: row crops easily check the bills, so does be Finn poultry con or confinement operations.
[00:03:36.900]Austin Duerfeldt: Some of the ones that might be a little bit more obscure from from immediate attention feedlots greenhouses nurseries sod farms and trade farms are all included in that definition of what commercial agriculture is in nebraska.
[00:03:53.310]Austin Duerfeldt: Once you kind of meet that definition and then you and you're fairly certain that, yes, I am commercial agriculture, then you can kind of start getting into that product by product.
[00:04:03.930]Austin Duerfeldt: conversation of does this item, need to be charge sales tax or is this the sales tactics isn't item there's two different definitions and nebraska department revenue gives.
[00:04:16.080]Austin Duerfeldt: Through the statutes one deals with crops, the other ones with livestock.
[00:04:20.520]Austin Duerfeldt: For the crop definition what agrees is and must be used directly for crop production to till the soil plant seeds harvest a crop or apply water for laser other agricultural chemicals to the land or crop to preserve a crop in the field.
[00:04:37.830]Austin Duerfeldt: And so the, the key word that I want to point out and it'll pop up again when we start talking about livestock is.
[00:04:44.910]Austin Duerfeldt: They use the word directly in that word directly is going to be key when we start getting into this conversation of what applies and what doesn't apply for sales tax exemption.
[00:04:55.230]Austin Duerfeldt: For the livestock group their definition is extremely similar they just changed some of the wording to.
[00:05:01.680]Austin Duerfeldt: to identify with what the production typically requires for doing livestock and it needs to be used directly for livestock production to supply measure or apply water feed.
[00:05:14.160]Austin Duerfeldt: warmth cooling comfort veterinary products or other beneficial chemicals to food producing or pale producing animals, it can aid and birthing or hatching of animals or removes ways from the animals pins.
[00:05:28.830]Austin Duerfeldt: And so, if you've got those two hurdles down you've gone through and you understand what the first definition is of commercial agriculture, you understand what the definition for a direct use item, you can start boiling things down into three different hats.
[00:05:44.490]Austin Duerfeldt: The first ad is things that are exempt the second one is non exempt and then what I consider is probably the more direct conversation is the things that it depends.
[00:05:54.900]Austin Duerfeldt: And so what i'm going to pop into the chat box right now is a link to the nebraska department of.
[00:06:04.530]Austin Duerfeldt: revenues website where they have informational guides six dash 368.
[00:06:10.320]Austin Duerfeldt: This is something that I would highly recommend that either a you bookmark this on the computer that you keep your books on for your farm operation.
[00:06:19.110]Austin Duerfeldt: or be you print this out regularly go back, maybe semi annually to see if there's any updates and keep this in a file drawer at your desk because this is probably going to be your.
[00:06:29.850]Austin Duerfeldt: Your go to guide on how do I fill out form 13, what are the definitions and their rulings and what we're going to talk about right now.
[00:06:38.520]Austin Duerfeldt: Is the parent department and revenue has actually gone through and they've listed a not comprehensive list.
[00:06:46.290]Austin Duerfeldt: But a list of commonly asked about items as to whether they're exempt or non exempt and they've got those listed out and so on this PDF link what you're going to find is and on seven and eight.
[00:06:59.370]Austin Duerfeldt: The guide provides a not again not comprehensive list, but a list of items that can qualify for sales tax exemption.
[00:07:09.120]Austin Duerfeldt: And these items include things such as combines, which is a piece of equipment used directly to harvest grain.
[00:07:14.940]Austin Duerfeldt: Feed wagons, which are pieces of equipment us directly to feed livestock robo gators and self propelled fertilizer units which are pieces of equipment used to apply chemicals to grain.
[00:07:26.250]Austin Duerfeldt: Her crops and then also things like tree space which are pieces of equipment used directly to move or harvest trees by nurseries.
[00:07:35.430]Austin Duerfeldt: As as I was going through that list the thing that i'm hoping that you're catching up on, and the mindset, you know you need to have when you're looking at these type items is.
[00:07:45.150]Austin Duerfeldt: You need to be thinking about how they're using the operation and how they're tied to that, whether it be commodity your livestock and and how its raised.
[00:07:54.900]Austin Duerfeldt: And so, going back to that combine I can I can tie that piece of equipment directly to going out into the field getting the corn out of the field and bring it in, so I can sell it and so i've got a direct use there that meets that definition.
[00:08:12.690]Austin Duerfeldt: On page nine of this guide, which is immediately after this list.
[00:08:17.490]Austin Duerfeldt: That we just got done talking about the Department of revenue goes through, and list items that are not exempt or, in other words, you will be required to pay sales tax on these items and these items are things such as your tags see tender trailers header trailers in grain bins.
[00:08:34.200]Austin Duerfeldt: Again it's only a small portion of what the list provides, but when you're sitting there looking through that list and you're thinking about some of the things are.
[00:08:42.840]Austin Duerfeldt: not exempt that you're going to have to pay sales tax on.
[00:08:46.950]Austin Duerfeldt: Sometimes I get some comments or arguments and my comment is based on the definition, explain how a seed tender trailer directly puts the seed into the ground it's more of a supporting role.
[00:09:00.870]Austin Duerfeldt: type of piece of equipment you're not planting with it you're just moving grain from one site to another in order to get it into the ground, and the same kind of with the header trailer.
[00:09:10.440]Austin Duerfeldt: i'm not using a header trailer to directly harvest the green i'm using the header trailer in order to transport equipment from one farm to the next farm.
[00:09:21.180]Austin Duerfeldt: And so I would highly recommend again stay current with this six dash 368 informational guide as they do update it from time to time and they'll change things in the list, for instance, I think.
