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Last Updated: 5/2/2017

'Livestock Confinement Systems'

What is a livestock confinement system?

A livestock confinement system is defined as the complete livestock or poultry production facility. It includes the buildings, feed and water systems, manure handling systems, livestock handling equipment, pens and gating, slotted flooring, ventilation systems, and other incidental items.

Taxability of livestock confinement systems

For sales tax purposes, livestock confinement systems are generally separated into three categories: building, exempt equipment, and taxable equipment.

Building

The basic structure is treated as real property including walls, roof, foundation, and electrical wiring that serves the general building.

  • Materials to build the basic structure are taxable. This applies whether the builder is a contractor, owner or lessor, or is hired by an exempt entity.
  • Payments for leasing the building are not taxable.

Exempt equipment

Exempt items include:

  • Components for feeding and watering systems
  • Certain livestock handling equipment
  • Ventilation systems that directly affect the health and productivity of the livestock
  • Other items that are considered farm machinery

A contractor may purchase the materials to build qualifying equipment that becomes real property exempt from tax.

Taxable equipment

Taxable items are generally considered personal property (rather than real property). Sales or leases of these items are taxable. Examples include:

  • Free stall partitions
  • Gates
  • Interior pens
  • Poultry cages
  • Stalls
  • Slotted flooring
  • Ventilator fans for general building ventilation

Leases of livestock confinement systems

A lease involving livestock confinement systems must separate the components of the system into the three categories (building, exempt equipment, and taxable equipment) and properly apply sales tax. If the charges are not separately stated, sales tax applies to the entire lease charge.

Fencing

Most fencing materials are taxable.

However, an exemption applies to fencing for farmed cervidae (deer and elk family). To qualify for the exemption, the fencing must be used to confine farmed cervidae to prevent them from escaping and it must be 8 feet high.

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