Tax Exempt

[strum456]

Does anyone know how I would go about getting a tax exempt number in Pennsylvania?

We have been wasting money for years paying tax on farm supplies. Is it a difficult process? After more than an hour of searching on the net, I was able to find a list of taxable and non taxable items. I also learned that farmers need not provide a tax ID number for exempt purchases. This, in itself is confusing to me. So, I don't really need a tax number? If that is the case, why do so many stores require that I provide a tax number?

 

[HarryN]

Just go to your local tax accessors office.

 

[SPIKER]

When I buy stuff for the farm, (usually at the farm store) all I do is provide my SS on form at checkout & sign saying for farm... That is the Ohio version but think PA might be similar...

M

 

[japody]

Here's the info you need:

http://www.revenue.pa.gov/FormsandP...sinesses/Documents/Sales-Use Tax/rev-1729.pdf

 

[strum456]

Here's the info you need:

http://www.revenue.pa.gov/FormsandP...sinesses/Documents/Sales-Use Tax/rev-1729.pdf

Yes, that is the document I was referencing in my OP. From what I can gather from this document, I don't need a license. Maybe all I need to provide is my SSN, as Spiker mentioned. The farm store is the worst for me. I always have to pay tax there. They ask for my ID and will not exempt me with out it. Some places just make me sign a form, but an ID is not needed.

Here are a few excerpts from the site in Japody's post.

Persons Required to be Licensed: Every person,
association, fiduciary, partnership, corporation or
other entity engaged in making taxable sales of
tangible personal property or services must be
licensed with the department. Sales include leasing
or renting of tangible personal property and the
rental of hotel rooms.

I don't make taxable sales. We sell hay.

TAX EXEMPTION CERTIFICATES
When purchasing items of tangible personal property
or services that are considered tax exempt, the
farmer must complete a PA Exemption Certificate
(REV-1220) for the supplier. Farmers are not
required to obtain a sales tax license number or
submit a sales tax license number to a supplier
prior to receiving a sales tax exemption on purchases
of tax-exempt tangible personal property
directly used in farming operations. One exemption
certificate may cover several purchases.


The bold statement above tells me that I don't need a tax ID number. Is Tractor Supply wrong in making me give them a tax number?

 

[JamesHW]

My place is in NY State, but a quick search found that you should present a filled out REV-1220 PA Exemption Certificate

The info here states: Using the REV-1220, exemptions from tax can be claimed because: ...the property or service is being directly used in manufacturing, mining, dairying, processing, farming and/or shipbuilding;...

Here is another PDF (page 5) that cover the need for a tax exempt number: TAX EXEMPTION CERTIFICATES When purchasing items of tangible personal property or services that are considered to be tax exempt, the farmer must complete a PA Exemption Certificate (REV-1220) for the supplier. Farmers are not required to obtain a Sales Tax license number or submit a Sales Tax license number to a supplier prior to receiving a Sales Tax exemption on purchases of exempt tangible personal property directly used in farming operations. One exemption certificate may cover several purchases.

Note that vendors are not required to accept the 1220 form: The vendor is not required to accept the Exemption Form. In the event a qualified business is denied exemption from Sales and Use Tax, the business will be required to pay the tax and petition for refund with the Board of Appeals.

I suggest prepare a stack of the forms partially filled out with your information typed in and check the applicable boxes when purchasing and present the form at the store.

 

[motownbrowne]

Does anyone know how I would go about getting a tax exempt number in Pennsylvania?

We have been wasting money for years paying tax on farm supplies. Is it a difficult process? After more than an hour of searching on the net, I was able to find a list of taxable and non taxable items. I also learned that farmers need not provide a tax ID number for exempt purchases. This, in itself is confusing to me. So, I don't really need a tax number? If that is the case, why do so many stores require that I provide a tax number?

If you're a sole proprietor, your social security number may be considered your tax ID number, so you don't need a separate one... You do however need to be a "farmer", or at least be a "farmer" in the eyes of the IRS, which means you need to file a schedule F. There's some other guidelines too, that apply to small businesses, like they want to see you reporting a profit at least every few years. If you don't they'll consider your "farming" a hobby, the supplies for which are not tax exempt. If you already file a schedule F, you should be good to go.

By the way, I'm not a professional, and my advice shouldn't be taken as if I were, but I've done a fair amount of research on the subject.

 

[JamesHW]

I believe mtb is correct on the schedule F filing.

Here is an interesting publication from Penn State that lays out "Who is considered a farmer"

Hobby (Not-for-Profit Farming)

An activity is a hobby if it's primarily for fun, recreation, or sport without any intention of making a profit. Any income from a hobby farm is reported on the first page of Form 1040, U.S. Individual Income Tax Return under "Other income," not on Schedule F (Form 1040). Expenses of a hobby can only be deducted on Schedule A (Form 1040), Itemized Deductions. Furthermore, the IRS prescribes the order and method for taking hobby-related deductions and limits the amounts that can be taken. Ultimately, hobby losses can't be used to offset unrelated income.

The IRS will presume a farming activity is being conducted for profit if it produced a profit in at least three of the past five tax years, including the current year. (For equine operations, the presumption is two of seven years.) If the years-of-profit test isn't met, it doesn't automatically mean the activity is a hobby. Instead, IRS will consider other criteria in its determination, including the following:

Extent to which the activity is conducted in a businesslike manner
Time and effort spent on the activity
Taxpayer's dependence on income derived from the activity
Whether activity losses are due to uncontrollable circumstances or are typical for similar start-ups
A farmer's or their adviser's expertise and knowledge related to the activity
Expectation that assets used in the activity will appreciate in value
Taxpayer's success in carrying on similar activities in the past
Efforts to change methods of operation to improve profitability
Amounts of occasional profits from the activity, if any

No single factor indicates whether an activity is carried on for profit or not; all facts are considered.

 

[MossRoad]

Yes, that is the document I was referencing in my OP. From what I can gather from this document, I don't need a license. Maybe all I need to provide is my SSN, as Spiker mentioned. The farm store is the worst for me. I always have to pay tax there. They ask for my ID and will not exempt me with out it. Some places just make me sign a form, but an ID is not needed.

Here are a few excerpts from the site in Japody's post.

Persons Required to be Licensed: Every person,
association, fiduciary, partnership, corporation or
other entity engaged in making taxable sales of
tangible personal property or services must be
licensed with the department. Sales include leasing
or renting of tangible personal property and the
rental of hotel rooms.

I don't make taxable sales. We sell hay.

TAX EXEMPTION CERTIFICATES
When purchasing items of tangible personal property
or services that are considered tax exempt, the
farmer must complete a PA Exemption Certificate
(REV-1220) for the supplier. Farmers are not
required to obtain a sales tax license number or
submit a sales tax license number to a supplier
prior to receiving a sales tax exemption on purchases
of tax-exempt tangible personal property
directly used in farming operations. One exemption
certificate may cover several purchases.


The bold statement above tells me that I don't need a tax ID number. Is Tractor Supply wrong in making me give them a tax number?

When it comes to taxes, if you don't have a farm # you are not considered a farmer. God help you if the state or IRS comes a knocking and you don't have anything documented, don't have a farm #, and are purchasing things without paying taxes on them. Just my pinion, but that's how it appears.

 

[strum456]

When it comes to taxes, if you don't have a farm # you are not considered a farmer. God help you if the state or IRS comes a knocking and you don't have anything documented, don't have a farm #, and are purchasing things without paying taxes on them. Just my pinion, but that's how it appears.

We are operating a farm and that is why I am trying to figure out how to get a tax number, if we need one. It is hard enough to make a profit farming without paying tax where it isn't owed.