Michigan Administrative Code › Department - Treasury › Bureau of Tax & Economic Policy › General Sales and Use Tax Rules › SPECIFIC SALES AND USE TAX RULES › Section R. 205.51 - Agricultural producing

Current through Vol. 24-12, July 15, 2024
Rule 1.
(1) For
				  the purpose of this rule, "agricultural producing" means the commercial
				  production, for sale, of crops, livestock, poultry, and other products by
				  persons regularly engaged in business as farmers, nurserymen, or
				  agriculturists.
(2) Sales of
				  tangible personal property are subject to the sales or use tax under this rule,
				  if the sales are to persons other than those specified in subrule (1), or if
				  the sales are made to persons specified in subrule (1), but the property is
				  used or consumed by those persons for a purpose other than the commercial
				  production of agricultural products for sale.
(3) Sales to farmers of fuel, clothing, and
				  all other tangible personal property for personal living or human consumption
				  or use are taxable. Sales of tangible personal property to all persons are
				  taxable when the property is used in producing food or other products for
				  personal consumption and not for sale.
(4) All sales to persons using land, but not
				  included in the definition of "agricultural producing" in subrule (1), are
				  taxable. For example, a mowing machine is taxable when sold to the operator of
				  a riding stable for use in cutting hay to be fed to the operator's riding
				  horses. The sale of the machine is exempt, however, if made to a person
				  regularly engaged in business as a farmer for use in cutting hay to be fed to
				  the farmer's work horses or cattle.
(5) Sales of the following are exempt only
				  when used in "agricultural producing" as defined in subrule (1):
(a) Seeds and other propagative portions of
				  plants.
(b) Fertilizer and similar
				  substances for improving quality of the soil.
(c) Spray materials for insecticides,
				  germicides, and fungicides.
(d)
				  Livestock, poultry, their feeds, and foodstuffs, including salt, bone meal, cod
				  liver oil, limestone, grit, oyster shell, and other similar substances used to
				  sustain animals or poultry.
(e)
				  Sacks, wrappers, and other nonreturnable containers resold with crops; also,
				  binding twine and baling wire.
(f)
				  Machinery, tools, other equipment, repair parts, motor fuel, oil, grease, and
				  other tangible personal property necessary for their operation and maintenance,
				  except that sales of such equipment are taxable under the following
				  circumstances:
(i) If the equipment is to be
				  attached to and becomes a part of real estate.
(ii) If a motor vehicle is used on a public
				  highway and is required by the motor vehicle law to have registration license
				  plates.
(iii) Gasoline, oil, tires,
				  and parts for a motor vehicle specified in paragraph (ii).
(g) Electricity or gas used directly in
				  producing agricultural products.
When a separate meter is not installed for recording exempt
					 electrical use, an allocation for exemption may be utilized if the total
					 electrical consumption exceeds 1,500 kwh per month, or 2,500 kwh per month for
					 homes with electric heat during the months of November to March. (See
					 R 205.115)