Generally, farmers do not need to have a tax registration number if they only
make wholesale sales of the agricultural products that they grow, raise, or produce.
However, this does not mean that doingbusiness/businesstypes do not apply to farming related activities.
Farmers must pay sales tax or use tax on all tangible personal property used in
farming, unless specifically exempted by law. This guide has a discussion on what
items used in farming are exempt from sales tax or use tax.
Wholesale Sales (Exempt for Farmers)
A B&O tax exemption is provided for wholesale sales by farmers of agricultural
products they have produced on their farms. If a farmer only makes wholesale sales
of his or her products, there is no need to obtain a tax registration number from
the Department of Revenue. A farmer that is not required to obtain a tax registration
number from the Department may report and pay use tax with a
Consumer
Use Tax Return.
Retail Sales (Not Exempt)
However, if a farmer sells his or her products at retail to consumers, such
sales are not exempt from the B&O tax. Retail sales of agricultural products
by farmers or other persons are taxable under the retailing B&O tax classification.
Additionally, if the product sold at retail is not an exempt food product or is
not otherwise exempt from sales tax, retail sales tax must be collected. (For
more information, see
sales and use tax
exemptions.) Below is a listing of some agricultural products that, if sold
at retail by a farmer, require the farmer to collect retail sales tax from the
buyer:
- Turf
- Flowers
- Plants
- Trees
- Shrubs
- Vines
- Moss
- Plantation Christmas Trees
Litter Tax
The gross proceeds of sales of certain products are subject to litter tax under
Chapter
82.19
RCW. Litter tax, however, does not apply to sales of agricultural products
that are exempt from B&O tax under
RCW
82.04.330. Therefore, farmers are not subject to litter tax on wholesale sales
of agricultural products.
Litter tax applies to the gross proceeds of retail sales of agricultural
products that constitute food for human or pet consumption. This includes
retail sales by farmers of agricultural products that constitute food for
human consumption. Litter tax is reported on the excise tax return.