SALT Report 1487 – The Missouri Department of Revenue ruled that a taxpayer’s purchases and sales of rhizomes are exempt from Missouri sales and use taxes. The taxpayer purchases the rhizomes to grow grass that will in turn, produce more rhizomes. The taxpayer then sells the rhizomes to farmers, who also use the rhizomes to grow grass that is either harvested and sold or used to produce biofuel pellets to heat agricultural facilities.
The Department ruled that rhizomes that will be sold at retail or used to feed livestock or poultry are exempt from sales tax. Additionally, rhizomes fall within the definition of “seed” as they are the reproductive portion of a plant and section 144.030.2(22), RSMo, provides an exemption for “seed, limestone or fertilizer which…when harvested will be sold at retail” and section 229.475.1(3) defines and exempts “plant parts” such as “roots, bulbs, tubers and rhizomes.” Therefore, rhizomes fall within the definition of “seed” and are exempt from sales tax under Sections 144.030.2(22) and 229.475.1(3).
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