Sale of Hatching Eggs or Poultry
The B&O tax does not apply to amounts received for the sale of hatching
eggs or poultry by poultry farmers, when the hatching eggs or poultry are
for use in the production of poultry or poultry products for sale.
References: RCW
82.04.410
Processed Hops Sold for Use Out-of-State
The B&O tax does not apply to amounts received by hop growers or dealers
for hops that are shipped outside the state of Washington for first use. The
hops must have been processed into extract, pellets, or powder in this state.
This exemption does not apply to a processor or warehouser on amounts charged
for processing or warehousing hops.
References: RCW
82.04.337
Sale of Agricultural Products by a Farmer
The B&O tax does not apply to any farmer that sells any agricultural
product for resale or to any farmer who grows, raises, or produces agricultural
products owned by others, such as custom feed operations. This exemption does
not apply to any person selling agricultural products at retail or to any
person selling manufactured substances or articles.
References: RCW
82.04.330
Payments Received Under Federal Conservation Reserve Program
The B&O tax also does not apply to any persons who participate in the
federal conservation reserve program or its successor administered by the
United States Department of Agriculture with respect to land enrolled in that
program.
References: RCW
82.04.330
Farmers Who Occasionally Assist Other Farmers
A farmer who occasionally assists another farmer in planting or harvesting
a crop is generally not considered to be engaged in the business of farming
for hire or performing horticultural services for farmers. For example, a
farmer owning baling equipment which is used primarily for baling hay produced
by the farmer, but who may occasionally accommodate neighboring farmers by
baling small quantities of hay produced by them, is not considered to be engaging
in business.
Persons who advertise or hold themselves out to the public as being available
to perform farming for hire will be considered as being engaged in the business
of farming for hire, irrespective of the amount of such business or that the
person also does some farming on his or her own land.
References: WAC
458-20-209
Interstate or Foreign Sales
Washington State does not impose retailing or wholesaling B&O tax on
sales of goods that originate in Washington if receipt of the goods occurs
outside Washington.
References: WAC
458-20-193
Sale of Seed at Wholesale to Farmers or Conditioning Seed for Planting
The B&O tax does not apply to amounts received by a person engaging within
this state in the business of: (a) Making wholesale sales to farmers of seed
conditioned for use in planting and not packaged for retail sale; or (b) conditioning
seed for planting owned by others.
"Seed" means seed potatoes and all other "agricultural seed"
as defined in RCW 15.49.011. "Seed" does not include "flower
seeds" or "vegetable seeds" as defined in RCW 15.49.011, or any
other seeds or propagative portions of plants used to grow ornamental flowers
or used to grow any type of bush, moss, fern, shrub, or tree.
References: RCW
82.04.331,
RCW
15.49.011
Buying and Selling at Wholesale Wheat, Oats, Dry Peas, Dry Beans, Lentils,
Triticale, Canola, Corn, Rye, and Barley.
The B&O tax does not apply to amounts received from buying wheat, oats,
dry peas, dry beans, lentils, triticale, canola, corn, rye, and barley, and
selling these products at wholesale. The exemption does not include buying
or selling of any manufactured products made from wheat, oats, dry peas, dry
beans, lentils, triticale, canola, corn, rye, and barley.
References: RCW
82.04.332
Compensation for Receiving, Washing, Sorting, and Packing Horticultural Products
A B&O tax deduction is available for amounts derived by any person as
compensation for the receiving, washing, sorting, and packing of fresh perishable
horticultural products and the material and supplies used therein when performed
for a farmer, either as agent or as independent contractor.
References: RCW
82.04.4287
Interest on loans to Farmers, Ranchers, or Producers or Harvesters of Aquatic
Products
A B&O tax deduction is available for amounts derived as interest on loans
to bona fide farmers and ranchers, producers or harvesters of aquatic products,
or their cooperatives. The lending institution must be owned exclusively by
its borrowers or members. The lending institution must be engaged solely in
the business of making loans and providing finance-related services to bona
fide farmers and ranchers, producers or harvesters of aquatic products, their
cooperatives, rural residents for housing, or persons engaged in furnishing
farm-related or aquatic-related services to these individuals or entities.
References: RCW
82.04.4294
Agricultural Fairs
The B&O tax does not apply to any business of any bona fide agricultural
fair, if no part of the net earnings benefits any stockholder or member of
the association conducting the agricultural fair. Any amount paid for admission
to any exhibit, grandstand, entertainment, or other feature conducted within
the fair grounds by others is subject to the B&O tax, except as otherwise
provided by law.
References: RCW
82.04.335
Exclusions from Manufacturing B&O tax
The following activities are not considered manufacturing activities for
purposes of the manufacturing classification of the B&O tax:
- Activities which consist of cutting, grading, or ice glazing seafood
which has been cooked, frozen, or canned outside this state;
- The growing, harvesting, or producing of agricultural products;
- Conditioning of seed for use in planting;
- Cubing hay or alfalfa;
- Packing of agricultural products, including sorting, washing, rinsing,
grading, waxing, treating with fungicide, packaging, chilling, or placing
in controlled atmospheric storage; and
- The removal of the head, fins, or viscera from fresh fish without further
processing, other than freezing.
References: RCW
82.04.120 and .2403
Temporary Deduction for Certain Beef Processors
Substitute House Bill 2929, Chapter 235, Laws of 2004, temporarily provides Washington's beef processors with a deduction from the measure of business and occupation tax for:
- Slaughtering cattle IF the taxpayer sells the slaughtered cattle at wholesale.
- Breaking or processing perishable beef products IF the perishable beef products are from cattle slaughtered by the taxpayer and sold at wholesale.
- Wholesale sales of perishable beef products derived from cattle slaughtered by the taxpayer.
- Processing nonperishable beef products IF the products come from cattle slaughtered by the taxpayer and are sold at wholesale.
- Wholesale sales of nonperishable beef products derived from cattle slaughtered by the taxpayer.
The deduction does not apply if the resulting beef products are sold at retail. "Beef products" is defined by SHB 2929 to be the carcass, parts of carcass, meat, and meat by-products, derived exclusively from cattle and containing no other ingredients.
For tax reporting purposes the deduction is reported on the deduction detail sheet as an "other" deduction. In the space provided for an explanation taxpayers should write "beef ban."
This deduction is effective March 31, 2004, and is allowed until the first day of the month following the date when the bans have been lifted on the importation of beef and beef products from the US to Japan, Mexico, and the Republic of South Korea. More information regarding the beef bans can be found on the USDA web site.
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