Agricultural employee housing: Year-round or seasonal housing for agricultural employees provided by one of the following:
- An agricultural employer
- Housing authority
- Local government
- State or federal agency
- Nonprofit community
- Neighborhood-based organization that is exempt from income tax under section 501(c) of the Internal Revenue Code of 1986
- For-profit provider of housing for agricultural employees
It includes single and multi-family dwellings, and dormitories. It also includes bathing, food handling, hand washing, laundry, and toilet facilities.
"Agricultural employee housing" does not include:
- Housing regularly provided to the general public on a commercial basis, such as hotels, motels, apartments, or rooming houses.
- Housing provided by a housing authority unless at least 80% of the occupants are agricultural employees whose adjusted* income is less than 50% of median family income.
(* adjusted for household size, for the county where the housing is provided)
Agricultural product: Any product of plant cultivation or animal husbandry including, but not limited to:
- A product of horticulture, grain cultivation, vermiculture, viticulture, or aquaculture as defined in RCW 15.85.020;
- Plantation Christmas trees;
- Short-rotation hardwoods as defined in RCW 84.33.035;
- Turf; or
- Any animal including but not limited to an animal that is a private sector cultured aquatic product as defined in RCW 15.85.020, or a bird, or insect, or the substances obtained from such an animal.
"Agricultural product" does not include animals defined as pet animals under RCW 16.70.020.
“Agricultural product” may not be construed to include or relate to marijuana, useable marijuana, or marijuana infused products. Marijuana," "useable marijuana," and "marijuana-infused products" have the same meaning as in RCW 69.50.101.
Anaerobic digester: A facility that processes manure from livestock into biogas and dried manure using microorganisms in a decomposition process within a closed, oxygen free container. RCW 82.08.900
Approved animal pharmaceuticals: The FDA maintains a list of all approved animal pharmaceuticals called the "Green Book." The USDA maintains a list of approved biotechnology products called the "Veterinary Biologics Product Catalogue." Pharmaceuticals that are not on either of these lists have not been approved and are not eligible for the exemption. (WAC 458-20-210)
Business and occupation (B&O) tax: B&O tax applies to the gross amount received from conducting business. There are different reporting classifications for retail sales, wholesale sales, professional services, and other business activities. Each classification has its own tax rate. Farmers that conduct activities in addition to selling agricultural products they grow, raise or produce at wholesale may be subject to the B&O tax. Persons performing more than one activity may be subject to B&O tax under more than one reporting classification.)
Cold storage warehouse: For the purposes of this guide, the term “cold storage warehouse” means a storage warehouse owned or operated by a wholesaler or third-party warehouser to store fresh and/or frozen perishable fruits or vegetables, dairy products, seafood products, or any combination thereof, at a desired temperature to maintain the quality of the product for orderly marketing.
Community supported agriculture (CSA): A CSA consists of a community of individuals who pledge support to a farming operation where the growers and consumers share the risks and benefits of food production. CSAs usually consist of a system of weekly delivery or pick-up of vegetables and fruit, in a vegetable box scheme, and sometimes includes dairy products and meat. Sales through a CSA are retail sales and are subject to B&O tax.
Consumer: A consumer is any person who uses tangible personal property or receives retail services. The tangible personal property or retail services may be for personal or business use. A seller needs to know who a consumer is to know when to collect sales tax. A buyer, needs to know when to pay sales tax to the seller and, if sales tax hasn't been paid, when to pay sales tax (often referred to as "deferred sales tax") or use tax directly to the Department of Revenue (Department).
Consumer use tax return: A form used to remit use tax directly to the Department. The Consumer Use Tax Return is for consumers and businesses that are not required to be registered with the Department. Farmers who are registered with the Department should not use this form and should remit payment on their excise tax return.
Custom farming services: Custom farming services are specific farming operations performed by an operator using any farm machinery or equipment, farm implement, or draft animal that are:
- Directly related to growing, raising or producing an agricultural product to be sold or consumed by the farmer, and
- Performed either under a contract or with directed or supervised by a farmer.
Custom farming services do not include custom application of fertilizers, chemicals, or biologicals.
Eligible apiarists: An “eligible apiarists” is someone who:
- Owns or keeps one or more bee colonies,
- Grows, raises, or produces honey bee products for sale at wholesale, and
- Is registered with the Department of Agriculture as required under RCW 15.60.021.
Eligible farmer: For the purposes of the sales and use tax exemption for replacement parts:
An “eligible farmer” includes any person who:
- Engages in the business of growing, raising, or producing agricultural products (as defined in RCW 82.04.213) for sale upon that person's own land or land in which the person has a present right of possession; and
- Generates gross sales of agricultural products, or has a harvested value of agricultural products, which the person has grown, raised, or produced, of at least $10,000 in the tax year immediately before the year in which an application for exemption is submitted to the Department.
