The Illinois Department of Revenue conducts audits of all businesses in Illinois to ensure proper payment of applicable taxes.  Our industry is not exempt from these audits.  We do however enjoy many exemptions from sales tax for items such as crop protection chemicals, fertilizer, seed and machinery (including repair and replacement parts) used in the application of these products.  Although our state laws define farm chemicals, fertilizer and most feed and seed as exempt when they are sold for ag use, it is still HIGHLY RECOMMENDED that you obtain a signature from your farmer customers that they are indeed using these products for the production of an agricultural crop.  Lately the Dept of Revenue has been asking to see this form when they are auditing ag retailers.  IFCA created an exemption form for you to use and it is available by clicking here where you are directed to the "Taxes" section on our website.  Download the form, add your company name and address, and have your customers sign this form at least once every 3 years.  Keep the form on file at your office. This form is important because it removes your business from responsibility if someone does buy chemicals, fertilizer or seed and then does not use it in crop production; that way, if the DOR believes the products are not being used in ag production, they will go after the user of the product for the tax and penalty and not your business.  If you sell equipment such as ATVs, nurse tanks or tool bars, it is vital to get the purchaser to sign the equipment exemption form, also available on our website.  

 

When it comes to cover crop seed, it is exempt from sales tax but other types of seeds such as grass seed used for lawns, waterways or buffers is technically not exempt because it is not being used to benefit the actual crop being produced.  As you visti our website there is information available including the actual statutes that explain the exemptions, forms to allow you to claim a property tax credit for your agrichemical containment structures, or refunds for taxable diesel burned in licensed floaters or sprayers.  Remember you do not need to license your application equipment if you operate it empty on the public highways.  It only has to be licensed if it is laden with load while on a public highway.  If you have any questions about sales taxes when it comes to our industry, please give us a call, we can help you!