Source: NCDA&CS, 7/16/14

Farmers across North Carolina recently received a letter from the state Department of Revenue informing them that new requirements went into effect July 1 regarding the sales-tax exemption on farm-related items used for planting, cultivating, harvesting or curing farm crops or in the production of dairy products, eggs or animals.

Previously, to qualify for this exemption a farmer had to have $1,000 in revenue from the farm. That minimum is now $10,000 in revenue in the prior year or an average gross income of $10,000 for the previous three years. Understandably, this change has angered farmers, particularly those with smaller operations. It's safe to say that many small farms that previously qualified for this exemption will not be eligible for it now. 

I share their frustrations over the change, which the General Assembly approved as part of an income tax modernization bill last year. When legislators first began discussing possible changes to tax laws, the proposals were more far-reaching and potentially even more detrimental to farmers. I fought to keep the sales-tax exemption for farms, but unfortunately the legislature increased the amount of revenue required to qualify for the exemption.

This year, every farm that wants to continue to receive sales-tax exemptions will need to reapply by Oct. 1. The Revenue Department encourages you to apply as soon as possible to allow processing time for your application. If you have questions, please do not hesitate to call the Revenue Department's dedicated phone line for farmers, 1-877- 252-4487.

I also encourage you to contact your representatives in the state House and Senate and let them know how you feel about this change. It is important that they understand the full impact of the laws they make.