Current through Register Vol. 54, No. 50, December 14, 2024
(a)Equipment, machinery, parts and foundations therefor and supplies used directly in farming. The purchase or use of tangible personal property or services performed thereon by a person engaged in the business of farming is exempt from tax if the property is predominantly used directly by him in farming operations. Purchases of vehicles required to be registered under 75 Pa.C.S. §§ 101-9821 (relating to the Vehicle Code) as well as supplies and repair parts for the vehicles are subject to tax. There shall be no exemption for maintenance facilities or tools, materials or supplies which are used or consumed in the construction, reconstruction, remodeling, repair or maintenance of real estate or farm equipment. Beginning March 4, 1971, foundations for equipment and machinery became subject to tax and remained taxable until February 9, 1981. Effective February 7, 1981, foundations used to support equipment, machinery and parts used directly in farming shall be exempt from tax. (1)Direct use. In determining whether property is directly used, consideration shall be given to the following factors: (i) The physical proximity of the property in question to the production process in which it is used.(ii) The proximity of the time and use of the property in question to the time of use of other property used before and after it in the production process.(iii) The active causal relationship between the use of the property in question and the production of a farm product. The fact that particular property may be considered essential to the conduct of the business of farming because its use is required either by law or practical necessity does not, of itself, mean that the property is used directly in farming operations.(2)Property directly used; predominant use. The purchase or use by a farmer of property in the following categories, when predominantly used directly in farming, is exempt from tax. When a single unit of the property is put to use by a farmer in two different activities, one of which is a direct use and the other of which is not, the property is not exempt from tax unless the farmer makes use of the property more than 50% of the time directly in farming operations. (i)General. Machinery, equipment, parts and foundations therefor, and supplies which are used in actual farm production, or to transport, convey, handle or store the product during the production are considered to be directly used in farming operations. Repair parts which are installed and become an integral part of the property are also exempt from tax.(ii)Testing and inspection. Property used to test and inspect the product during the actual farm production is considered to be directly used in the farming operations.(iii)Cleaning of returnable containers. Property used to wash, sterilize, or inspect returnable containers prior to their being filled is exempt when used in packaging the product if the container will be delivered to the ultimate consumer.(iv)Packaging; preserving. Wrapping equipment and supplies, including internal packing materials and returnable containers, used in packaging which passes to the ultimate consumer are directly used and therefore exempt. Property used to handle and preserve farm products upon the farm premises, and to prevent or deter the destruction, injury or spoilage of farm products, or productive animals or plants, is exempt from tax. Examples of such property include the following: (A) Chemicals used for crop pest control and equipment used to dispense it.(B) Property used to groom productive animals so as to preserve their health (including property such as dehorners, debeakers, and hoof trimmers) and harnesses used to control productive animals on the farm premises.(C) Refrigeration devices, including ice, used upon the farm premises to preserve the farm product prior to the operation of packaging passing to ultimate consumer.(D) Chemicals and disinfectants used to clean and sterilize equipment with which milk animals come into direct contact, such as milking equipment, so as to prevent their infection, and to clean and sterilize milk cans so as to prevent spoilage of the milk.(E) Medicines, cleaning solutions, compounds and supplies used to clean and groom productive animals so as to preserve their health.(v)Research. Property which is used directly in research activities shall be exempt from tax, provided that the object of the research is the production of a new or improved product or method of producing a product. The exemption does not apply to property used in market research or in other research which is conducted with the objective of improving administrative efficiency.(vi)Farm products; property which becomes a constituent or a part of a farm product. Property which is or becomes a constituent or a farm product is used directly in farming operations. Property consumed by productive animals such as feed and food additives, and property used for plant growth such as seed, fertilizer and chemical additives, is also used directly in farming.(vii)Planting and tilling; caring for crops or productive animals. Property which is used to cause other property to become a constituent or part of a farm product, or to be consumed by productive animals or to foster plant growth shall be exempt from tax. Examples of property include the following: (A) Seeders, planters, plows, harrows, cultivators, sprayers and similar equipment used to till the soil, to plant seed and to care for and cause the growth of productive plants.(B) Portable equipment used to feed and water productive animals and to administer medication to them, such as portable tubs, buckets, cans, feed scoops, feed carts, portable watering devices, portable incubators and brooders and artificial breeding equipment.(C) Fuel used to heat brooders, incubators and greenhouses.(viii)Harvesting or collecting farm products. Property which is used to extract or separate a farm product from productive animals, the soil or plants shall be exempt from tax. The property includes harvesters, combines, binders, forage blowers, milking equipment including strainers and strainer discs, egg collecting equipment, corn shuckers, threshers and manure or feed handling equipment such as shovels, scoops, forks, barn brooms and carts.(3)Property not directly used. Property in the following categories is not used directly in a farming operation and the purchase or use of the property shall be subject to tax.