[00:09:33.480]Austin Duerfeldt: In hydrogen tanks or something that they recently addressed, and why the last couple of iterations because that was bringing up some questions is whether that should be exempt or not.
[00:09:43.680]Austin Duerfeldt: The last sorting hat that we have to talk about, and this is probably the most frustrating one it's probably where most of the questions are probably going to come in through.
[00:09:51.600]Austin Duerfeldt: Is this it depends category and the best thing I can do to describe it depends item, is it really depends on what the intended uses and the story given.
[00:10:05.010]Austin Duerfeldt: The probably the one thing that.
[00:10:09.120]Austin Duerfeldt: Many find frustrating is, to my knowledge, there is no percentage of proof test that you have to meet which might be a shining light and all of this.
[00:10:19.710]Austin Duerfeldt: And so, if I go through and i'm purchasing an item that may or may not be tax exempt and I go through, and I started trying to come up with how i'm going to use this in the operation.
[00:10:30.480]Austin Duerfeldt: As soon as I get to a point where i'm listing something where it's a direct to use i've hit that to where it's good enough for an exemption and again that's my understanding reading through the legislation, some of the guidance that they give.
[00:10:44.010]Austin Duerfeldt: And so to give an example of how this can go down i'm going to give you two different stories that i've run into in my past.
[00:10:52.050]Austin Duerfeldt: The first story is one that I actually had to deal with so before accepting this position with you know, I was a county treasurer and Richardson county.
[00:11:01.230]Austin Duerfeldt: and during that time it was 2014 when this bill came and passed and we had to implement some of the sales tax rules and part of the changes was that county treasurer's office was all of a sudden, going to be responsible for collecting a TV and UTV sales tax across state nebraska.
[00:11:21.120]Austin Duerfeldt: And so the question that came up in my office and office across the state was how do we go about collecting this and understanding what the law is.
[00:11:29.970]Austin Duerfeldt: And so, basically it boils down to again that story given and what the intended use was, and so, if I had to farmers walk into my office, the exact same day went out and bought the identically TVs and there let's just even say their neighbors.
[00:11:47.160]Austin Duerfeldt: The first farmer walked up to the counter and told me that they went out and bought this ATV.
[00:11:51.510]Austin Duerfeldt: I told them this great looking at TV will get that title for you, by the way, what exactly do you intend to use the TV for because I have got to figure out whether or not.
[00:12:00.900]Austin Duerfeldt: This is an item that's getting charge sales tax or whether this is an item that needs to go on the personal property tax roll with the county assessor.
[00:12:09.750]Austin Duerfeldt: And so, as I started asking him questions generally conversation would come up where he'd say well i'm going to move the green auger with it, and I want to do some spring cleaning around the yard.
[00:12:19.770]Austin Duerfeldt: I want to check livestock based on those type of answers and the guidance given from nebraska department of revenue.
[00:12:28.740]Austin Duerfeldt: That item should be charge sales tax, and so I would collect sales tax accounting treasurer's Office at the time of titling.
[00:12:36.330]Austin Duerfeldt: If the farmer that walked him behind him that's the neighbor that bought an identical a TV came in and I asked him the same exact question.
[00:12:45.420]Austin Duerfeldt: and His reply was well I bought it with the intention of I was going to put some hay bales in the back of it and go feed some cattle.
[00:12:52.560]Austin Duerfeldt: Back in the pasture and then i've got a sprayer unit for it and i'm going to put Downs fertilizer in the past year and try and keep some of the weeds controlled so that I can get the most bang for my buck out the pasture and keep it in a good quality state.
[00:13:07.950]Austin Duerfeldt: Based on that answer he's got direct us to the livestock.
[00:13:14.220]Austin Duerfeldt: That purchase of an ATV is sales tax exempt and should be reported to the county assessor on the personal property tax roll.
[00:13:23.550]Austin Duerfeldt: One additional piece of information that I want to throw in there just because I brought up the tv's.
[00:13:29.820]Austin Duerfeldt: Is if you are purchasing or handling a TV and i'll put that link in the chat right now.
[00:13:35.130]Austin Duerfeldt: You probably need to read up on the forbes six ATV if this is your very first purchase or you're looking at selling, there is a special form that you need to have the handle that for when you go talk to the county treasure they're going to ask for this at the time titling.
[00:13:52.830]Austin Duerfeldt: The second story that i'll go ahead and give is this one isn't necessarily one that I had to deal with, but it's one that came up when I was talking to a.
[00:14:01.170]Austin Duerfeldt: Local dealership again it's it's a very similar conversation it's just talking about a different piece of equipment, and so the conversation issue was dealing with skids tears.
[00:14:13.410]Austin Duerfeldt: And again, it all boils down to what the intended use was and so dealership had to farmers walk in they were wanting by identical skids tears.
[00:14:23.700]Austin Duerfeldt: The first farmer, said that he was going to move der with it, and he was going to use it to help around the shop and so he was going to hook a chain up to it, and maybe pick up a, whether it be an engine block or maybe an axle my he was going to use it for repair type work.
[00:14:39.270]Austin Duerfeldt: In that situation, there was no direct use towards the row crop or livestock that purchase should be charged sales tax.
[00:14:49.530]Austin Duerfeldt: On the other hand, the neighbor who let's just say he was a rancher walked in again buying an identical skid steer.
[00:14:56.460]Austin Duerfeldt: He said he was going to go and clean his livestock pins with a need to buy the pusher attachment, and he was going to get a male speaker and he was going to use it for feeding the cattle also.
[00:15:07.680]Austin Duerfeldt: Again he's just demonstrated to direct use conversation pieces that's tied to that equipment and so, in his situation that skid steer sales tax exempt.
