Are You Collecting Sales Tax?

On September 21 the Times Argus printed an article called “Farmers, Vendors Face Back Sales Tax” It is important to understand that there are times when farms are exempt from sales tax and there are times when a farm is required to collect or pay sales taxes. This applies to the sale of farm products and in the case of the Time Argus article it applies to the purchase of equipment. Getting a bill or penalty to pay back taxes is not likely in your budget, so let’s avoid any surprises.

Farmers selling products direct to end users on-farm or at farmers markets must understand which exemptions do or don’t apply to them. Click this link to a fact sheet from NOFA VT, page 4 describes tax regulations related to farmers market sales.

http://nofavt.org/sites/default/files/Regulations%20for%20FM%20Vendors.pdf

Prepared Foods, Crafts (ie Wool), Beverages are generally taxable. In certain states, edible flowers are not taxable but cut flowers/ornamentals (dried corn/gourds) are taxable. Consult your state department of taxes to determine if any of your “non-food” products are taxable (lumber, christmas trees, nursery plants, dried flowers ?)

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About Mark Cannella

Mark is a farm business management specialist with UVM Extension based in Berlin, VT. He specializes in business planning, farm financial analysis and agricultural economics.
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