To apply for farm number, or not to apply... your thoughts?

[Shoshana]

Hi everyone! I'm in Alabama and have two 'legal' type questions about 'homesteading'.

First, we are purchasing acreage in the next month and plan to keep chickens and a few of our own cows, and possibly a few horses (or other livestock) from the local animal rescue, that need housing and care, as room and pasture allow. We are planning to put in a garden and use the produce from the garden and livestock for our personal needs, and for giving of excess to family and friends. However, it has been suggested to me that we may want to take the extra produce that we cannot use or store and sell eggs 'from our property' and the garden produce at the farmer's market. I've read the state ag laws, and I am legally able to do this. However, I called our local extension agent because I'm not sure if doing so would then classify me as a 'farm', or whether that only happens if I apply for a 'farm number'. She says I don't have to, but I CAN apply for a farm number, and that having one would, for instance, qualify us for help if something catastrophic happened to our pasture, in terms of getting help to feed the livestock.

My question is, what are the pros and cons of having a farm number? Will I be subject to willy nilly inspections and permit fees every time I turn around if I apply for one? It seems like I can buy feed in this state without a farm number, so is the only real purpose of having one applying for aid that I may never need?


Second question: Does anyone know if I have to collect some sort of sales tax on eggs sold from my property or produce sold at a farmer's market? I realize this is a very local question, so if anyone in Southern Alabama knows and can respond, that would be great.


Thanks for your thoughts on these!

 

[faykokoWV]

I don't know about your state, but we get a reduction in our property tax for a farm, which may be another reason to apply.

 

[Mac in Wisco]

I just ran across your questions.

You don't need a farm number except to participate in USDA Farm Services Agency programs. Commodity subsidies, conservation land payments and other programs that are run by the federal government (or possibly your state) would require an FSA farm number. If you were to apply for these programs, then you would need a farm number for use on the paperwork. Otherwise you would probably never use it and nobody would ever really care if you had a farm number or not...

If your question is actually what qualifies you as a "farm" (presumably for certain benefits to you), there is no set answer. For property tax purposes it is up to your state law and your assessor whether it will be taxed as agricultural land. For certain IRS rules, two-thirds of your income must come from agricultural production. It all depends upon the rules of the agency you are dealing with as to whether you own a "farm" or are a "farmer".

As far as collecting sales tax on eggs and produce, if you were anywhere else, I would say "No, food is not taxable", but Mississippi and Alabama are the only two states in the Union that still tax food. It's more than likely that you will have to collect tax on farm sales in your state, unless there is an exception for gross sales under a certain amount per year.

 

[faykokoWV]

WV still taxes food as well.

 

[Mac in Wisco]

Quote:
You're right. I thought Alabama and Mississippi were the only ones, but it seems that those two are the only states that still tax food at the full sales tax rate. A few other states also have taxes on food, but at a reduced rate, or refund it through income tax credit.