This sales and use tax exemption applies to purchases or use of qualifying machinery and equipment (M&E) by a manufacturer (winery) where the M&E is used directly in the manufacturing /wine making operation. RCW 82.08.02565, RCW 82.12.02565, and WAC 458-20-13601
Who qualifies for the sales/use tax exemption?
- Manufacturers that manufacture wine for sale or processors for hire that manufacture wine that will be sold by their customer.
- Note:RCW 82.04.130 excludes "the growing, harvesting, or producing of agricultural products; or packing of agricultural products" from the definition of manufacturing. This precise exclusion from the definition of "manufacturing," plus the fact that the M&E exemption is limited to manufacturing, means that growers/vintners are not eligible for the M&E exemption for growing and harvesting activities. However, if you both grow grapes and manufacture them into wine, M&E used in your manufacturing activities at the manufacturing site qualify for exemption.
What is covered by the sales/use tax exemption?
- Machinery and equipment that is used directly by a manufacturer or processor for hire in a manufacturing, processing for hire, or research and development operation.
- Charges for parts, labor, and services used in installing, repairing, cleaning, altering, or improving qualifying M&E.
What machinery & equipment qualify for exemption?
- Industrial fixtures: an item attached to the building or to land that becomes part of the real estate and is classified as real property, not tangible personal property. Examples: craneways, certain concrete slabs, tanks
- Devices: an item that is not attached to a building or site. Examples: forklifts, pallet jacks, destemmers, crushers, presses, sorting machines, free standing shelving, ladders, wine barrels
- Support facilities: a part of a building or structure or improvement used to contain or steady an industrial fixture or device. A support facility must be specially designed and necessary for the industrial fixture or device and must perform a function beyond just being a building, structure, or improvement. Examples: special concrete pads needed for a device
- Pollution control equipment: equipment installed and used in a qualifying manufacturing operation to prevent air or water pollution or contamination for the operation.