Trivia Question for Today: What is a grain bin exactly?

That was the question before the Minnesota Supreme Court Thursday in the case of Custom Ag Service vs. Commissioner of Revenue. The commissioner had taxed Custom Ag for a use tax on bins that had been brought in from outside the state. A use tax is charged on all taxable items that were not taxed at the rate of both the State of Minnesota and the municipality you live in at the time of purchase.

The grain bins were bought by Custom Ag to resell to their customers as a part of the final product they sell. Attorney Chad Felstul, representing Custom Ag, argued that the bins were part of a grain-drying system, and not long-term grain storage bins. The statute specifically exempts grain dryers but not grain bins; and while it does list some specific systems, like milking systems and automatic feeding systems and leaves the door open to other like systems, it does not list grain-drying systems. The crux of the case falls on the definition of grain bins and grain dryers.

Attorney Rita Demeules for the commissioner argued that the state was only looking to tax what was specifically taxable under law, the actual grain bin, and not any of the venting or drying pieces. The only thing everyone seemed to agree on is that Custom Ag would have a much better case if the law was clearer or said “grain drying system” and “grain storage bin”.

Custom Ag received these bins, along with other equipment to build products to sell to outside clients and, since their purpose as purchased was for use as grain bins, Demeules said, they should be taxable. Contractors who import items that are taxable and convert them to items that are not taxable are charged a use tax, even though when they sell the item it does not have a sales tax on it.

Custom Ag Services website.

In case you’ve never driven through a farming area, a quick google images search will give you a good idea of what they’re talking about.

[Custom Ag Service of Montevideo, Inc., Relator vs. Commissioner of Revenue, Respondent