Buying new tractor and and dealing with sales tax

[ktmpat]

I live in Maryland and have been looking at purchasing a new tractor. I was told by one dealer that I can reduce the out the door cost by simply stating I will be using the tractor for agriculture use. I'm not a farmer though I will be planting a small garden. I'm not sure if he is just trying to make a sale and I'll be in trouble later down the road with the state.

anyone have any suggestions?

 

[gamble77]

See who the responsibility falls on (you or the dealer) if the state does question it. Also, it sounds like you tractor will be used to grow some produce so you should be fine.

 

[SnowRidge]

Google your state's rules. Every state is different. Since Maryland is considered one of the ten tax *@lls, I would be very careful.

I would NOT simply take the dealer's word for it.

 

[ktmpat]

This is from the Maryland comptroller website, Maryland Sales and Use Tax - Agricultural Exemptions

Sales, including rentals, to a farmer of farm equipment used to raise livestock and poultry, prepare, irrigate or tend the soil, or plant, service, harvest, store, clean, dry or transport seeds or crops are exempt from the sales and use tax. Farm equipment is treated as personal property entitled to sales and use tax exemption even if attached to real property. Both replacement parts and components, including hydraulic oil, are also exempt.

 

[civesnedfield]

This is from the Maryland comptroller website, Maryland Sales and Use Tax - Agricultural Exemptions

Sales, including rentals, to a farmer of farm equipment used to raise livestock and poultry, prepare, irrigate or tend the soil, or plant, service, harvest, store, clean, dry or transport seeds or crops are exempt from the sales and use tax. Farm equipment is treated as personal property entitled to sales and use tax exemption even if attached to real property. Both replacement parts and components, including hydraulic oil, are also exempt.

I think this is the key to the whole thing. Typically most states consider a farmer, a person that earns 2/3 of their income from farming.

 

[RedRiver]

See who the responsibility falls on (you or the dealer) if the state does question it.

Agreed.

I know in Mississippi you have to file it on your income tax to get the farm tax. Dealers have a letter from the state that the customer has to sign agreeing that they file it on their tax. It used to be the dealers responsibility but thankfully they have changed it. There are some people who insist that they get the farm tax even when it's obvious they don't farm but I think it is stupid because the penalties aren't worth saving just a few hundred bucks.

 

[ktmpat]

Thank you all for your replies. The last thing I need is for the state to come back on me later.

 

[jeffinsgf]

Get with your conservation department and set aside a few of your acres for wildlife habitat. Now you're a farmer who is acting in the best interest of the land by not farming.

 

[CDsdad]

I found out what RedRiver said. Dealer said I was good for exemption because I was planting trees. I checked into it and the responsibility in MS is on the buyer. I paid the extra $900 tax because I've had personal dealings with the state tax commission. $900 is well worth it not to have to deal with that bunch of thieves again.

 

[tony123]

Just a month ago I was sitting at the tractor dealer making this same decision. I told him to make me exempt because I was doing a "Hobby Farm". Then, just before he finished up the paperwork, I changed my mine. I agree, the few hundred dollars is not worth the hassle or worry.