Purchase of Crop-Duster Does Not Qualify for Arkansas Agricultural Exemption

News provided by

Sep 02, 2016, 02:38 ET

DALLAS, Sept. 2, 2016 /PRNewswire/ -- The Arkansas Department of Finance and Administration ("Department") issued a ruling on the application of the Arkansas agricultural exemption to a taxpayer's purchase of an aircraft. The taxpayer in question operated an agricultural flying service and purchased a used aircraft outside the state and brought it into Arkansas to use in the business. The Department conducted an audit and determined that because airplanes are specifically excluded from the definition of farm equipment and machinery, the purchase was subject to use tax and consequently assessed use tax and interest.

The taxpayer appealed, arguing that the purchase should qualify for the agricultural exemption under GR-51(B)(1)(a). This regulation defines "farm equipment and machinery" as agricultural implements used exclusively and directly for the agricultural production of food or fiber as a commercial business or the agricultural production of grass sod or nursery products as a commercial business. Although it does exclude airplanes, it specifically includes "sprayer" and "spreaders." The taxpayer contended that because the airplane was used solely in crop-dusting, it should be considered a "sprayer" or "spreader" and did not fit the meaning of "airplane" as used in applicable Arkansas statutory laws and rules.

The Appellate Court ultimately upheld the Department's assessment, finding that although the taxpayer provided evidence showing the aircraft had no function other than the application of seeds, fertilizers, and chemicals, it did fit the plain and ordinary meaning of the word airplane and, therefore, was excluded from the exemption.

About Ryan
Ryan is an award-winning global tax services firm, with the largest indirect and property tax practices in North America and the seventh largest corporate tax practice in the United States. With global headquarters in Dallas, Texas, the Firm provides a comprehensive range of state, local, federal, and international tax advisory and consulting services on a multi-jurisdictional basis, including audit defense, tax recovery, credits and incentives, tax process improvement and automation, tax appeals, tax compliance, and strategic planning. Ryan is a five-time recipient of the International Service Excellence Award from the Customer Service Institute of America (CSIA) for its commitment to world-class client service. Empowered by the dynamic myRyan work environment, which is widely recognized as the most innovative in the tax services industry, Ryan's multi-disciplinary team of more than 2,100 professionals and associates serves over 12,000 clients in more than 40 countries, including many of the world's most prominent Global 5000 companies. More information about Ryan can be found at ryan.com.

Logo - http://photos.prnewswire.com/prnh/20160125/325377LOGO

TECHNICAL INFORMATION CONTACT:

Jeremiah T. Lynch
Principal
Ryan
212.847.0113
[email protected]

Available Topic Expert(s): For information on the listed expert(s), click appropriate link.

Jerry Lynch - http://www.profnetconnect.com/jeremiahlynch

SOURCE Ryan