[00:15:20.880]Austin Duerfeldt: Take this conversation even a little bit further down into the weeds i'll go ahead and point out that another key difference between exempt non exempt.
[00:15:31.200]Austin Duerfeldt: Is is the attachment to land if you've got an item that's going to be physically attached to the land technically you're looking at an improvement to real estate and that does not count towards the exemption.
[00:15:44.730]Austin Duerfeldt: One movie that I commonly run into and we just put up one ourselves not maybe four or five months ago is grain bins and the difficult part with green beans green beans are not.
[00:15:57.480]Austin Duerfeldt: Tax exempt but some pieces of the green been are, and so, for instance, when you're writing up a sale ticket and you receive that.
[00:16:07.650]Austin Duerfeldt: you're going to see that the events installed on the roof, with the grain bin are taxed.
[00:16:13.980]Austin Duerfeldt: But equipment specifically designed for drying the green so let's say you put it, a stir raider inside that green button.
[00:16:21.600]Austin Duerfeldt: that's designed to help dry and condition the grain and so that stir raider is tax exempt and so when you get a a bill for installing a new green been you're going to look down through that and there's going to be some items they're exempt and some that aren't.
[00:16:38.250]Austin Duerfeldt: The story of repair and placement parts is a very similar situation to this it all depends on the story that you're giving in the intended use.
[00:16:48.330]Austin Duerfeldt: The way the law states that sales of all repair and replacement parts to use for agricultural machinery and equipment that are used directly in commercial agriculture are exempt from sales and use tax.
[00:17:01.410]Austin Duerfeldt: And so, a couple of key features, this does include generic equivalent parts and so you don't have to go out and buy genuine case or genuine john deere parts in order to get the exemption.
[00:17:14.850]Austin Duerfeldt: And some of the examples of the Department of revenue has listed are Hannah freeze and batteries and spark plugs and death.
[00:17:22.050]Austin Duerfeldt: But going back to that definition of direct to use what many found is there's a couple of friction areas in there, I know one conversation that i've had in the past when talking over sales tax issues was with wd 40.
[00:17:35.700]Austin Duerfeldt: And really at all dependent on how the intended use was, and so I had one dealership say that they were at a meeting and they were talking about wd 40 and specific.
[00:17:46.290]Austin Duerfeldt: If you bought a canon wd 40 and you said that that can wd 40 is going to go on a planter unit, and I want to use it to lubricate the chains that's a.
[00:17:57.120]Austin Duerfeldt: Direct us apart towards the planner unit that's planting the seed.
[00:18:03.660]Austin Duerfeldt: The dealer said that was going to be sales tax exempt whereas if you bought that same Canada wd 40 and said you were going to put in the shop to bust loose some rested bolts.
[00:18:15.420]Austin Duerfeldt: That one didn't have a direct use and so that wasn't what was getting charge sales tax, and so the question was well how do you deal with you know most farmers by wd 40 by the case I going to deal with you know, having 12 cans, in case.
[00:18:30.150]Austin Duerfeldt: The example that department of revenue gives on their informational guide.
[00:18:35.670]Austin Duerfeldt: deals with baling wire twine and net rap so the baling wire twine and net rap is not agricultural machinery and equipment it's just part of that equipment as utilized by the machine.
[00:18:50.670]Austin Duerfeldt: And so it really depends on what the intended uses for those farmers that are looking to bail a product and not sell it and just use it themselves or for somebody that's buying it to do custom bailing work.
[00:19:07.380]Austin Duerfeldt: Those are both examples of where that item is going to be taxable.
[00:19:12.630]Austin Duerfeldt: If you are buying buying that baling wire and putting in a baylor and the subsequent result is you're going to go out and bail some your own crop and you're going to sell it and ship it down to Texas.
[00:19:27.210]Austin Duerfeldt: That sale is going to be exempt if you're reselling the crop.
[00:19:32.370]Austin Duerfeldt: That baling wire and twice and it's going to be exempt at that point.
[00:19:38.100]Austin Duerfeldt: What what this kind of boils down to for.
[00:19:42.150]Austin Duerfeldt: dealers and retailers and individuals is we'll start with the dealers and retailers, the most straightforward solution, I can give you is is based on.
[00:19:54.030]Austin Duerfeldt: What the purchaser says and receiving a forum 13 go ahead and complete the transaction and sales tax exempt if they say they are sales tax exempt.
[00:20:06.840]Austin Duerfeldt: Many retailers and dealerships have associations they're probably going to provide guidance i'll dig deeper into this but, in general, if a retailer sold an item sales tax exempt based on the information given by the purchaser and collected a completed form 13.
[00:20:24.270]Austin Duerfeldt: The following the penalty is on the purchaser for improperly filing a form 13 and for individuals, basically, what that means is, if you improperly file a form 13.
[00:20:34.950]Austin Duerfeldt: The penalties either going to be $100 or 10 times the amount of the tax whichever is greater so if you're already running numbers in your head if you've got a $30,000 skits your loader and you're getting five and a half half percent sales tax.
[00:20:51.360]Austin Duerfeldt: And then you take that times 10% for improperly filing you're getting to talking about a pretty big chunk of change if you're getting something sales tax exempt for you should pay sales tax.
[00:21:04.140]Austin Duerfeldt: For farmers and ranchers really the thing that I would recommend is kind of a three step process, the first thing I would do bar none is again have this six dash.
[00:21:15.030]Austin Duerfeldt: informational guide printed out and have it in your office and the first thing I would do is go down through the list and see if the item that i'm looking to purchase is already directly listed as exempt or non exempt based on the guidance from the nebraska department of revenue.
