Ranch Accounting – Kay County (OK)

The state offers a 100% sales tax exemption for the purchase of feed, seed and livestock supplies assuming certain requirements are met. A rancher/farmer must obtain an Agricultural Permit Exemption Card which is presented at the time of purchase to confirm participation. Eligible items include seeds, feed, fertilizer and livestock pharmaceuticals. It is important to note that feed not used for commercial agriculture production, such as pet food, is not eligible.

State law dictates the sale of livestock (such as cattle and horses) are 100% exempt from sales tax when sold to farming or ranching operations that operate as for-profit. In other words, a commercial transaction. It does not cover transactions between hobbyists, recreational farmers, or pet owners.

To complete a tax-exempt sale, the seller/producer must regularly be engaged in farming for a profit. The buyer must provide written certification stating they are also regularly involved in the business or raising animal life for marketing and the animals will be used for that state purpose. Finally, the buyer must hold an Operational Exemption (SMX Card) from the Oklahoma Tax Commission. It is important to note there are certain cases where an SMX card is not required to receive the exemption, as the buyer’s certification is considered sufficient.

The state offers a motor fuel tax refund for gasoline purchases to run eligible equipment including farm tractors or stationary engines owned or leased by a rancher. The refund cannot be claimed on fuel used in vehicles like pickup trucks, cars, or commercial trucks even if used on a ranch. The amount of the refund is limited to $.1692 per gallon which constitutes the full tax rate minus the $.02 agricultural levy.

The refund has to be claimed by the rancher within three years of the fuel purchase date. To make a claim the business owner should complete and submit Form 130 Application for Refund of Motor Fuel Tax. Refunds are issued via direct deposit, requiring the submission of an additional Refund Direct Deposit Form ARDD-100.

The credit is designed to provide a credit based on a minimum investment of $50,000 in depreciable property or the addition of the full-time- equivalent employees engaged in eligible activities. Typically, Oklahoma ranchers and farmers do not qualify for this credit unless involved in agricultural processing operations. This can include activities such as turning raw crops into packaged goods, milling, or commercial meat processing. The five-year credit amount is determined by the greater of 1% per year of investment in new depreciable property, or $500 per new job. If the business is located within an enterprise zone, the credit value doubles to 2% per year based on investment of $1,000 per new employee when investments exceed $40M.