(i)Real estate. The term farming does not include the construction, reconstruction, alteration, remodeling, servicing, repairing, maintenance or improvement of real estate. The purchase or use of tangible personal property by a farmer for such purpose is subject to tax, even though the structure may house or otherwise contain equipment or other facilities used directly in farming. Constructing, remodeling, repairing or maintaining buildings (including houses, garages, barns, stables, greenhouses, mushroom houses and storehouses), fences and stanchions permanently affixed to real estate, dams, roads, spillways and other improvements to real estate, is not a farming operation, and properly used in the work shall be taxable. Activities such as land reclamation, forestry, land clearing, landscaping and similar activities which are intended to improve or preserve real estate, are not farming operations.(ii)Maintenance facilities. Maintenance, service and repair work is not a farming operation. Maintenance facilities, including tools, equipment and supplies predominantly used in performing the work (For example: chain hoists, tire spreaders, welding equipment, drills, sanders, wrenches, paint brushes and sprayers, oilers, absorbent compounds, dusting compounds, air blowers and wipers) is subject to tax. However, replacement parts which are used to replace worn parts upon exempt machinery and equipment (For example: motors, belts, screws, bolts, cutting edges, air filters or gears) and operating supplies which are actively and continuously used in the operation of exempt machinery and equipment (For example: fuel, lubricants, paint and compressed air) is exempt from tax. Equipment and supplies, including soaps and cleaning compounds, brushes, brooms, mops and similar items, used in general cleaning and maintenance of farm property shall be subject to tax.(iii)Managerial, sales or other nonoperational activities. Property used in managerial, sales or other nonoperational activities is not directly used in farming and, therefore, is subject to tax. This category includes but is not limited to property used in any of the following activities:(A)Farming management and administration. Office furniture, supplies and equipment, textbooks and other educational materials, books and records, and other property used in farming, recordkeeping and other administrative and managerial work is subject to tax. The property includes, but is not limited to, supplies used to record the quality and quantity of work in production or goods in storage, the flow of work, the results of inspection or to instruct workers in routing work or other production activities.(B)Selling and marketing. Property used in advertising farm products for sale, or in marketing, transporting the products to a market or to customers, or selling the products, is not within the scope of the farming exemption.(C)Exhibition of farm products. Property used in the exhibition of farm products or of farming operations is subject to tax. The property includes blankets, halters, prods, leads, harnesses, dressing, ribbons, clippers and similar show grooming and display equipment.(D)Safety and fire prevention. Property used to prevent or fight fires and equipment and supplies used for programs as safety, accident prevention or fire prevention is subject to tax, even though such equipment or property is required by law, except for drugs, medicines and medical supplies exempted by section 204(17) of the TRC (72 P. S. § 7204(17)).(E)Employe or personal use. Property used for the personal comfort, convenience or use of the farmer, his family, his employes or persons associated with him is subject to tax. Examples of property include the following: beds, mattresses, blankets, tableware, stoves, refrigerators and other equipment used in conjunction with the operation of a migrant labor camp or facilities for farm employes. Protective equipment (such as face masks, helmets, gloves, coveralls, goggles, and the like), worn by farming personnel is exempt from tax.(F)Space heating, cooling, ventilation and illumination. Property, including machinery, equipment, fuel or power used to ventilate buildings, lighting for general illumination or air conditioning and refrigeration, space heating and similar property, is subject to tax, unless its use is required in order to preserve the health of productive animals or to prevent spoilage of farm products, prior to package passing to the ultimate consumer.(G)Prefarming activities. Property used to transport personnel or to collect, convey or transport property, and storage facilities or devices used to store property, prior to its use in the actual farming operation, is subject to tax.(H)Property used during farming operations. Property used in managerial, sales or other nonfarming activities, is subject to tax even though it is used during farming operations. Illustrations of property include safety, heating and ventilation equipment, planking or grating for crosswalks or platforms, and maintenance equipment or facilities.(I)Postfarming activities. Property used to transport or convey the farm product after the final farming operation which includes but does not extend beyond the operation of packaging for the ultimate consumer, and storage and refrigeration facilities or devices used to store the product, are not used directly in farming and shall be taxable. For example, equipment, which loads packaged products into cases or cartons for ease of handling in delivery shall be subject to tax. Machinery, equipment, supplies and other property used to convey, transport, handle or store the packaged product is also taxable.(J)Additional processing of farm products. Property used in making butter, sausage, pasteurized milk, canned goods, jellies, flour, juices, cheeses, ice cream and other items which are not "farm products," as defined in § 32.1 (relating to definitions), is not exempt from tax under the farming exemption.(b)Use of exemption certificate. When a farmer purchases exempt property under this section, the farmer shall prepare and deliver to the vendor a properly executed exemption certificate.The provisions of this § 32.33 amended May 22, 1981, effective 5/23/1981, 11 Pa.B. 1806; amended July 1, 1983, effective 7/2/1983, 13 Pa.B. 2066; amended March 9, 1984, effective 3/10/1984, 14 Pa.B. 843. This section cited in 61 Pa. Code § 32.1 (relating to definitions); 61 Pa. Code § 32.25 (relating to steam, gas, electricity, fuel oil and kerosene); 61 Pa. Code § 44.4 (relating to guns and ammunition); and 61 Pa. Code § 60.21 (relating to commercial racing activities).