SALT Report 1550 – The Florida Department of Revenue released guidance regarding the sales and use tax exemption for electricity used for agricultural purposes. Currently, electricity used directly or indirectly for the production or processing of agricultural products on a farm is exempt.
However, effective January 1, 2013 the exemption for the use of electricity is expanded to include:
- Electricity used for the packing of agricultural products on a farm, or
- Electricity used in a packinghouse for the production, packing, or processing of agricultural products, including packinghouses that are not located on a farm
The exemption applies if the electricity is separately metered from any electricity used for purposes other than production, packing, processing, or other nonexempt use. Consequently, the exemption does not apply to electricity used in buildings or structures where agricultural products are sold at retail.
To qualify for the exemption, the purchaser must supply the utility provider with an exemption certificate which states that the electricity will be used for the production, packing, or processing of agricultural products on a farm or will be used in a packinghouse.
In situations where the utility provider accepts an exemption certificate in good faith, the purchaser will be liable for any applicable tax, penalty, or interest due. Utility providers that currently have an exemption certificate from the purchaser for electricity used in the production or processing of agricultural products on a farm are not required to obtain a new certificate from the purchaser.
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