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New Sales Tax Law May Not Apply to Most NC Farmers Markets (updated 3/18/14)

Getting to the bottom of this new tax law and how it applies to farmers markets and their vendors has been a long strange trip. Though I think we are far from the end of this saga, recent information and conversations lead me to conclude that we can reasonably interpret that the new tax laws (NCGS 66-255) do not apply to most farmers market managers in NC.

Over the last couple of weeks I have talked to legislators, the NC Department of Agriculture, The NC Farm Bureau, the Mountain Tailgate Market Association, the House Committee on Food Desert Zones, the NC Legislature Research Division, chambers of commerce, county commissioners, reporters, farmers, market managers, and more. I am in agreement that, as stated in a recent story in the Asheville Citizen Times on the issue, “it’s remarkable how a group of individuals can look at the same state law and interpret its impact in completely different ways.” I go further and say not only do people disagree on the impact, there is not even agreement on who the law applies to.

I anticipate that the law itself will continue to be reinterpreted by the North Carolina Department of Revenue (NCDOR) and it will very likely be addressed in the NC Legislative short session in May (thanks to everyone who contacted their representatives). My suggestion to the legislators (and anyone talking to them) is to clearly exempt farmers markets and farmers market managers from the requirements of section 66-255. Ironically, it was originally written with an exemption for farmers markets, an exemption that was removed during the sausage making process (my apologies to sausage makers – you guys do a great job) between passage of the legislation and the final version.

I’ve now come to the conclusion that for most farmers markets and market managers section 66-255 does not apply. Though some people looking at the language of 66-255 interpret it to redefine “specialty market operator” for that section, the NC Department of Agriculture is interpreting it to not override the definition of specialty market operator spelled out in the first section of the revenue bill – “66-250. Definitions”. In that section there are 6 subsections of definitions for markets, operators, and vendors. The pertinent one for farmer market managers is section 5. Section 5 of 66-250 defines a Specialty market operator as “A person, other than the State or a unit of local government, who rents space, at a location other than a permanent retail store, to others for the purpose of selling goods at retail or offering goods for sale at retail.” The NC Department of Agriculture is hanging their hat on the “other than the State or a unit of local government.” In the spirit of hitching our wagon to theirs, I suggest that any market operator (manager) that does not “rent” space is, by definition, not a specialty market operator and therefore is not covered by this section of the Revenue law.

So this now boils down to the definition of “rents space” (for operators, section 5) or “space is rented” (for Specialty market, section 4). To my mind, if a market or market operator does not own their location, or have a legal lease on their location space, then they have no space to rent. If a market does not charge any dues they are not renting space. Most markets do have fees to join a market, and even fees for market days, but I am unaware of any markets having legal agreements to provide specific spaces for specific times for a specific amount of money (that is, renting). I’ve tried to reach the NC Department of Revenue to see if they will give me a definitive definition (there is no definition in the legislation) but only get a busy signal when I call.

There is one other place that NCDOR might try to catch independent farmers markets and that is if they define farmers markets as events. 66-255 describes two market categories to which it applies – one is a specialty market and the other is an “event.” As noted above, section 66-250 defines a specialty market, but nowhere is there a definition of “event” or “event operator.” Again I think we stick with the NCDA’s interpretation that their farmers market managers are not operators of events but instead they are exempted because they are state government. If the NCDA farmers markets are not events then surely independent farmers markets are also not events.

I want to be clear here that I am not an attorney (and from my experience that would not help much because everyone that I talked to has a different read on this). As a market manager you need to decide for yourself. I am, though, instructing the market that is run by ASAP, the Asheville City Market, that they are not a specialty market as defined by this legislation and therefore the market manager is excluded from the requirements spelled out in Section 66-255.

Whatever markets decide to do, they should make all vendors aware that they may need to register and pay taxes (as well as comply with all applicable regulations), but that the market manager will not be enforcing NCDOR regulations. You can find some of the laws and regulations governing markets, farmers, and other vendors, as well as contact information for regulatory agencies, in ASAP’s The Regulatory Environment for Farms in Western North Carolina as well as other resources for farmers markets at the Farmers Market section of our website.

I do urge our representatives to clear this up by specifically exempting farmers markets and farmers market managers. If you want to let your representative know how you feel you can find them at

Charlie Jackson, Executive Director