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Legislation passed in Wisconsin could save the state’s farmers and agribusiness more than $1.5 million annually in sales and use tax.

Wisconsin Sales Tax Exemption is a Major Win for Agribusiness

  • 4/9/2014

A bill passed by the Wisconsin State Assembly in March 2014 could save the state’s agribusiness industry more than $1.5 million annually in sales tax on agricultural machinery and contracting services. The legislation would become effective immediately after it is signed by Governor Scott Walker.

Farmers and feed producers in Wisconsin should consider delaying major purchases to take full advantage of the new legislation. The govenor's signature is expected this year.

“This is a major win for agribusiness,” says Phil Yahnke, an agribusiness principal with CliftonLarsonAllen. “The new law actually rewrites an outdated provision and provides a specific exemption for certain types of machinery and services regardless of whether the item is an addition to, a component of, or a capital improvement of real property.”

Specific exemptions

Specifically, the bill provides a sales and use tax exemption for the sale of certain processing equipment used in fertilizer blending, feed milling, or grain drying operations. This includes holding structures used for weighing and dropping feed or fertilizer ingredients into a mixer, wet corn holding bins, mixers, conveying equipment, and grinding, mixing, and saturation bins.

The exemption also applies to contractors purchasing building materials to construct or repair holding structures used in fertilizer blending, feed milling, or grain drying operations.

CLA’s role in the legislation

This very important bill is the direct result of two sales tax audits conducted on CLA clients. The Wisconsin Department of Revenue was encountering difficulty in applying old statutory provisions to some new technologies in the industry, and began to change its interpretation of the old statute. As a result, sales tax auditors were disallowing agribusiness exemptions that had been granted for many years.

CLA worked with the Wisconsin Agribusiness Association and the Wisconsin Department of Revenue to draft legislation and clarify the types of equipment that are exempt.

How we can help

Even though the new law will not be effective until it is signed by the governor, farmers and agribusiness companies should begin developing strategies now to get the most from the tax exemption. CLA professionals can help determine the best timing for purchasing new equipment and services.