If you run a farm, you might wonder about the agricultural property tax exemption in Ohio. Generally speaking, the purchase of all products that are used for agricultural production are tax exempt. Statewide, sales tax is levied on all tangible personal property or services, unless there is another sort of exemption in place for those specific items. Farming counts as such an exception.
How Does Ohio Define Farming?
The state of Ohio defines farming as working the soil for the production of crops and the raising of farm livestock, bees or poultry as a business. Under the tax law, agriculture, horticulture and floriculture are also included in the definition of farming. This means that the production or growth of grain, vegetables, fruits, cattle, poultry, nursery stock, flowers or plants are all considered farming.
Ohio Sales Tax Exemption
As a farmer, you are likely eligible for an Ohio sales tax exemption. In most cases, any tangible personal property that is used for farming is considered exempt. This category includes anything that can be seen, weighed, measured, touched or perceived by the senses. Purchases of feed, tractors, fertilizer, insecticide or storage containers would fall under the tangible personal property category and are therefore not subject to sales tax.
However, what is known as real property is not exempt from sales tax. Real property includes land, buildings and anything that is fixed to the land. This category includes purchases such as single-use buildings, portable grain bins or items worked into real property, like lumber, nails or pipes.
Ohio Tax Exempt Form
In Ohio, it is the responsibility of farmers to obtain a certificate declaring their tax exemption. Without this, they will be charged sales tax as usual. The seller is required by law to collect sales tax and remit it to the state, so a tax exemption certificate must be presented at the time of the purchase.
To obtain an Ohio farm tax exempt form, a farmer should visit the Department of Taxation’s website. He will need either a Sales and Use Tax Unit Exemption Certificate (form STEC U) or a Sales and Use Tax Blanket Exemption Certificate (form STEC B). STEC U can be used if you are making a one-time purchase, while STEC B can be used if you plan to make multiple purchases over time from the same vendor.
In order to complete either STEC U or STEC B, a farmer must include her name and contact information, the reason she's claiming an exemption and the vendor’s information. The farmer must also sign the form. One reason a farmer might provide for an exemption could be that she will be using the products for agriculture, horticulture or floriculture. Though a vendor who is used to dealing with tax-exempt farmers might have some of these forms on file, it is the buyer’s responsibility to be sure she has the form and presents it at the time of sale.