Source:  NC FARM BUREAU, 11/4/14

Background
• Earlier this summer, the legislature revised its 2013 ag sales tax law changes
• Based on the changes, everyone who has an agriculture exemption certificate must act to remain eligible to purchase farm inputs and equipment without sales tax
• There are now two classes of farmers who are eligible for ag sales tax exemptions

(I) Qualifying Farmers
There are two ways for a person to be classified as a qualifying farmer
I. Have $10,000 or more in annual gross farm income in previous tax year
2. Average $10,000 or more in annual gross farm income over prior 3 tax years

Applying for qualifying farmer exemption certificates
Use NCDOR Form E-595QF
• Applicants must provide tax documents indicating annual gross farm income
• One-time application

Qualifying farmers must return certificate to NCDOR when they stop farming or earn less than $10,000 in annual gross farm income over 3 consecutive tax years

Qualifying farmers must have certificate for purchases made after October I, 2014
• But qualifying farmers may continue to use their "old" agriculture exemption certificates for purchases until September 30, 2014.

(2) Conditional Farmers
Allows individuals who are not qualifying farmers to claim ag sales tax exemptions
Two requirements to be classified as a conditional farmer:
1. Certify intent to engage in farming operations
2. Timely file annual tax documents showing income and expenses from farming

Applying for conditional farmer exemption certificates
• Use NCDOR Form E-595CF

Other requirements and limitations
• Keep track of sales tax exempt purchases
• Certificate expires after 3 years and may not be renewed
• Failure to timely file tax documents triggers back taxes and penalty

For more information, please visit www.ncfb.org or www.dornc.org.