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BA Deere
Honored Advisor

Sales tax on grain bins.

Heard from a reliable source that some bin builders haven`t been charging sales tax.  And now in their search for revenue for funding, there may be a 10 year clawback for these taxes, one builder would owe $2 million in uncollected sales tax.....ouch!

 

A past customer might get a letter from that builder..."Ah yeah, you know that $100,000 bin that we put up for you 3 years ago?....well, oooops we kinda forgot to charge you sales tax. so could you send us a $7,000 check...please?".  

 

On the one hand, those builders not charging tax could have a lower bid than those that were charging tax.  And it`s funny that there is sales tax on grain bins, there isn`t on machine sheds or barns..  I mean, you put grain in the bin, they can`t be used to store your boat in, they are total farm use, yet taxed?

 

http://www.iasourcelink.com/docs/default-source/webinar-docs/iowa-agriculture-tax-webinar.pdf?sfvrsn...

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3 Replies
hardnox
Advisor

Re: Sales tax on grain bins.

Interesting. I've never paid tax on a bin.

 

The same logic would seem to apply to single purpose livestock facilities- or if not, why?

 

I imagine that if the corporate livestock sector in Iowa realizes that it would mean they'll have to pay another .20 per hog to get people to contract with them they'll get that changed right quick.

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Red Steele
Veteran Advisor

Re: Sales tax on grain bins.

I believe the criteria in MN is whether the bin is being used for production ( ie storing corn that is going to be fed) or if the bin is being used to store corn, hoping for a price increase. Drying corn, I believe is also exempt, as is holding bins for drying corn.

 

So, depending on your argument, most of the corn drying equipment is exempt as a type of ag production, but when you get into storing corn (competing with commercial storage) the state (at least here in MN) wants some sales tax on it.

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BA Deere
Honored Advisor

Re: Sales tax on grain bins.

That`s exactly right Red.  This is a can of worms that was opened by a do-gooder politician looking for funding for his big spending plans.  If this clawback of 10 years is pushed that will put some bin dealers out of business.  Those dealers that have been charging tax all along will now feel they`ve been at a unfair advantage and they have.

 

I don`t think anyone was purposely avoiding that sales tax, it probably wasn`t on their radar.  They assumed a farmer buying a bin, that`s for his opperation, it isn`t like he could put up a bowling alley in it or use it for recreation.  So like the grain drying and handling equipment that IS exempt, the bin mistakenly fell into that category as well.

 

I have a feeling that there`s alot of other gray areas in the state sales tax exemption and I`m not going to be the one to mention them in public, but i`m thinking Smiley Happy

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