INDIANAPOLIS, Ind. — Farmers seeking to properly pay Indiana sales tax owed on goods purchased for their operations may occasionally find the rules puzzling, according to an official with the state’s Department of Revenue.

The exemption status of many products depends on usage, said Amanda Stanley, public relations project manager for the department. Items such as animals, feed, seed and fertilizer are exempt if they are "directly used in the direct production of food and commodities that are sold either for human consumption or for further food or commodity production," she noted.

"Since the exemptions are situation dependent, this can be confusing," Stanley continued. "It’s complicated. We want to make sure the laws and regulations are fairly applied to all taxpayers."

As an example, Stanley cited a saw that might be used by the owner of a Christmas tree farm to cut down trees during the holiday season.

"If the saw is used in the production of Christmas trees, it is exempt," she explained. "But if you use it after the season to help your neighbors trim their trees, you’re providing a service and it’s not exempt. If you use something one way, it’s exempt. If you use it another way, it’s not exempt."

Farmers must intend for their operations to make a profit in order to qualify for exempt status.

Assuming an operation meets the general requirements for exemption, the purchases of products such as plants, insecticides, fungicides, certain personal property and agricultural tools and equipment may be eligible, Stanley stated. Machinery or equipment designed for the gathering, moving or spreading of animal waste may also be exempt.

Machinery or equipment used for such things as general farm maintenance, selling and marketing, farm management and safety and fire prevention would be taxable, she said.

To receive a general sales tax exemption certificate from the state, farmers must fill out form ST-105. Approved farmers will receive a certificate they would need to show when making an eligible purchase.

Stanley said farmers unsure if their purchase meets exemption requirements should pay the tax and later apply for a refund.

"The biggest problem farmers experience is whether or not something qualifies as an exemption," she said. "I’m not aware of any big issues with farmers not paying their proper share of state sales tax."

Producers with questions may contact the department at 317-233-4015. For more information or to download form ST-105, visit www.in.gov/dor