Frequently Asked Questions Regarding Farmers
General Frequently Asked Questions Regarding Farmers
No. A commercial logger or a commercial fisherman must use Form E-595EA, Application for Exemption Certificate Number for Qualified Purchases, to apply for an exemption certificate number.
Yes. If you are not a resident of North Carolina, you will need to apply for a farmer exemption certificate number in order to purchase qualifying items in North Carolina for use in a farming operation inside or outside of North Carolina exempt from North Carolina sales and use tax.
Farm machinery, attachment and repair parts for farm machinery, fertilizer, feed, seeds, and livestock are a few examples of items that can be purchased by a qualifying or conditional farmer exempt from sales and use tax. Items must be for use by the qualifying or conditional farmer primarily in farming operations to qualify for the exemption. For purposes of the exemptions available to qualifying or conditional farmers, an item is used in farming operations if it is used for the planting, cultivating, harvesting, or curing of farm crops, in the production of dairy products, eggs, or animals, or for boarding horses. If an item is used for both farming operations and other purposes, the farmer must retain documentation showing the item is used primarily in farming operations to qualify. Items not used primarily in farming operations are subject to the applicable rates of sales and use tax.
For more information concerning what items qualify for exemption from sales and use tax when purchased by a qualifying or conditional farmer, refer to Sales and Use Tax Bulletin 27.
It depends on the service. Refer to Sales and Use Tax Bulletin Section 27-6 for additional information.
It depends on the contract. Refer to Sales and Use Tax Bulletin Section 27-7 for additional information.
Send a letter containing the name, Social Security number (sole proprietorship) or Federal Identification number if the farmer exemption certificate number was issued to an entity, qualifying or conditional exemption number, and the date you either stopped engaging in a farming operation or failed to meet the income threshold for a qualifying farmer to: NC Department of Revenue, Registration Unit, P. O. Box 25000, Raleigh, NC 27640-0001. You may also fax your request to (919) 715-2999 or contact the Department at 1-877-252-3052 (toll-free).
Fax your request for the replacement exemption certificate to (919) 715-2999. Include in the request, your name or company name, mailing address, telephone number, and qualifying or conditional farmer exemption certificate number. If you do not know the qualifying or conditional farmer exemption certificate number, you must include your individual Social Security number (sole proprietorship) or the Federal Identification number if the qualifying or conditional farmer exemption certificate number was issued to an entity. You may also contact the Department at 1-877-252-3052 (toll-free).
Conditional Farmer Frequently Asked Questions
No.
Yes.
A conditional farmer exemption certificate is valid for the income tax year in which the certificate is issued and the following two income tax years, provided the person to whom the certificate is issued timely submits copies of applicable state and federal income tax returns to the Department within 90 days following the end of each taxable year covered by the conditional exemption certificate or provided the person does not cease engaging in farming operations prior to the end of the third income tax year.
Only when a person suffers a weather-related disaster that prevents the person from becoming eligible for a qualifying farmer exemption may the Department extend a conditional farmer exemption certificate. Refer to the instructions of Form E-595CFEX for the specifics regarding the one (1) year extension a conditional farmer exemption certificate.
Yes. The person must maintain documentation of the items purchased and copies of state and federal income tax returns that reflect activities from farming operations.
The person must maintain documentation of the items purchased for the period of time covered by the conditional exemption certificate and for three years following the expiration of the conditional farmer exemption certificate.
No, provided all of the following:
- any item purchased exempt from tax claiming an exemption for farming operations is used for a qualifying farm operation,
- the conditional farmer provides copies of applicable state and federal income tax returns to the Department within 90 days following the due date of an income tax return for each taxable year covered by the conditional farmer exemption certificate, including an extension granted by the Secretary under G.S. § 105-263, and
- the conditional farmer provides any other information requested by the Department to verify the person met the requirements for a conditional farmer exemption certificate.
Yes. A conditional farmer does not have to wait until the conditional farmer exemption certificate expires to apply for a qualifying farmer exemption certificate.
No. The Department automatically cancels the conditional farmer exemption certificate number at the time the qualifying farmer exemption certificate is issued by the Department.
Generally, no. The Department may not issue a conditional farmer exemption certificate to a person who has had a conditional farmer exemption certificate issued during the prior 15 taxable years. However, if it has been 15 years since the expiration of the conditional farmer exemption certificate the Department may issue a new conditional farmer exemption certificate.
Form E-595QF Frequently Asked Questions
Yes. Each applicant must provide gross income documentation along with the Form E-595QF application before the Department can process an application.
Each applicant must submit the appropriate income tax schedule from their federal tax return that documents gross income from farming operations for the preceding income tax year or the preceding three income tax years.
No. A copy of the entire federal income tax return is not required to be submitted along with the Form E-595QF application. The applicant should only submit the pages of the income tax return that substantiate gross income from farming operations and the type of farming operation the applicant is engaged in as provided below.
Schedule F, Profit or Loss from Farming, of Federal Form 1040, U.S. Individual Income Tax Return, for each applicable income tax year which provides the gross income from farming and the type of farming operation. Lines 9 or 50 of Schedule F will be used to determine gross income from farming operations.
Page 1 and Schedule B, of Federal Form 1120S, U.S. Income Tax Return for S Corporation, for each applicable income tax year which indicates the gross income from farming operations and the type of farming operation. Lines 1a or 5 of page 1 of Form 1120S will be used to determine gross income from farming operations.
Page 1 and Schedule K, of Federal Form 1120, U.S. Corporation Income Tax Return, for each applicable income tax year which indicates the gross income from farming operations and the type of farming operation. Lines 1a or 10 of page 1 of Form 1120 will be used to determine gross income from farming operations.
Page 1 of Federal Form 1065, U.S. Return of Partnership Income, and Schedule F of Federal Form 1040, U.S. Individual Income Tax Return, for each applicable income tax year which indicates the gross income from farming operations and the type of farming operation. Lines 9 or 50 of Schedule F will be used to determine gross income from farming operations.