Nebraska Grain and Feed Association
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NGF COMMENTS ON DRAFT REVENUE DEPT. RULING ON REVISED ENERGY SALES TAX REFUND

Association Supports Limited Expansion, Disappointed Draft Did Not Go Farther

The Nebraska Grain and Feed Association (NGF) this week responded to the Nebraska Department of Revenue’s (NDR) draft revenue ruling outlining the approach the department intends to use determining when the energy used at these facilities, including drying grain will be recognized for a commercial grain elevator to claim a 100% sales tax exemption on energy.  NGF supported a revision to the current NDR methods of review. 

The NDR expanded their qualified energy uses on claiming the exemption to the following processes;

  • That grain drying can occur on an ongoing basis not just during a specific period of time;
  • That any type of grain can be dried, not just corn; and,
  • The need to maintain detailed records to support any analysis of energy usage for which an exemption certificate is issued.

NDR reaffirmed in their draft ruling these unqualified energy uses that:

  • Aerate dried grain to prevent grain spoilage, control insects, and reduce dust and sweating;
  • Aerate both dried grain and grain with excess moisture in the same bin;
  • Maintain the moisture content of dried grain;
  • Move, clean, sort, and blend grain;
  • Move grain from the receiving area to grain storage facilities;
  • Move grain from storage facilities to be weighed and subsequently loaded into transportation equipment;
  • Move grain to a bin for storage; or,
  • Operate the administrative building, office equipment, and any other non-processing equipment.

The Association supported the NDR clarification that grain drying can occur on an ongoing basis and not just during a specific period of time, and that any type of grain can be dried, not just corn.  NGF pointed out that most commercial elevators dry or condition grain throughout the year, and that producers deliver grain to commercial elevators throughout the year that may be damaged or needs to be dried down to a point where the moisture content is consistent and safe for storage. 

The Association expressed its disappointment that the department did not recognize that the aeration of dried grain to prevent grain spoilage, control insects, or reduce dust and sweating was not recognized as a value added process.  In the comments submitted to the NDR, the Association pointed out that “many large grain elevators were forced to store tens of millions of bushels of grain on the ground this year due to the late and protracted harvest which was hampered by excessive moisture.  These grain elevators are required to pick up the grain for storage or shipment within a certain period of time, and as this grain is gradually picked up, corn especially must be dried down and conditioned to a storable temperature.  The process of picking up these ground piles will take several months as the grain is transported from various satellite locations to permanent terminal storage facilities.”

NGF pointed to the fact that much of the early harvest and especially corn was stored on the farm at moderate to high levels of moisture, and a large amount of the on - farm corn was stored at various moisture levels which made continuous and consistent drying difficult causing heat damage including broken and cracked kernels.  Much of this farm stored grain this year has developed various levels of mycotoxins which, if high enough, can be a threat to animal or human consumption. 

The Association’s comments concluded that, “Grain elevators that receive the damaged product from the farm will spend months to move, clean, sort, and blend this grain into a saleable product.  We believe, and especially this year that the energy consumed for the cleaning, sorting and blending of this damage grain is an appropriate value added process and should be recognized by the department to qualify for the sales tax exemption.  At the least, energy used to aerate both dried grain and grain with excess moisture in the same bin to maintain the moisture content of dried grain should be recognized.”

Association staff will update members when the comments have been considered, which changes might be incorporated and when the draft rules are finalized.

 

 

calendar of events

August 4, 2017

NeGFA Summer Meeting & Golf Outing

York Country Club

York, NE

 

 

 

 

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Nebraska Grain and Feed Association
4600 Valley Road, Suite 416
Lincoln, NE 68510-4844
Phone: 402-476-6174
Fax: 402-476-3401