202009.02
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Arkansas—Sales and Use Tax: Farmer’s ATV Purchase

Arkansas – Farmer’s ATV Purchase Did Not Qualify for Farm Machinery and Equipment Exemption

A taxpayer’s protest against Arkansas sales tax assessment on its purchase of an ATV was denied because the taxpayer failed to prove entitlement to the farm machinery and equipment exemption by a preponderance of the evidence. Generally, farm machinery and equipment used exclusively and directly for the agricultural production of food or fiber as a commercial business are exempt from tax. In this matter, the taxpayer purchased an ATV and signed a Commercial Farming Sales Tax Exemption certificate, certifying that the ATV would be used exclusively and directly in the agricultural production of food and fiber to be sold in the commercial marketplace. Subsequently, the Department of Finance and Administration (department) assessed the taxpayer for unpaid tax on the ATV with interest to which the taxpayer protested.

Upon review, it was noted that:

  • the ATV was tangible personal property and was taxable;
  • although the taxpayer argued that the purchase of ATV qualified for farm machinery and equipment exemption, he/she failed to provide any evidence of the ATV’s use upon the farm property;
  • the ATV’s use within the taxpayer’s cattle activities was pure speculation; and

For additional information, visit DFA.Arkansas.gov

About Davis Davis & Harmon LLC – Sales Tax Experts: Headquartered in Dallas, Texas, Davis Davis & Harmon LLC – Sales Tax Experts specializes in sales/use tax refund recovery and audit defense. Our team of consultants is comprised of former Big 4 sales tax consultants and state sales tax auditors. Each of our consultants has 15 to 20 years of experience, providing our clients with access to a highly specialized team of sales/use tax professionals. At Davis Davis & Harmon, LLC we are committed to maintaining the highest standards in our talent pool. We work hard to meet our clients’ needs by ensuring that you view our firm as an extension of your company and a member of your team.

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