[00:21:33.210]Austin Duerfeldt: If I go through that list and they don't have guidance on the particular item that i'm looking at.
[00:21:40.470]Austin Duerfeldt: Then you start having to go through and trying to decipher well what am I going to use this piece of equipment for and see if you can find an instance where you have direct use definition.
[00:21:54.210]Austin Duerfeldt: If I get done with the second step and I still don't know whether or not i've got something concrete for direct use.
[00:22:02.130]Austin Duerfeldt: What I did when I was counting treasure.
[00:22:05.310]Austin Duerfeldt: And what I would still recommend for anybody that's got questions.
[00:22:09.930]Austin Duerfeldt: don't be afraid to go ahead and call the nebraska department of revenue and has to speak with a sales tax representative.
[00:22:16.500]Austin Duerfeldt: they've dealt with this enough that they know questions to ask, in order to figure out whether or not something's going to meet the definition or not, and it beats having a penalty of you know, four or $5,000 on an item, where I should have paid sales tax and I didn't.
[00:22:36.150]Austin Duerfeldt: The next thing that you're going to find in the chat box for a link is a link to form 13 and again just for reminder all these links are going to be provided on the farm w and l.edu website, along with this recording but with this web link on this forum.
[00:22:54.930]Austin Duerfeldt: This is something that if you're just starting out and even if you've been operating for a few years.
[00:23:00.750]Austin Duerfeldt: I still highly recommend partially filling out a form 13 and printing out five or six of these and putting them in your glove box.
[00:23:08.460]Austin Duerfeldt: That way, when you do go to a new dealer or a retailer fear going to an auction, you have the form that you need to provide, in order to get that sales tax exemption at that time of purchase.
[00:23:21.840]Austin Duerfeldt: And so that kind of covers the informational guide six dash 368 and that guide also covers how to fill out form 13 if you've got questions on that, but that covers the agricultural sales tax portion of it but there's a few other things that I do want to touch base on.
[00:23:41.130]Austin Duerfeldt: And those we're going to kind of run through here right quick, the first one that we're going to talk about is dealing with services.
[00:23:52.050]Austin Duerfeldt: So with services again this is kind of one of those issues where it depends on what the intended uses or what what's being purchased for.
[00:24:02.940]Austin Duerfeldt: The length i've provided sent you to the farm and revenues frequently asked questions, which is something that again I received some of these questions from time to time.
[00:24:12.840]Austin Duerfeldt: And for starters, one of the ones that I probably run into the most is when you're hiring a pest control service to come and do work, and so, if i've got a livestock operation and i've got a rat problem and i'm trying to get that under control and handled.
[00:24:29.910]Austin Duerfeldt: Depending on exactly what i'm what i'm hiring that pest control service to do and where i'm hiring him to do it it's going to decipher whether or not this item should we charge sales tax or not.
[00:24:42.510]Austin Duerfeldt: And so, if I go out and I hire a firm to come in to do pest control around migraine storage units and my livestock facilities.
[00:24:50.760]Austin Duerfeldt: That service is going to be sales tax free.
[00:24:55.020]Austin Duerfeldt: If the pest application is made on the farm, but not specifically on land use for commercial agriculture those applications are taxable.
[00:25:05.550]Austin Duerfeldt: And so it can get a bit confusing when you're trying to do a whole farm application, what exactly is and what isn't going to count in terms of that tax free versus tax status.
[00:25:19.740]Austin Duerfeldt: Another one in this is more probably on a Community level is for.
[00:25:25.050]Austin Duerfeldt: Car washes, believe it or not.
[00:25:28.230]Austin Duerfeldt: If a non for profit group wants to go out and conduct a carwash to try and raise funds for a project that they have deemed necessary or or what their what their organization strives to accomplish.
[00:25:43.170]Austin Duerfeldt: They can conduct a carwash that is sales tax free, but in order for it to be sales tax free, it has to be a free will donation.
[00:25:52.440]Austin Duerfeldt: If they're conducting a car wash, for they have a set fee cost you $9 to have us wash your vehicle.
[00:25:59.490]Austin Duerfeldt: That is going to require sales tax to be collected.
[00:26:04.440]Austin Duerfeldt: Churches, on the other hand, can conduct a carwash that is sales tax free, even if they have a set fee, and there are some rules i'm going to touch base on a little bit later when we get down to auctions that explains why.
[00:26:19.350]Austin Duerfeldt: The last kind of one that you run into is school groups raising money for school functions, whether that be a band trying to raise money for a trip to Florida wherever they might be going those items are not taxable, even if they set a specific charge.
[00:26:37.110]Austin Duerfeldt: The next section that I want to cover that deals with.
[00:26:44.490]Austin Duerfeldt: occasional sales and this is one that I think is kind of misunderstood at some points in time when i'm having conversations with people occasional sales.
[00:26:54.900]Austin Duerfeldt: it's key to remember that this includes equipment used productively and listed as an appreciable capital asset for at least one year if you're talking about a business looking at it.
[00:27:05.670]Austin Duerfeldt: In terms of a personal side of things, you can sell personal effects and household goods and fall onto the occasional sale.
[00:27:15.090]Austin Duerfeldt: But that sale needs to occur at a personal residence it doesn't have to necessarily be my residence, it could be a situation where my answer is having a garage sale and I just go and put some my stuff on it, or it needs to be an online auction.
[00:27:29.310]Austin Duerfeldt: Based on the guidance, it can it can occur for no more than three days in a calendar year, and so I could have a spring garage sale, and I could have a fall garage sale, but I can't be having your garage sale every other week.
