Sales of horses may be made through claiming races, auctions, on the farm, or by individuals. All sales are considered retail sales unless otherwise specified. The sale must be reported under the Retailing B&O tax classification and the Retail Sales Tax classification.
Retail sales tax is due on all retail sales made in the state of Washington, unless there is a specific exemption. An exemption from the retail sales tax is granted for sales of horses, registered with a nationally recognized breeding association, when they are purchased for breeding purposes (racing to determine the value of the breeding stock is considered a breeding purpose). The Farmers' Certificate for Wholesale Purchases and Sales Tax Exemptions (pdf) must be filled out by the purchaser and given to the seller.
Retail sales tax must be collected on all retail sales of geldings, spayed mares, registered horses not used for breeding purposes, and nonregistered horses. Income derived from leasing horses is subject to the Retailing B&O tax and retail sales tax. However, leased horses that are registered with a nationally recognized breeding association when leased for breeding purposes qualify for the breeding stock exemption. The Farmers' Certificate for Wholesale Purchases and Sales Tax Exemptions must be completed by the purchaser and provided to the seller.
When a horse is purchased at wholesale, the purchaser must resell the horse without intervening use. The sale is considered a wholesale sale when all of the following elements exist:
There is no intervening use of the horse (no showing, racing, breeding, etc.) between the time of purchase and time of resale;
The horse is resold within 60 days; and
The seller receives a reseller permit from the purchaser.
Income from horses sold at wholesale is subject to the Wholesaling B&O tax.