If you have not engaged in farming operations for an entire tax year immediately before applying for the exemption because you are new to farming or newly returned to farming, you may still qualify for the exemption. The exemption is conditioned on the farmer either:
- Making gross sales of agricultural products, or having a a harvested value of agricultural products, which the farmer has grown, raised or produced, at least $10,000 in the first full tax year that the farmer engaged in farming operations; or
- Being in the process of growing, raising, or producing agricultural products having an estimated value at any time during the first full tax year that the farmer engaged in farming operation of at least $10,000, if the farmer will not sell or harvest an agricultural product during the first full tax year in which the farmer engages in farming operations.
If a person fails to meet the above conditions, and has claimed the exemption, the person must repay the taxes within 30 days of the end of the first full tax year in which the person engages in business as a farmer. The Department of Revenue must assess interest on the taxes for which the exemption was claimed, retroactively to the date the exemption was claimed and accrues until the taxes for which the exemption was claimed are paid.
Excise tax return: A form provided by the Department that businesses use to calculate and pay certain taxes to the Department. The excise tax return is used to pay B&O Tax, Retail Sales Tax, Use Tax, Litter Tax and other excise taxes.
Farmer: A person who grows, raises, or produces, upon their land, any agricultural product to be sold. "Farmer" does not include a person growing, raising, or producing products for their own consumption; a person selling any animal or substance obtained in connection with their business of operating a stockyard or a slaughter or packing house; or a person in respect to the business of taking, cultivating, or raising timber. (RCW 82.04.213)
Farming for hire: Farmers who perform horticultural services for others are farming for hire. A farmer who occasionally assists another farmer in planting or harvesting a crop is generally not considered to be engaged in the business. These activities are generally considered to be casual and incidental to the farming activity. 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 in business.
However, farmers who advertise or hold themselves out to the public as being available to perform farming for hire will be considered as being engaged in business. For example, a farmer who regularly engages in baling hay or threshing grain for others is engaged in business and taxable upon the gross proceeds from this activity, irrespective of the amount of such business or that this person also does some farming of his or her own land. (WAC 458-20-209)
Farmers' Certificate for Wholesale Purchases and Sales Tax Exemptions: A form used by farmers to document that certain transactions are not subject to sales tax. This form can be used in lieu of a reseller permit for wholesale purchases (e.g. feed, seed, fertilizer, spray materials, etc.) or it may be used to document specific sales tax exemptions listed on the form.
Feed: Any substance used as food to sustain or improve animals, birds, fish, or insects, and includes whole and processed grains or mixtures thereof, hay and forages or meals made therefrom, mill feeds and feeding concentrates, stock salt, hay salt, bone meal, fish meal, cod liver oil, double purpose limestone grit, oyster shell, and other similar substances. "feed" includes food additives which are given for their beneficial growth or weight effects. However, "feed" does not include hormones or similar products which do not make a direct nutritional or energy contribution to the body, nor does it include products which are used as medicines.
Feedlot: A feedlot feeds cattle owned by others or cattle that the feedlot purchases for resale. The cattle are fed on the land owned or leased by the feedlot.
Fertilizer: Any substance containing one or more recognized plant nutrients and is
- Used for its plant nutrient content and/or
- Designated for use in promoting plant growth.
"Fertilizer" includes limes, gypsum, and manipulated animal and vegetable manures.
Food and food ingredients: The term “food and food ingredients" means substances, whether in liquid, concentrated, solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing by humans and are consumed for their taste or nutritional value. (WAC 458-20-244)
Gross amount: The term "gross amount," which appears at the top of column one on the excise tax return, is a "catch-all " term for whichever of the following terms is applicable to your business: "gross proceeds of sale," "gross income of the business," or "value of products." The gross amount includes all consideration received without deductions for the costs of doing business or other expenses. (RCW 82.04.070 & RCW 82.04.080)
Hauling for hire: Providing the service of transporting goods from one location to another for another person is classified as hauling for hire. Income from this activity is generally subject to public utility tax under either the motor transportation or urban transportation classification. (WAC 458-20-180)
Horticultural services: The term "Horticultural services" means services related to the cultivation of vegetables, fruits, grains, field crops, ornamental floriculture, and nursery products. The term "horticultural services" includes, but is not limited to, the following:
- Soil preparation services such as plowing or weed control before planting
- Crop cultivation services such as planting, thinning, pruning, or spraying
- Crop harvesting services such as threshing grain, mowing and baling hay, or picking fruit.
