Sales Tax on Livestock Feed
The only certain things in life are death and taxes, and sometimes farmers and ranchers feel like they’re being taxed to death. To help alleviate some of the tax burdens on our farm and ranch families, Farm Bureau in 2016 helped spearhead a sales tax exemption on livestock feed. Thanks to a bill passed that year, the state may not levy Transaction Privilege Tax, or TPT, on feed for livestock, poultry or ratites, including salts, vitamins, and other additives. In non-statute language, that means that there’s no state sales tax on livestock feed.
This doesn’t mean, however, that you will never see a line item for taxes on your receipt from the feed store. The state statute only excludes livestock feed from state sales tax – not from city (or other local government) taxes. And in Arizona, the patchwork of city tax codes is complicated, varied, and difficult to navigate.
Most of our cities follow the Model City Tax Code or MCTC. And section 465(r) of the MCTC exempts livestock feed from sales tax if it is sold to a commercial operator. So, if you live in one of those cities and you’re “engaging or continuing in the business of farming, ranching, or feeding livestock,” then your livestock feed is exempt – it’s not subject to the city’s normal sales tax rate. If you’re not a commercial operator, however, then the feed that you buy for your recreational livestock or horses is subject to city sales tax in MCTC jurisdictions.
But before you run down to your stores to demand a refund of your city tax, there’s one more wrinkle to unfold. The MCTC also contains “options,” which are basically add-ons to the code that cities can choose to adopt. If a city adopts Model Option #10, that means that the city does not exempt livestock, feed, and agricultural chemicals purchased by farmers or ranchers. In other words, regardless of what you’re buying the feed for, it’s subject to city sales tax.
How do I figure out what jurisdiction I’m in?
A list of all the cities who have adopted the MCTC can be found at https://modelcitytaxcode.az.gov/City_profiles/City_profiles.htm. Click on your city to find out the tax rate and whether it has adopted Model Option #10.
What if I’m being charged tax that I don’t need to pay?
If you’re incorrectly charged sales tax on livestock feed, we recommend that your first phone call be to the store manager. Arizona Farm Bureau’s Government Relations staff has put together a “cheat sheet” for you to use to navigate the long and winding provisions of Arizona’s tax code. You can find the cheat sheet at www.azfb.org on the Public Policy page under Resources and Links.
If that doesn’t work, reach out to the Department of Revenue and ask for further guidance.
And of course, be sure and let the Government Relations team know what’s going on – we’re happy to help you along every step of the way!
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