California Code of Regulations › Title 18 - Public Revenues › Division 2 - California Department of Tax and Fee Administration- Business Taxes (State Board of Equalization- Business Taxes, See Ch. 6 and 9.9) › Chapter 3 - Diesel Fuel Tax › Article 3 - Exemptions and Refunds › Section 1431 - Diesel Fuel Used on a Farm for Farming Purposes

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The following provisions and definitions apply for purposes
					 of the exemption from the backup tax pursuant to Revenue and Taxation Code
					 Section
					 60100(a)(5)(A),
					 and the refund of tax to the ultimate vendor pursuant to Revenue and Taxation
					 Code Section
					 60502.
(a) The term "used on a farm for farming
				  purposes" applies only to diesel fuel which is used (i) in carrying on a trade
				  or business of farming, (ii) on a farm in California, and (iii) for farming
				  purposes.
(b) A person will be
				  considered to be engaged in the "trade or business of farming" if the person
				  cultivates, operates, or manages a farm for gain or profit, either as an owner
				  or a tenant. A person engaged in forestry or the growing of timber is not
				  thereby engaged in the trade or business of farming. A person who operates a
				  garden plot, orchard, or farm for the primary purpose of growing produce for
				  the person's own use is not considered to be engaged in the trade or business
				  of farming. Generally, the operation of a farm does not constitute the carrying
				  on of a trade or business if the farm is occupied by a person primarily for
				  residential purposes or is used primarily for pleasure, such as for the
				  entertainment of guests or as a hobby.
(c) The term "farm" is used in its ordinary
				  and accepted sense, and generally means land used for the production of crops,
				  fruits, or other agricultural products or for the sustenance of livestock or
				  poultry. The term "livestock" includes cattle, hogs, horses, mules, donkeys,
				  sheep, goats, and captive fur-bearing animals. The term "poultry" includes
				  chickens, turkeys, geese, ducks, and pigeons. Thus, a farm includes livestock,
				  dairy, poultry, fish, fruit, fur-bearing animals, and truck farms, plantations,
				  ranches, nurseries, ranges, orchards, feed yards for fattening cattle, and
				  greenhouses and other similar structures used primarily for the raising of
				  agricultural or horticultural commodities. Greenhouses and other similar
				  structures that are used primarily for purposes other than the raising of
				  agricultural or horticultural commodities do not constitute farms, as for
				  example, structures that are used primarily for the display, storage,
				  fabrication, or sale of wreaths, corsages, and bouquets. A fish farm is an area
				  where fish are grown or raised, as opposed to merely caught or
				  harvested.
(d) Diesel fuel will be
				  considered to be used for "farming purposes" when it is used on a farm by the
				  owner, tenant, or operator of the farm in connection with the activities
				  described in this subdivision. Diesel fuel will be considered to be used for
				  "farming purposes" when it is used on a farm by a person other than the owner,
				  tenant, or operator of the farm for any of the purposes described in
				  subdivision (d)(1).
(1) Cultivating the soil,
				  raising or harvesting any agricultural or horticultural commodity, or raising,
				  shearing, feeding, caring for, training, or managing livestock, poultry, bees,
				  or wildlife. Examples of operations which are considered to be operations for
				  "farming purposes" within the meaning of this paragraph include plowing,
				  seeding, fertilizing, weed killing, corn or cotton picking, threshing,
				  combining, baling, silo filling, and chopping silage.
(2) Handling, drying, packing, grading, or
				  storing any agricultural or horticultural commodity in its unmanufactured
				  state, but only if the owner, tenant, or operator produced more than one-half
				  of the commodity which was so treated during the year covered by the exemption
				  certificate described in Revenue and Taxation Code Section
				  60503
				  which supports the claim for refund.
(3) Planting, cultivating, caring for, or
				  cutting of trees that is incidental to the farming operations of the farm on
				  which it is performed or incidental to the farming operations of the owner,
				  tenant, or operator of the farm, or in connection with the preparation (other
				  than milling) of trees for market that is incidental to these farming
				  operations. These operations include the felling of trees and cutting them into
				  logs or firewood but do not include sawing logs into lumber, chipping, or other
				  milling operations. Operations of the prescribed character will be considered
				  incidental to farming operations only if they are of a minor nature in
				  comparison with the total farming operations involved. Therefore, a tree farmer
				  or timber grower may not claim a refund under Revenue and Taxation Code Section
				  60502
				  with respect to diesel fuel used in connection with the trade or business of
				  tree farming or timber growing.
(4)
				  Operation, management, conservation, improvement, or maintenance of the farm
				  and its tools and equipment. The activities included are those which contribute
				  in any way to the conduct of the farm as such, as distinguished from any other
				  enterprise in which the owner, tenant, or operator may be engaged. Examples of
				  included operations are clearing land, repairing fences and farm buildings,
				  building terraces or irrigation ditches, cleaning tools or farm machinery, and
				  painting farm buildings. Since the diesel fuel must be used by the owner,
				  tenant, or operator of the farm to which the operations relate, diesel fuel
				  used by an organization which contracts with a farmer to renovate his farm
				  properties is not used for farming purposes. Diesel fuel used in a lawn mower
				  for maintaining a lawn is not used for farming purposes.