OklahomaHorses Magazine September 2021

26 OklahomaHorses • September/October 2021 Qualifying for Agricultural Sales Tax Exemption for Horse Operations by Mary Westman, Esq. D o horse operations qualify for an Oklahoma agricultural (ag) sales tax exemption permit? Although not all horse owners qualify for such a permit, certain horse operations can qualify. To begin, according to Okla. Stat. tit. 68, §1358(8)(B), horses are defined as an “agricultural product,” and “business[es], or facilities for the business, of raising horses” are included in the definition of ranching. However, the analysis doesn’t stop there. The next step is to figure out which horse operations will meet the definition of an agricultural or ranching operation. So if horses can be defined as agricultural products, which horse owners qualify as agricultural producers? Oklahoma statute defines an agricultural producer as “any person planting, raising, growing, or har- vesting agricultural products.” Okla. Stat. tit. 2, § 1-3. Further, “agricultural produc- tion” is limited to what would ordinarily be considered a farming ranching operation “undertaken for profit” and “the raising of food crops or livestock for sale” (emphasis added). Okla. Admin. Code 710:65-13-15. In addition, horses are defined as livestock in Oklahoma. Id. However, horse owner- ship “solely for one’s own use for pleasure riding, trail riding, performance riding, participation in horse shows, or racing” is not considered agricultural production or ranching and will not meet the eligibility requirements for an ag sales tax exemption permit. Okla. Admin. Code 710:65-13-15. For-profit horse operations that meet the definition of either an agricultural produc- er or a ranching operation will be eligible for an Oklahoma agricultural sales tax exemption permit. To apply, one can visit the Oklahoma Tax Commission website at https://oktap.tax.ok.gov/oktap/web/_/#1 and complete the application. To apply for the Oklahoma agricultural sales tax exemption permit, you must pro- vide certain documents to prove eligibility. Although other documents are permitted by Oklahoma statute, according to the Oklahoma Tax Commission website, to prove eligibility relevant to horse oper- ations, the permit application requires the following documents at the time the application is made: 1. a copy of IRS Schedule F (used to report farm income and expenses) or a copy of IRS form 4835 (used to report farm rental income based on crops or livestock produced by the tenant); 2. a three-year business plan for start-ups; or 3. FFA or 4-H participation documentation from a school. So which horse owners and/or operations qualify for an ag sales tax exemption permit in Oklahoma? Those that are agricultural producers or ranchers and are in business to make a profit will qualify. Horse breeders who sell their foals with the goal and intent to make a profit would meet the eligibility requirement. Other types of horse opera- tions might not be such a simple determi- nation but would instead require a detailed analysis of the entire operation. However, if you own horses “solely for [your] own use for pleasure riding, trail riding, performance riding, participation in horse shows, or racing,” you will not meet the eligibility requirements based on The landing page for the application