[00:27:43.920]Austin Duerfeldt: The other key thing is those sales are not supposed to be including business property and so, if i'm thinking that I want to go out and have a garage sale and let's say my significant other cells pampered chef for a tupperware or some sort of a.
[00:27:57.810]Austin Duerfeldt: baking line that you sell through the home.
[00:28:02.190]Austin Duerfeldt: We can't technically be putting some of the the display items or the discounted items that we no longer need for promotions on the sale those items should not be part of what i'm listing on a garage sale as an occasional sale, because those were business type items.
[00:28:26.910]Austin Duerfeldt: The next section in the next length and want to provide for you is dealing with auctions the good news with dealing with auctions and talking about, that is, for the most part auctions are fairly straightforward.
[00:28:40.860]Austin Duerfeldt: Some of the more common types auctions we're going to run into our state's farms, religious and non for profits.
[00:28:49.080]Austin Duerfeldt: With most auctions what you have is a situation where, if you have an auctioneer conducting or assisting for under hire her for hire under contract.
[00:29:01.500]Austin Duerfeldt: That sale is going to be taxable.
[00:29:05.310]Austin Duerfeldt: And this even includes items such as gift baskets but gift to master gift certificates are actually exempt and, if you think about that one.
[00:29:14.280]Austin Duerfeldt: The gift certificate is going to get charged sales tax at the time the recipient goes in actually utilizes that gift certificate but gift baskets our sales taxable FA auctioneer is assisting or conducting that for under higher contract.
[00:29:30.090]Austin Duerfeldt: The exception to the auctioneer role is with religious organizations.
[00:29:36.030]Austin Duerfeldt: And this goes back to that carwash conversation that we were having a little bit ago religious groups can hold one sale, that is not taxed, even with the assistance of an auctioneer.
[00:29:48.840]Austin Duerfeldt: The key guidelines behind that is the sale, must be a regular activity of the group and last, no more than three consecutive days and so going back to that carwash.
[00:29:59.070]Austin Duerfeldt: If the church normally has a carwash to raise funds, whether that be for the children's group or something of that nature and it doesn't lasting longer than three days that's why that one's classified as sales tax exempt even if they're charging a fee.
[00:30:16.170]Austin Duerfeldt: In terms of auctions again they can have an auctioneer running it, but the items on the auction need to be donated to the church and so, if i'm going to go and i'm going to put items on there, whether that be tools or something else.
[00:30:33.150]Austin Duerfeldt: Technically i'm donating those to the church and then the churches and one auctioning those off, I can just have things listed on the sale.
[00:30:41.850]Austin Duerfeldt: At the church again dusting, but I still maintain ownership of it.
[00:30:48.060]Austin Duerfeldt: vehicles and trailers on auctions are going to be taxed, regardless of where it's at.
[00:30:53.640]Austin Duerfeldt: But the collection of that is going to be at the time registration, so you won't pay sales tax on that when you buy from the auctioneer you're going to pay sales tax on that when you go and talk to your accounting treasure.
[00:31:06.720]Austin Duerfeldt: For those going to auctions, make sure again you're providing a forum 13 to the auctioneer generally that's either at the time of bitter registration.
[00:31:16.770]Austin Duerfeldt: Or at the time of closing your bidding number just talk to the auctioneer team, when you arrived is find out how they operate and handle that.
[00:31:25.230]Austin Duerfeldt: One last bit of information I don't run into this a lot, but if you're at an auction, and there is a situation where.
[00:31:33.180]Austin Duerfeldt: Part of the condition of the sale is delivery out of state and so let's say that you're along the border and it could be on the North end without decoder on the South end with Kansas for examples.
[00:31:44.850]Austin Duerfeldt: But if I buy something on an auction and part of the conditions is after the sale they're going to deliver X item to a farm down in Kansas.
[00:31:56.190]Austin Duerfeldt: That sale does not.
[00:32:00.210]Austin Duerfeldt: apply for sales tax in nebraska.
[00:32:07.980]Austin Duerfeldt: next topic that I kind of want to touch on is one that.
[00:32:13.050]Austin Duerfeldt: I would probably say most of us can be accused of at some point or another, and this deals with us stacks us tax is is nothing more than sales tax paid at a time, other than the time of purchase.
[00:32:28.620]Austin Duerfeldt: And so, commonly what we ran into back in like 22,007 2010 was a lot of people are going online and buying things off of eBay and Amazon or wherever else they might be looking at and that item should have been charged sales tax, but the online retailer wasn't collecting it.
[00:32:49.350]Austin Duerfeldt: Just because sales tax wasn't collected at the time of purchase if the item should have been charged sales tax.
[00:32:56.550]Austin Duerfeldt: Technically it's up to that purchaser, the individual to remit that tax to the State through use tax.
[00:33:04.710]Austin Duerfeldt: The state has two different ways for individuals three Meg use tax to the state.
[00:33:09.900]Austin Duerfeldt: The first option that you have is during your annual federal and state income tax filing what everybody's doing right now I would hope it is you can utilize line 41 on the nebraska individual income tax return form.
[00:33:26.970]Austin Duerfeldt: and basically if you're going to use that method what you're doing is throughout the year let's say I went and made 13 purchases online.
[00:33:36.240]Austin Duerfeldt: In all of them mounted to maybe there was a $7 sales tax item here and $41 sales tax item there.
[00:33:44.730]Austin Duerfeldt: i'm going to lump those 13 or so purchases and report, those on.
[00:33:52.260]Austin Duerfeldt: One filing with the seed nebraska.
[00:33:55.530]Austin Duerfeldt: The other option that you have, and this is probably a more of a case by case basis is, you have the option to file a form three nebraska and local individual use tax return.
