LANSING — The Michigan House and Senate finalized legislation this week to preserve the state’s agricultural sales and use tax exemptions and clarify which farm-related purchases qualify. House Bills 4561 and 4564, sponsored by Reps. Dan Lauwers and Tom Barrett, now await Gov. Snyder’s approval.
The amendments were pursued by Michigan Farm Bureau (MFB), in part, after recent farm audits exposed misinterpretations by the Department of Treasury.
“Even though agriculture historically received the exemptions, we faced a significant educational effort with Treasury and some of our elected officials,” said MFB President Carl Bednarski. “We had to help them understand that while our industry’s equipment and technology are continuously modernizing, Treasury’s farm audits and interpretations of the law haven’t kept pace.”
He attributed much of the success in passing the legislation, to local county Farm Bureau members.
“We asked our members for help and they displayed impressive grass-roots strength with more than 600 farmers sending over 1,800 emails to representatives, senators, and the Governor,” Bednarski said. “Farmers need the ability to reinvest in their farms, not pay additional taxes.”
The bills clarify existing law that direct and indirect farm-related equipment purchases are not subject to the sales and use tax. It also allows tangible personal property such as heating and cooling, water systems, milking systems to remain eligible for the agriculture sales and use tax exemption.
Additionally, the legislation addresses past, present and future Treasury interpretations by providing a retroactive statement on the updated definitions so that as audits are conducted, the new definitions will be used for any applicable tax years.
According to MFB Legislative Counsel Rebecca Park, the bills also provided much-needed guidance on greenhouse operations.
“The bill clarifies that greenhouse structures that can be disassembled and reassembled without affecting functionality,” Park said. “And all direct equipment used in the operation are not subject to the sales and use tax.”
Governor Snyder has two weeks to sign the bill into law, veto the bill, or choose not to act on the bill. If the bill is neither signed nor vetoed in that time-frame, it immediately becomes law.