Services to farmers

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 B&O classification on the gross income of these activities. 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.

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 Farmers' Certificate for Wholesale Purchases and Sales Tax Exemption from the farmer. The purchases of pesticides by ABC are for resale and are not subject to retail sales tax, provided that ABC gives the seller a copy of a reseller permit or other appropriate exemption certificate.

If ABC does not segregate their charges (i.e. they charge one lump sum for both the application and the pesticides), then the entire amount received by ABC would be subject to B&O tax under the service and other activities classification. ABC would not charge the farmers sales tax. ABC must pay sales tax when they purchase the pesticides. The entire amount charged by ABC is for horticultural services, and ABC is considered the consumer of the pesticides.

References: RCW 82.04.050, WAC 458-20-102, & WAC 458-20-209