[00:34:08.040]Austin Duerfeldt: And what that does is again basically it's more of if I went out and I bought a skid steer and I should have been charge sales tax and I wasn't.
[00:34:16.620]Austin Duerfeldt: I can go and file this and remit sales tax and then I will have to do it later on, I can get it done taken care of in a more expedient manner.
[00:34:30.210]Austin Duerfeldt: What this all requires is a lot of time and a little bit of digging in order to do this if you're going to do it.
[00:34:36.180]Austin Duerfeldt: i'm saying nebraska has an example that's very similar to what i'm going to give you right now but let's just say that I went out and I purchased online some gifts for my five cousins on my mom's side.
[00:34:49.290]Austin Duerfeldt: And let's say that the online retailer that I purchases from did not charge me any sales tax, but they should have and so i'm technically and legally required to remit that amount to the state.
[00:35:04.920]Austin Duerfeldt: And so, how do I go about doing this well i'm going to have to actually calculate out the amount to remit to the state, along with attaching some special code, so the state knows.
[00:35:14.490]Austin Duerfeldt: What city or county these funds need to be remitted to.
[00:35:20.880]Austin Duerfeldt: And so again, as I mentioned i've got five cousins here if two of them live and fall city, I want to have to calculate and remit tax based on faulty sales tax rates for two of them.
[00:35:35.400]Austin Duerfeldt: On one of them i'm gonna have to figure it on unincorporated nebraska sales tax rates are basically they live out in a rural area and they don't have a county or city sales tax so they've just got state sales tax if they have to handle.
[00:35:48.660]Austin Duerfeldt: On the fourth one they live in Gothenburg and so i'm going to have to calculate out what the sales tax rate is in Gothenburg and attached to the special codes that go along with.
[00:35:58.950]Austin Duerfeldt: That city and then the fifth one lives in iowa and again just like what we were talking about what the auction in terms of delivering out of state that sales tax exempt or that item is being shipped to iowa.
[00:36:14.220]Austin Duerfeldt: That purchase going to be sale, sex, except for nebraska I won't have to remeeting sales tax for the cousin I ship something to an iowa.
[00:36:23.130]Austin Duerfeldt: nebraska department and revenues website that I linked has a PDF that lists the sales tax rates for different towns, along with the codes needed to complete the form 1040 in are the forms three.
[00:36:38.970]Austin Duerfeldt: If you are using a 1040 in and you expect your tax repair to handle it for you you're probably going to at bare minimum need to provide the amounts and the cities that are tied to those transactions.
[00:36:56.850]Austin Duerfeldt: The last bit information, I want to provide maybe this will be a little bit more uplifting than the things that i've been talking about is I got two links in this one The first one is for agricultural specific the other one is for general, but these two links.
[00:37:14.160]Austin Duerfeldt: Are for how you claim refunds.
[00:37:17.580]Austin Duerfeldt: And this is typically something that I see when.
[00:37:21.660]Austin Duerfeldt: Maybe I went out of town and I went and purchased a bunch of building supplies and had them delivered to my my property and rural fall city.
[00:37:32.910]Austin Duerfeldt: And they charged me the local city tax rate instead of charging me my places tax rate because based on nebraska law has point of delivery.
[00:37:44.400]Austin Duerfeldt: And so they should have been charging my unincorporated rate they charged me the city rate and so we've got discrepancy there and I would charge too much sales tax.
[00:37:55.530]Austin Duerfeldt: Rather than creating a scene and having an unnecessary argument with a cashier retailer that may or may not have the power to corrected or fix it.
[00:38:06.450]Austin Duerfeldt: As long as I go and I collect a detailed receipt and other documentation about the transaction, the fact that it was being shipped to my location and the address if the amount is.
[00:38:20.070]Austin Duerfeldt: $2 or more I can have that amount.
[00:38:26.490]Austin Duerfeldt: refund it to me.
[00:38:29.310]Austin Duerfeldt: In case you missed it, I went ahead and pop it back in the chat the agricultural exemption link is there in the chat for now i'm going again i'll have all these links on the farm, you know website when we posted a recording of this webinar.
[00:38:45.480]Austin Duerfeldt: So that kind of covers the surface layer of sales and use tax in nebraska.
[00:38:51.150]Austin Duerfeldt: There are resources available online, the last time that I had a discussion with a representative for the nebraska department of revenue.
[00:38:59.340]Austin Duerfeldt: They aren't necessarily looking to do in person trainings anymore they're working towards building a more robust educational tool on their website, and so I would highly recommend again just like I mentioned, having that six test 368 informational guide bookmarked or printed out.
[00:39:19.800]Austin Duerfeldt: Having just the general nebraska department of revenue website may be something that's beneficial if you deal with a lot of sales tax issue items.
[00:39:29.460]Austin Duerfeldt: With that we've got about.
[00:39:32.790]Austin Duerfeldt: What are we at like 20 minutes or so that I am open for questions and we can discuss and talk about different items and maybe walk through some things to somebody who's got something in particular, they want to talk about.
[00:39:43.890]Jessica Groskopf: So again, if you have questions for Austin we're going to hang on here for a minute we've got 15 to 20 minutes you can go ahead and drop those questions in the chat box or in the Q amp a.
[00:39:57.600]Jessica Groskopf: So again, if you have questions, please include them in the chat box or in the question and answer feature both which can be found at the bottom of your screen.
[00:40:09.060]Jessica Groskopf: And just as a reminder this recording will be placed online at farm w and l.edu backslash webinars at that website, you can see all of our past recordings, as well as a schedule of future webinars and we do them every Thursday at noon central time.
[00:40:36.780]Jessica Groskopf: So again, if you if you have questions, please go ahead and include them in the chat box.
