What could be more useful in producing more food if you have wet land and seeing immediate impact in most situations than installing farm tile, right? Try telling that to the people at the Indiana Department of Revenue. It won't fly.
Based on how current law is written, their interpretation is that farm field tile and tiling machines are not directly used in the production of food, notes Stephanie McFarland, senior public relations representative for the Indiana Department of Revenue. Therefore, both the file and machines, even tile plows sold to farmers, are taxable.
How do they enforce it? By auditing businesses that sell tile and tiling equipment. If they discover that they haven't charged tax, then they seek the money back in what's called a 'use' tax from the individuals who made the purchases. They also assess a penalty, usually 10%, plus charge interest at the going rate.
In one case we're aware of, they've went back three years, going after people who bought tile or tiling machines from the businesses that they audited.
About now, if you haven't been paying tax on these items, you're probably saying, 'hush, don't open up a can of worms. That's a fair argument, but in this case someone already tipped over the can. The only people who can change this procedure are legislators, and they've been contacted. In fact, Bob Cherry, R-Greenfield and also a legislative specialist with Indiana Farm Bureau, Inc., says bills have been filed in both the House and Senate that would clean up this language and make farm field tile and farm tiling equipment exempt from sales tax.
In the house, it's HB1091, with a hearing set on it for Tuesday, Jan. 25 in the Statehouse. It will be heard along with a hearing on other tax-related issues. Primary author on the bill HB1091 is Doug Gutwein, Francesville.
Cherry is hopeful that the legislature will pass this bill so that the law clearly states that farm field tile and farm tiling machines are exempt from Indiana sales tax. If the law is changed, then the Department of Revenue will act according to how the law is written, Mc Farland says.
Already, field tile is exempt in surrounding states. "So we have a situation where farmers are going out of state to buy field tile instead of buying form Indiana retailers," Cherry says. He's a common-sense, home-grown farm boy, and to him, that just doesn't make sense to let that practice continue.
If you have thoughts on this bill, now is the time to contact your local legislators and let them know how you feel. Even those who are reluctant to talk to legislatures should be able to do it easily if they have this issue to talk about.
Changing the law is the only way the interpretation can be guaranteed to change, both government officials and legislators claim.