Farm Card aka Agriculture and Use Tax exemption

[JimFromTN]

I have some land in Henry county that I had greenbelted.  I have been shopping for an atv to use on the property and a salesman mentioned getting a farm card and I would not have to pay the sales tax.  This brightened my day and I did further research and found out that I am qualified.  My basic question is, is it a hassle to use?  Do I need to keep all paperwork of anything I purchased with it?  Is there some chance of being audited or have to prove that I have generated income from the property?  

  

[Garufa]

Pretty sure some type of income must be generated from use of the land for such an exemption if you want to be legit.

[gregintenn]

I think you just need the tax ID number. I am not aware of anyone being audited on the basis of showing a profit, although the requirement is technically law.

 

Sell a few liogs off the property or charge someone a modest fee to cut hay from it. I can't remember off the top of my head whether it's once every three or five years you are supposed to show a profit.

Edited March 1, 2019 by gregintenn

[Miltech]

-As I recall you must have at least $1500 in income to qualify, Its been a while since I filed the form.

edit: Its $1000 from the TN site

Edited March 1, 2019 by Miltech
correct info

[TomInMN]

If you're qualified, why the concern about an audit?

[MP5_Rizzo]

This is from the Tennessse Department of Revenue website

Here’s the link  https://revenue.support.tn.gov/hc/en-us/articles/203809459-What-qualifies-for-a-Tennessee-agricultural-exemption-

• Sales of all-terrain vehicles (ATVs) for use directly and principally in the production of agricultural or nursery products for sale and consumption off the premises.

[Hozzie]

I have a friend who they did come after for his Kubota UTV.  He was able to show it's use, but it does happen that they check.  This was in Smithville so it isn't like it was a big city.  And this was on a large, legit farm.  Not sure why they picked him to test, but it does happen.

[JimFromTN]

This is on the TN Revenue website.  My land is a greenbelt which means I qualify under Agricultural Forest and Open Space Land Act of 1976.  I can't find anything where it says I have to prove that I generated any income unless I qualify under one of the other criteria.

 

https://revenue.support.tn.gov/hc/en-us/articles/204488605-How-do-I-apply-for-the-Tennessee-agricultural-exemption-

To qualify, farmers, timber harvesters and nursery operators must meet one or more of the following criteria:

• Be the owner or lessee of agricultural land from which $1,000 or more of agricultural products were produced or sold during the year, including payments from government sources;
• Engaged in the business of providing for-hire custom agricultural services of plowing, planting, harvesting, growing, raising, or processing agricultural products or the maintenance of agricultural land;
• Be the owner of land that qualifies for taxation under the provisions of the Agricultural Forest and Open Space Land Act of 1976;
• Be able to provide a copy of the applicant’s federal income tax return that contains one or more of the following:
  • Business activity on IRS schedule F (Profit or Loss From Farming); or
  • Farm rental activity on IRS for 4835 (Farm Rental Income and Expenses) or schedule E (Supplemental Income and Loss); or
• The applicant establishes to the satisfaction of the commissioner that he or she is actively engaged in the business of raising, harvesting or otherwise producing agricultural commodities.

Edited March 1, 2019 by JimFromTN

[Hozzie]

Edit, if you only have to meet one, then I think you are ok.  Just have your qualification info handy if it comes up.

Edited March 1, 2019 by Hozzie