[00:40:57.690]Jessica Groskopf: Alright i'm not seeing any questions come through the chat box so Austin we want to thank you for your knowledge and your time for sharing with us and reminding us about this very important topic again this webinar is being recorded and will be placed online at farmed@ul.edu and.
[00:41:17.040]Jessica Groskopf: We do actually have one that came in so Austin in the chat says, if a producer purchases a whole bunch of different things, some exempt stuff not.
[00:41:26.940]Jessica Groskopf: Is it up to the retailer to know which ones are exempt and charge accordingly.
[00:41:33.150]Austin Duerfeldt: So my comments on that is, in general, what you're going to find is probably depends on the scale of what the retailer has been most retailers will have built into their system, whether or not something is exempt and so again in general, even if I go and I purchase.
[00:41:52.440]Austin Duerfeldt: A handful of things.
[00:41:55.140]Austin Duerfeldt: I would say the retailer is probably 80%.
[00:41:59.070]Austin Duerfeldt: going to have that correctly marked as long as they know that you're purchasing is seeing it for an exam time and have a form 13 if they do, perhaps miss something and that happens, I mean i've probably filed maybe five or six different refund claims and and i'm not that old yet.
[00:42:20.550]Austin Duerfeldt: If you do have something where you go through, and you have paid sales tax and they just flat out missed it that's where that refund form comes in, and you can supply that receipt and whatever other information is required in order to get the correct sales tax amount.
[00:42:36.990]Austin Duerfeldt: We can do you can go ahead and get that refund it does take a little bit of time it's not something that I would say, if you send in a refund form you're going to see that money in a week.
[00:42:47.580]Austin Duerfeldt: middle have to be reviewed and then go through the payment processor to stay in nebraska so it might take you up three to three weeks to a month in order to see that money coming back.
[00:42:57.570]Austin Duerfeldt: But they will get through, and if there are issues generally you can talk to a representative or or resubmit the claim based on whatever information they found lacking.
[00:43:11.940]Jessica Groskopf: So ginger Wilson does have her hand up and ginger you're now able to talk, if you want to go ahead and ask your question live.
[00:43:22.860]Ginger Willson: i'm sorry I don't know why my hand is raised.
[00:43:28.830]Ginger Willson: appreciate listening sorry.
[00:43:31.050]Jessica Groskopf: Not a problem, thank you very much, all right, there is another question in the chat box and it says, how do we register our truck as farm.
[00:43:41.550]Austin Duerfeldt: Okay, so.
[00:43:44.280]Austin Duerfeldt: This takes me back to the good old calories right here days i'm registering something as a farm track.
[00:43:51.810]Austin Duerfeldt: Is is fairly simple in my county basically just had to inform us assess what you were doing we didn't necessarily argue and again it kind of falls down to that conversation of when I mentioned earlier, if you improperly file a form 13 with a.
[00:44:10.500]Austin Duerfeldt: retailer it wasn't the retailer's job to enforce whether or not you should have received that exemption.
[00:44:17.490]Austin Duerfeldt: it's kind of the same way with registering a truck if you tell the county treasurer that this truck is going to be registered as a farm checks i'm using it on a farm to do livestock and other things.
[00:44:30.540]Austin Duerfeldt: They should go ahead and process that the comment that I would make is.
[00:44:35.670]Austin Duerfeldt: Tom and maybe i'll go ahead and include that in the links for the recorded webinar because I don't have the link right in front of me but.
[00:44:43.230]Austin Duerfeldt: The definition of farm use is something that I would highly recommend there were some issues that I hadn't Richmond county back when I was treasure of.
[00:44:53.310]Austin Duerfeldt: Individuals registering things as farm use and then let's say I register a truck is farm use.
[00:44:58.680]Austin Duerfeldt: And I was driving back and forth to my nine to five job in town technically that's going to disallow that as being registered as far.
[00:45:07.170]Austin Duerfeldt: As when I talked to JESSICA got it there in the chat, but when when I generally talk to the individuals about why they want to register and farm and your your.
[00:45:17.310]Austin Duerfeldt: reasoning might be different, but generally what they were doing is they were trying to build a case to apply that vehicles costs to the schedule F and and my comment is that's that's a.
[00:45:30.270]Austin Duerfeldt: I don't want to say inappropriate but that's an unnecessary process in order to take something on a schedule, if I can have a.
[00:45:39.150]Austin Duerfeldt: Personal vehicle car I could go out and buy a hyundai elantra and have that expensed on my farm account if i'm using that vehicle driving back and forth to.
[00:45:49.380]Austin Duerfeldt: savannah Missouri to get parts for a planner that I have i'm just just having it licensed as a specific type doesn't necessarily mean that it is deductible on a schedule if there's more to it than, then you don't have to necessarily license it as such to get there.
[00:46:10.770]Jessica Groskopf: Alright, our next question comes from the Q amp a and just as a reminder, we do still have some time, so if you have questions, please put them.
[00:46:18.270]Jessica Groskopf: either in the chat box or in the Q amp a feature, and the question is, if I hall scrap metal from my farm said clean up to a metal recycling facility and get paid for it and I required to pay sales tax.
[00:46:35.670]Austin Duerfeldt: I would probably tell you that that would be one that I wouldn't end up needing to call department of revenue on my my initial thought would be.
[00:46:49.590]Austin Duerfeldt: My initial thoughts probably going to be yes, just because i'm not sure where you're going to provide the direct us from.
[00:46:58.560]Austin Duerfeldt: That that's probably going to be the key feature that department of revenue starts digging on to try and figure out and going back to that pestis.
