DISCUSSION
...
Taxpayer protests that its use of the equipment for fence-related
activities and moving bales of hay are both exempt uses. Regarding the former,
Taxpayer at the hearing stated that it uses fencing to divide its fields for
the sheep, and the protested equipment is used to pull the posts, haul the
posts, and take the mower to the fields. Per Taxpayer, the pasture area for the
sheep has to be changed/rotated every couple of weeks. Taxpayer states that the
tools for the fencing are hauled by the skid steer. Although fencing is
normally taxable (see 45 IAC 2.2-5-4(c)), under certain circumstances it can be
exempt. Those circumstances are dealt with by 45 IAC 2.2-5-3(e)(3),
which states:
Fences, fencing materials, gates, posts, and electric fence
chargers are exempt only if the same are purchased for use in confining
livestock during the production processes of breeding, gestation, farrowing,
calving, nursing, or finishing.
In Taxpayer's case the fencing itself is not what is at issue–what
is at issue is the equipment that Taxpayer argues is used to install fencing
(i.e., the skid steer). 45 IAC 2.2-5-3(e)(3) does not exempt the equipment to
install fencing. Furthermore, Taxpayer's use of the equipment does not meet the
double direct test set out in IC § 6-2.5-5-2(a).
Taxpayer further states that the equipment is used to move bales of hay. As Taxpayer explained at the hearing, the hay is moved from storage areas to a centralized feeding area. 45 IAC 2.2-5-6(d) states: (d) Exempt purchases: (1) Feeds–Sales of agricultural machinery, tools, and equipment used by the purchaser directly in feeding exempt animals, poultry, etc., are exempt from tax. This exemption does not extend to machinery, equipment, and tools used for the handling, movement, transportation, or storage of feed prior to the actual feeding process.
Taxpayer moves the bales of hay from one location, to another
centralized location. Taxpayer's hauling of the bales of hay is not exempt–as 45 IAC
2.2-5-6(d) states, "This exemption does not extend to machinery,
equipment, and tools used for the handling, movement, transportation, or
storage of feed prior to the actual feeding process." (Emphasis added).
Taxpayer has not met the burden of proof set out in IC § 6-8.1-5-1(c).
FINDING
Taxpayer's
protest is respectfully denied.
http://www.in.gov/legislative/iac/20120229-IR-045120077NRA.xml.pdf
