Chemicals, Seed, Fertilizer, Feed & Baby Chicks Require Sales Tax Form
IFCA has been working with our fellow ag groups and with the IL Dept of Revenue to address uncertainty with regard to cover crop seed sales. We believe we finally have a final answer on how our retail members should best handle sales of these types of seeds (and all seeds) to purchasers. According to IDOR, they will consider cover crop seed sales as eligible for the production agriculture exemption from sales tax, so long as the cover crop is used in a manner that benefits the following cash crop. IDOR did remind us also that for all sales of tax exempt items used in production agriculture, retailers should have the purchasers sign a form that states what they purchased, when they purchased it, and that these products will be used in an exempt manner, i.e. to produce a crop. Sales of crop protection chemicals are exempt in their own right, but sales of fertilizer, seed, feed and baby chicks require the purchaser to list a "resale" number on the form they sign. Since most farmers do not have a resale number, the IDOR issues a standard number of 0110 for them to use.
So: From here forward, anytime you sell chemicals, fertilizer or seed to a farmer (or baby chicks!) have the purchaser sign an exemption form. IFCA created a form that you can edit to list your company name and address, and it includes the resale number 0110 click here for the form. All the farmer has to do is sign it and you keep it on file. Having this form on file at your location will protect you as the seller for being liable for any tax in case the purchaser does use the items in a manner that is not exempt from sales tax. We recommend you update the form periodically, at least once every three years, to get a new signature and date on the form and keep it on file. Finally, remember that sales of seed used for waterways or lawns are not exempt from sales tax. Only seed that will be used to grow a harvested crop, a pasture that is fed to livestock, or a cover crop used to benefit the cash crop is exempt with regard to sales tax on seed sales. If you have questions please contact Jean or KJ.