[00:47:06.240]Austin Duerfeldt: pesticide applicator one you know if i'm trying to kill rats that are in a feed bunk I can directly show or that's tied to the commercial agricultural production of that livestock.
[00:47:19.530]Austin Duerfeldt: Picking up and hauling scrap metal I struggled to see where you're going to find that direct use connection from most most of the scrap metal that I run into, and that I see.
[00:47:31.230]Austin Duerfeldt: is generally outside of the farm shop and a pile not necessarily tied to a piece of ground that's actually being used for production.
[00:47:40.830]Austin Duerfeldt: And so, again, I can provide a phone number to nebraska department of revenue on on the links at farmed out, you know about you, to you, afterwards, but that would be one where I would go ahead and.
[00:47:54.030]Austin Duerfeldt: and call and talk to them about.
[00:47:57.060]Austin Duerfeldt: Can you give us a full list of regulations associated with farm exemptions i've only found two.
[00:48:03.390]Austin Duerfeldt: Yes, if.
[00:48:05.550]Austin Duerfeldt: Again, that first link that I put in there that Chapter one is technically the full listing of sales tax laws if you scroll down through the list, they will actually get to the sales tax portion of.
[00:48:19.980]Austin Duerfeldt: um agricultural exemptions, but I can definitely go ahead and get get that and make sure that's on the list of things for the farm, you know.
[00:48:28.980]Austin Duerfeldt: list of websites take a look at afterwards.
[00:48:37.350]Jessica Groskopf: i'm not seeing any other questions in the chat, so this is a last call for questions, while there may be thinking about those Austin any final thoughts from you.
[00:48:49.440]Austin Duerfeldt: um it's you know it's one of those things that it really depends, and you just kind of gotta take.
[00:48:56.070]Austin Duerfeldt: The approach it with the mindset that i'm going to go through and be constructive about it and there's I know i've run in some individuals before where.
[00:49:06.750]Austin Duerfeldt: They just started trying to make up processes in order to find a direct use correlation.
[00:49:13.260]Austin Duerfeldt: And if you ever get audited I would tell you that that's probably going to be a problematic approach to take to this, and so, when you're running through this if you've got a Gray Gray area item that you're trying to to find whether or not they should be sales tax or sales tax exempt.
[00:49:31.200]Austin Duerfeldt: You know, make a list of the processes that you literally will be using this item for and then try and see if there's a direct correlation based on that.
[00:49:43.620]Jessica Groskopf: All right, one came in on our last call, and it was can you send a list of all the exemptions on purchases.
[00:49:55.440]Austin Duerfeldt: The list of all the exemptions on purchases are and hopefully you're so on, are you wanting equipment wise, are you wanting more service wise which which lists are you looking for.
[00:50:14.940]Austin Duerfeldt: And maybe it's just both we could just do both the service wise, my comment would be there's not necessarily a defined list the list for exempt items for agricultural why's that is part of that.
[00:50:35.010]Austin Duerfeldt: PDF and I can go ahead and because i've got that pulled up right now I can go ahead and repost that but that's on page.
[00:50:43.230]Austin Duerfeldt: seven and eight what you're going to find is in its I would say it's a fairly comprehensive list because it gets into again I brought a.
[00:50:52.140]Austin Duerfeldt: Min hydrates applicator not and hydrostatic games, but in Hydra trailers all the guys right now are starting to pull those that was a big issue, and I was counting treasure so whether or not those tech related to be licensed that is actually listed now as a.
[00:51:06.270]Austin Duerfeldt: exempt item, along with crop dusting planes.
[00:51:10.710]Austin Duerfeldt: Some of the miscellaneous items like GPS units, those are exempt only the portion that attaches to the agricultural machinery and equipment, though classifies I just exempt.
[00:51:22.440]Austin Duerfeldt: And so, this the length I provide there in the chat takes you to the PDF and that PDF has that list on page seven and eight that will give you a again fairly comprehensive list, the one thing that I will point out about that list, though, is.
[00:51:39.000]Austin Duerfeldt: While this informational guide is a.
[00:51:43.320]Austin Duerfeldt: binding document to nebraska department of revenue until amended, you will notice when they have this list of items that are sales tax exempt.
[00:51:52.950]Austin Duerfeldt: They put the word in there that says can and so just because they've got something listed on here that it should be sales tax exempt doesn't necessarily mean that when they do an audit and they start looking at specific piece of equipment.
[00:52:09.780]Austin Duerfeldt: They might try and go about it and say, well, we don't see the actual direct to use of it and even though it's listed as something exempt you didn't meet the the requirements under the definition of using it for that purpose.
[00:52:24.840]Austin Duerfeldt: And so again it's a fairly comprehensive list, but just because it's on the list doesn't necessarily mean as 100% guaranteed you still got to be able to prove that you are using that for a direct to use purpose.
[00:52:40.410]Jessica Groskopf: awesome well, thank you Austin and thank you, everybody for joining us today a recording of this webinar will be posted at farmed out, you know that EDU.
[00:52:49.350]Jessica Groskopf: where you can also register for other upcoming webinars make sure you join us next week for one of probably our most popular webinars of the year.
[00:52:58.380]Jessica Groskopf: And that will be the release of the preliminary results of the nebraska farm real estate survey for the.
[00:53:05.370]Jessica Groskopf: Crop year again next Thursday is the release of the preliminary results for the nebraska farm real estate survey.
[00:53:12.900]Jessica Groskopf: As a reminder, you will be receiving a short survey in your email, and we would really appreciate your feedback on today's webinar as well as input on future sessions Thank you again for joining us.

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Nebraska Sales Tax and Exemptions for Agriculture (March 11, 2021 Webinar)

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