TIP # 06A01-09
Electricity Used for Agricultural Purposes Becomes Exempt from Sales Tax
Effective July 1, 2006, electricity used directly and exclusively for the production or processing of agricultural farm products on a farm is exempt. This exemption only applies if the electricity is separately metered from the electricity used for non-production or non-processing purposes. If the electricity is centrally metered and the electricity is used for both tax-exempt and taxable purposes, the purchase of the electricity is subject to tax.
For purposes of this exemption, the following terms are defined:
Farmer means a person who is directly engaged in the business of producing crops, livestock, or other agricultural commodities. The term includes, but is not limited to, horse breeders, nurserymen, dairy farmers, poultry farmers, cattle ranchers, apiarists, and persons raising fish. (Section 212.02(28), Florida Statutes)
Agricultural production means the production of plants and animals useful to humans, including the preparation, planting, cultivating, or harvesting of these products or any other practices necessary to accomplish production through the harvest phase, and includes aquaculture, horticulture, floriculture, viticulture, forestry, dairy, livestock, poultry, bees, and any and all forms of farm products and farm production. (Section 212.02(32), Florida Statutes)
Processing means the act of changing or converting the nature of a product after it has been harvested. (Rule 12A-1.087(2)(g), Florida Administrative Code)
Examples of tax-exempt uses of electricity include electricity used to supply power to farm equipment used directly and exclusively in producing or processing agricultural products on a farm. Examples of production equipment include, but are not limited to, irrigation pumps, milking machines, potting equipment, feeding systems, aerators, and computerized monitoring equipment. Examples of processing equipment include, but are not limited to, conveyors, chillers, freezers, packaging equipment, and computerized processing equipment.
Other tax-exempt uses include electricity that is separately metered and used to supply power to greenhouses, poultry houses, dairy barns, horse stables, and processing facilities located on a farm.
If a farmer operates a retail facility in conjunction with a farming operation, the tax-exempt electricity used for production or processing operations must be separately metered from the taxable electricity used in the retail facility to qualify for the exemption.
Electricity consumed prior to July 1, 2006, does not qualify for the exemption, regardless whether the electricity is billed to the farmer after July 1, 2006.
To qualify for the exemption, the purchasing farmer must furnish the utility provider with an exemption certificate stating that the electricity will be used directly and exclusively for the production or processing of agricultural farm products on a farm. In instances where the utility provider accepts an exemption certificate in good faith, the Department will look to the purchaser for any applicable tax, penalty, or interest due. A suggested format of an exemption certificate is attached.
References: Section 19, Ch. 2006-289, L.O.F. Sections 212.02(28), (32), 212.08(5)(e), and 212.085, F.S. Rule 12A-1.087(2), F.A.C.
FOR MORE INFORMATION
This document is intended to alert you to the requirements contained in Florida laws and administrative rules. It does not by its own effect create rights or require compliance.
For forms and other information, visit our Internet site at www.myflorida.com/dor. Or call Taxpayer Services, 8:00 a.m., to 7:00 p.m., ET, Monday through Friday, excluding holidays, at 800-352-3671 or 850-488-6800.
Persons with hearing or speech impairments may call our TDD at 800-367-8331 or 850-922-1115.
For a detailed written response to your questions, write the Florida Department of Revenue, Taxpayer Services, 1379 Blountstown Highway, Tallahassee, FL 32304-2716.