Tax Type
Retail Sales and Use Tax
Description
Farmers; Taxability of Fencing Materials
Topic
Exemptions
Date Issued
10-06-1966
This will acknowledge your letter of October 6, 1966, which reads as follows:
"As you are aware, § 58-441.6(c) of the Virginia Retail Sales and Use Tax act provides an exemption from the sales and use tax for, among other things, `farm machinery, and all other agricultural supplies provided the same are sold to and purchased by farmers for use in agricultural production for market.'
"I understand that there has been considerable confusion among farmers as to the proper treatment of materials used for fencing farm animals, fields and pastures. It seems clear to me that such materials are essential to agricultural production (as a matter of fact, § 8-886 makes it unlawful for farmers not to have such fences). Further, it was certainly the intention of the General Assembly to be liberal in extending the exemption from sales taxes to our farm industry, as shown by the failure of the farming exemption to include language similar to that used in the manufacturing exemption which requires `direct use' in the manufacturing process.'
As you pointed out, the Act exempts agricultural supplies provided the same were sold to and purchased by farmers for use in agricultural production and market. The Act does not mention fences in any way.
Upon conferring with the State Tax Commissioner, we find that he takes the position, which he states is similar to that taken by other States having a comparable provision in their sales tax laws, that fences attached permanently to the land become an improvement to the land and are not exempt. However, temporary fences not permanently attached to the land are deemed to be exempt.
Attorney General's Opinion