On lawn mowers and motor vehicles in Missouri – Wacky Tax Wednesday

There’s a nifty provision in Missouri law that allows a producer of agricultural products to trade them to offset the sales and use tax owed on a motor vehicle or trailer purchased for agricultural purposes. That’s a mouthful, but the concept is simple enough: Give the dealer agricultural products that you raised, such as grain or livestock, and the dealer will reduce the sales or use tax by an amount comparable to the value of the agricultural products.

Except when that dealer can’t.

The Missouri Department of Revenue (DOR) recently determined that a customer’s purchase of a zero-turn lawn mower isn’t exempt from sales tax, even though the customer would transfer farm products to the seller as part of the transaction.

Section 144.025.5, RSMo provides that any purchaser of a motor vehicle or trailer for agricultural purposes may trade grain or livestock they produced or raised to offset the sales and use tax owed. So why doesn’t the exemption apply in this instance?

According to Letter Ruling 8039, the zero-turn lawn mower doesn’t qualify for the exemption because it isn’t designed primarily for use on highways and therefore doesn’t qualify as a motor vehicle. (The folks behind the letter ruling obviously never saw The Straight Story.)

LR 8039 notes:

• Section 301.010.1(35) RSMo, defines a motor vehicle as “any self-propelled vehicle not operated exclusively upon tracks, except farm tractors…” [Emphasis added by DOR].
• Section 301.010.1(71) RSMo, defines a vehicle as “any mechanical device on wheels, designed primarily for use, or used, on highways…” [Emphasis added by DOR].

It’s a puzzle. The exemption in question is clearly designed to give a break to farmers purchasing equipment (motor vehicles or trailers) for agricultural purposes. Yet rather than focus on the fact that the lawn mower would be used for agricultural purposes, the department focused on the fact that the lawn mower isn’t meant to be used on highways.  

Still, I suppose lines must be drawn somewhere. The sales tax exemption specifically applies to “a motor vehicle or trailer used for agricultural use,” and according to LR 8039, a zero-turn lawn mower is neither.

It’s difficult to keep track of what qualifies for a sales tax exemption in different states, and what doesn’t. Sales tax software helps. Learn more.