Livestock: For the purposes of this guide the term “livestock” means horses, mules, donkeys, cattle, bison, sheep, goats, swine, rabbits, llamas, alpacas, ratites, poultry, waterfowl, game birds, and other species so designated by statute. "Livestock" does not mean free ranging wildlife as defined in Title 77 RCW.
Public utility tax (PUT): A tax imposed on the gross income of specific public service businesses within the state of Washington. The tax is imposed in lieu of B&O tax, and is remitted to the state on an excise tax return, similar to B&O tax. The most common application for farmers is hauling for hire. (RCW 82.16.010, RCW 82.16.020 & WAC 458-20-179)
Reseller permit: A form issued by the Department that authorizes the buyer to purchase goods and/ or certain services at wholesale (not paying sales tax). The goods cannot be for the buyers own use and must be for resale. (WAC 458-20-102)
Retail sale: All sales of tangible personal property (including articles produced, fabricated, or imprinted) are classified as retail sales unless the buyer intends to resell the product and provides a copy of their reseller permit. The term includes services provided by persons who install, repair, clean, alter, improve, construct, or decorate real or personal property for consumers. (RCW 82.04.050)
Retail sales tax: A tax imposed on the buyer of goods and certain retail services. The seller is responsible for collecting the tax from the buyer and remitting the tax to the Department. The sales tax is a combined state and local tax. The local rate varies throughout the state. (RCW 82.08.020)
Revised Code of Washington: The Revised Code of Washington (RCW) is the compilation of all permanent laws now in force. It is a collection of session laws (enacted by the Legislature, and signed by the Governor, or enacted via the initiative process), arranged by topic, with amendments added and repealed laws removed. It does not include temporary laws such as appropriations acts. Most laws administered by the Department are codified in Title 82 RCW. The official version of the RCW is published by the Office of the Code Reviser.
Seed: Propagative portions of plants, commonly used for seeding or planting, whether true seeds, bulbs, plants, seedlike fruits, seedlings, or tubers.
Spray materials: Any substance or mixture of substances in liquid, powder, granular, dry flowable, or gaseous form, which is intended to prevent, destroy, control, repel, or mitigate any insect, rodent, nematode, mollusk, fungus, weed, and any other form of plant or animal life which is normally considered to be a pest. The term includes treated materials, such as grains, which are intended to destroy, control, or repel such pests. "Spray materials" also includes substances which act as plant regulators, defoliants, desiccants, or spray adjuvants.
Structures (chicken): For the purposes of the exemption from sales tax for propane or natural gas for heating chicken structures, the term “structures” means: barns, sheds, and other similar buildings in which chickens are housed.
Tangible personal property: Personal property is property that can be seen, weighed, measured, felt, or touched. It does not include real property (real estate) or property that is attached to real property in such a way as it becomes part of the real property.
UBI/Account ID: Sometimes called a registration, tax reporting account, or "C" number, the Unified Business Identifier (UBI) number is a nine-digit number used to identify persons engaging in business activities. The number is assigned when a person completes a Business License to register with or obtain a license from state agencies. The Departments of Revenue, Licensing, Employment Security, Labor and Industries, and the Corporations Division of the Secretary of State are among the state agencies participating in the UBI program.
Use tax: A tax imposed on goods and certain services in this state when the goods or services are acquired without paying retail sales tax. Either sales or use tax, applies, but not both. Like the sales tax, the use tax is a combined state and local tax. Use tax rates and sales tax rates are identical.
Washington Administrative Code: The Washington Administrative Code (WAC) codifies the rules (i.e., regulations) of each state agency having rule-making authority. The Department of Revenue writes rules to help taxpayers understand and accurately report and pay their tax liabilities. The WAC rules addressing the material presented in this guide are commonly referred to as the Excise Tax Rules and are codified by the Office of the Code Reviser in Chapter 458-20 WAC.
Warehouse: For purposes of this tax guide, the term “warehouse” means an enclosed building or structure in which finished goods are stored. A warehouse may have more than one storage room and more than one floor. Office space, lunchrooms, restrooms, and other space within the warehouse and necessary for the operation of the warehouse are considered part of the warehouse as are loading docks and other such space attached to the building and used for handling of finished goods. Landscaping and parking lots are not considered part of the warehouse. A storage yard is not a warehouse, nor is a building in which manufacturing takes place.
Wholesale sales: Items sold for resale are classified as wholesale sales. The buyer must provide the seller with a copy of their reseller permit, a Farmers' Certificate for Wholesale Purchases and Sales Tax Exemptions or another approved exemption certificate.