Agricultural Rotary Cutter Taxable in Arkansas

Jun 5th, 2019

The Arkansas Department of Finance and Administration (DFA) recently determined that a rotary cutter used in the production of cattle and chickens was taxable.

Generally, farm machinery and equipment are exempt from sales tax when "used exclusively and directly for the agricultural production of food and fiber as a commercial business."

Here, the taxpayer bought a rotary cutter and reported that they used it in the production of cattle and chickens, but it was unclear whether the rotary cutter was ultimately purchased exclusively for farming as a commercial business. The DFA was uncertain how a rotary cutter or mower could be used in the production of cattle and chickens. Therefore, the DFA determined the exemption did not apply because the taxpayer did not show that the equipment was used directly for the agricultural production of food and fiber as a commercial business.

https://www.ttrus.com/agriculture-in-arkansas