Retail Sales
Machinery and equipment repairs: Persons repairing machinery and equipment
for farmers must collect retail sales tax on the charges, unless specifically
exempt by law. In addition, the charges are subject to B&O tax under the
retailing classification.
Service B&O Tax (sales tax does not apply)
Farming for hire and performing horticultural services for farmers: Persons who engage in farming for hire or who perform horticultural services for farmers are generally subject to the service and other activities classification of the B&O tax on the gross income of the business. The term "horticultural services" includes, but is not limited to, the following activities:
- Soil preparation of land currently being used to raise plant crops,
such as plowing, weed control, or orchard stump removal before replanting;
- Crop cultivation activities such as planting, thinning, weeding, pruning,
or spraying;
and
- Crop harvesting activities such as threshing grain or legumes, mowing and
baling hay, or picking fruit.
Persons in the business of farming for hire or performing horticultural services
for farmers are considered the consumers of any materials they purchase unless
they resell the materials and bill their customer (the farmer) a separate charge
for the materials. (See wholesale sales below.)
References: RCW
82.04.190 and
WAC
458-20-209
Wholesale Sales (sales tax does not apply)
If a person engaging in the business of farming for hire or providing horticultural
services to farmers also sells tangible personal property for a separate charge,
the charge made for the tangible personal property is subject to either the
wholesaling or retailing B&O tax depending on the nature of the sale.
For example, ABC Aviation Co. (ABC) is hired by farmers to spray pesticides on
their crops. ABC segregates the charge for the pesticides and the charge for the
application on its sales invoices. When reporting its tax liability, ABC should
report the charge for the pesticide application under the service and other activities
B&O tax classification. The charge for the sale of the spray materials is
subject to the wholesaling B&O tax, provided ABC obtains a resale certificate
from the farmers. The purchases of pesticides by ABC are for resale and are not
subject to retail sales tax, provided that ABC gives the seller a resale certificate.
References: RCW
82.04.050,
WAC
458-20-102, and
458-20-209