Follow Us

Five Tax Related Items You Don’t Want to Forget

Adapted from the Resource Guide for Direct-to-Consumer Sales and Agritourism Operations

Written by Beth Oleson

Agritourism operators are some of the most entrepreneurial, brain-storming business leaders in creation. You have land, a tractor, an imagination the size of Texas, and since most of you only require 3-4 hours of sleep you find a few minutes in the wee hours of the morning to brainstorm. Over the couple of “winter-ish” months we experience in the South many of you may have added different components to your farm, added food retail, or expanded your operation as a whole.

Now spring is in the air, people are flocking to farms and festivals abound. With all the hustle and bustle of the new season, it can be easy to forget the regulatory guidelines all agritourism operations should follow. The following are five reminders of tax regulations for your agritourism operation:

1. Check “your new attractions” against your CUVA Covenant

If you have added any new components/activities to your operation AND that tract of land is in a CUVA Covenant, make sure those new components/activities are in line with the Covenant. Keep in mind CUVA is administered and dictated mainly by YOUR local tax assessor, not the State. Most operators now carve out a small piece of land where their actual agritourism operations actually take place. Also, ensure the new activity has a strong educational component built in. Photo courtesy of armstrongfamily05.blogspot.com

2. Merchandise, Products and CUVA

At agritourism operations, people can instantly find themselves in a euphoric vacation mode that overcomes the better judgement and budgets of otherwise sensible parents and adults. They WANT to buy merchandise, branded products and the food that tastes so much better because it came from YOUR farm. This ultimately means additional revenue for the farm. If the agritourism operation is a working farm that produces some sort of commodity, and has agritourism components to it, it should not constitute a CUVA breach as long as you are selling products that were produced on your farm. But it can be very easy to find oneself in breach of a CUVA Covenant when one begins to sell products not produced on the farm (ie. T-shirts, honey, other commodities). These items and the cash register need to be located on the non-CUVA portion of the property. Photo courtesy of Shetler Family Dairy

3. Admission Fees for the General Public is Taxable

Whether your admission sign states “tax included” or “plus tax”, admission into your agritourism operation is subject to both local and state sales tax. You are responsible to keep records showing the base admission price, the additional sales tax, then the total sale. Record keeping is your friend.

4. School Field Trips SHOULD be Tax Exempt

Admission for educational field trips SHOULD be exempt from sales taxes. If the school is paying admission for the teacher, parent, chaperone, etc., then the admission fee is tax exempt. If the parent, teacher, chaperone, etc. is paying the admission fee themselves, the admission fee is subject to state and local taxes. If the group is a private funded school, and you are in doubt of their status, be sure to ask for a tax-exempt form. Photo courtesy of Summers Farms

  5. ALL farm food products and grocery items are subject to local tax

It is important to know that ALL items are subject to local taxes, and the only tax exclusions available are for the state sales taxes. Any product that meets the definition of prepared food (defined below) or is intended for on-premises consumption is subject to both local and state taxes.  Farm products that are meant for off-premise human consumption and are not classified as prepared food are the only types of items exempt from the state sales tax, but subject to all local sales taxes. Fresh produce, apple cider, etc. is not considered prepared food, and therefore exempt from the state portion of sales taxes. Prepared food is subject to state sales tax collections. Prepared food is defined as any food product that has two or more ingredients mixed at the seller’s location, is heated or has been heated at one time by the seller at the seller’s location, or is sold with a utensil. Juice, jams, jellies, pies, single serving cups of juice, etc. are considered prepared food. Photo courtesy of Dickey Farms.

Your Georgia Agritourism Association (GAA) is a resource for all agritourism operations. While GAA is not legal counsel, the staff and Board of Directors have been actively engaged with GAA members who have experienced the pains of regulatory violations. One resource many have found useful is GAA’s ability to provide a connection to other operators who have been through regulatory scrutiny.

A more comprehensive overview of sales tax, CUVA, and the GATE program can be found in the Resource Guide for Direct-to-Consumer Sales and Agritourism Operations on the Georgia Agritourism Association website. If you have questions about these or- other agritourism related matters, don’t hesitate to contact your Board of Directors or GAA staff at (706) 845-9085 or admin@georgia-agritourism.org.

Legal Disclaimer: This article is offered for general information purposes only. It does not constitute specific legal advice or opinion. You should not act or rely solely upon any of the information contained in this article without seeking the advice of a qualified CPA who specializes in these particular areas or work directly with the GA Dept of Revenue.