A BILL TO BE ENTITLED
AN ACT to lower the income requirement for qualifying farmers for purposes of the sales tax exemption for farmers.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 105‑164.13E reads as rewritten:
"§ 105‑164.13E.  Exemption for farmers.
(a)	Exemption. – A qualifying farmer is a person who has an annual income from farming operations for the preceding taxable year of seven thousand five hundred dollars ($7,500) or more or who has an average annual income from farming operations for the three preceding taxable years of seven thousand five hundred dollars ($7,500) or more. For purposes of this section, the term "income from farming operations" means sales plus any other amounts treated as gross income under the Code from farming operations. A qualifying farmer includes a dairy operator, a poultry farmer, an egg producer, and a livestock farmer, a farmer of crops, a farmer of an aquatic species, as defined in G.S. 106‑758, and a person who boards horses. A qualifying farmer may apply to the Secretary for an exemption certificate number under G.S. 105‑164.28A. The exemption certificate expires when a person fails to meet the income threshold for three consecutive taxable years or ceases to engage in farming operations, whichever comes first.
Except as otherwise provided in this section, the items exempt under this section must be purchased by a qualifying farmer and used by the farmer in farming operations. For purposes of this section, an item is used by a farmer for farming operations if it is used for the planting, cultivating, harvesting, or curing of farm crops or in the production of dairy products, eggs, or animals. The following tangible personal property and services that may be exempt from sales and use tax under this section are as follows:
(1)	Fuel, piped natural gas, and electricity that are measured by a separate meter or another separate device and used for a purpose other than preparing food, heating dwellings, and other household purposes.
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(b)	Conditional Exemption. – A person who does not meet the definition of a qualifying farmer in subsection (a) of this section may apply to the Department for a conditional exemption certificate under G.S. 105‑164.28A. A person with a conditional exemption certificate is allowed to purchase items exempt from sales and use tax to the same extent as a qualifying farmer under subsection (a) of this section. To receive a conditional exemption certificate under this subsection, the person must certify that the person intends to engage in farming operations, as that term is described in subsection (a) of this section, and that the person will timely file State and federal income tax returns that reflect income and expenses incurred from farming operations during the taxable years that the conditional exemption certificate applies.
A conditional exemption certificate issued under this subsection is valid for the taxable year in which the certificate is issued and the following two taxable years, provided the person to whom the certificate is issued is engaged in farming and provides copies of applicable State and federal income tax returns to the Department within 90 days following the due date of an income tax return for each taxable year covered by the conditional exemption certificate, including an extension of the due date granted by the Secretary under G.S. 105‑263. A conditional exemption certificate issued under this subsection may not be extended or renewed beyond the original three‑year period; provided that a person may request a one‑year extension of their conditional exemption certificate if the person satisfies all of the following conditions:
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(3)	The person provides the Department all of the following:
a.	Documents showing that, but for the disaster, the person would have earned seven thousand five hundred dollars ($7,500) or more in gross sales for the year in which the disaster occurred.
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SECTION 2.  This act becomes effective January 1, 2020, and applies to exemption certificates issued on or after that date.