ALABAMA DEPARTMENT OF REVENUE
SALES, USE & BUSINESS TAX DIVISION
SALES & USE TAX RULE
810-6-3-.01. Exemptions for Agricultural Products Sold by the Producer.
(1) There are two exemptions in the sales and use tax statutes relative to agricultural
products sold by the producer - one is found in Sections 40-23-4(a)(5) and 40-23-62(8),
Code of Alabama 1975, and the other in Section 40-23-4(a)(44). A sale of agricultural
products that does not qualify for one of these exemptions may still qualify for the other.
(2) Sections 40-23-4(a)(5) and 40-23-62(8) exempt sales of products of the farm, dairy,
grove, or garden from sales and use tax when the products (i) are sold by the producer, by
members of the producer's immediate family, or by persons employed by the producer to assist
in the production of the products and (ii) have not been processed, except to the extent that
the products are customarily processed by operators of farms, dairies, groves or gardens in
preparing products for market.
- (a) This exemption does not apply to agricultural products sold by the producer through
a store which the producer operates. (Curry v. Reeves, 240 Ala. 14, 195 So. 428)
- (b) Unlike the exemption outlined in paragraph (3) below, this exemption is not limited
to products that are planted, cultivated, and harvested by the producer. Examples of products
that may qualify for this exemption but not the exemption in paragraph (3) include but are
not limited to milk, eggs, catfish, minnows, bees, honey, rabbits, and hamsters produced on
farms.
(3) Section 40-23-4(a)44 exempts fruit or other agricultural products from sales and use
tax when sold by the person or corporation that planted, cultivated, and harvested the products.
Unlike the exemption outlined in paragraph (2) above, this exemption is not lost to the producer
who sells qualifying agricultural products through a store operated by the producer.
(4) Sales of agricultural products which otherwise qualify for one or both of the
exemptions outlined in paragraphs (2) and (3) above do not lose their exempt status if the
products retain their raw, unprocessed form when prepared by the producer for marketing or
merchandising. An agricultural product is no longer in its raw, unprocessed form if it is
cooked, boiled, roasted, or mixed or compounded with ingredients other than additional exempt
agricultural products.
- (a) Examples of prepared agricultural products which do not lose their exempt status when
they otherwise qualify for either or both of the exemptions outlined in paragraphs (2) and
(3) are:
| 1. raw pecans when cracked or shelled |
| 2. raw shelled peanuts |
| 3. raw shelled peas, beans or butterbeans |
| 4. raw shucked corn |
| 5. raw washed fruits or vegetables |
- (b) Examples of processed agricultural products which do not qualify for the exemptions
outlined in paragraphs (2) and (3) above are:
| 1. apple cider |
| 2. boiled or roasted peanuts |
| 3. candy |
| 4. cane or sorghum syrup |
| 5. fruit pies |
| 6. ice cream |
| 7. jellies and jams |
| 8. peanut butter |
| 9. pickled peaches |
| 10. pickles |
| 11. roasted pecans |
(Readopted through APA effective October 1, 1982, amended May 22, 1993,
amended July 30, 1998)
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