WAC 122

Feed Purchased by Cattle Auction BusinessesCancelled 07/17/02 - Feed Purchased by Cattle Auction Businesses - This directive explains that because of a 1985 law change, custom feedlot operators may purchase feed at wholesale and are exempt from B&O tax irrespective of whether they charge the livestock owner separately for the cost of feed.Chapter 118, Laws of 2001, and Det. 87-266, 4 WTD 007 (1987) provide sufficient guidance to determine the tax consequences of this activity.

Agricultural Tax Guide

Farmer's Retail Sales Tax Exemption Certificate

"Sale at retail," "retail sale."

"Sale at wholesale," "wholesale sale."

Tax on retailers.

Tax on wholesalers, distributors.

Exemptions--Farmers--Agriculture.

Tax imposed--Retail sales--Retail car rental.

Sales and use tax authorized--Additional taxes--authorized --Maximum rates.

Sales of feed, seed, fertilizer, spray materials, and other tangible personal property for farm use.Effective 4/10/94.WAC 122 repealed, incorporated into WAC 210, effective 9/25/03.

SPRAY MATERIALS USED IN PRODUCING TIMBER AND THE AGRICULTURAL EXEMPTION -This document explains that the retail sales tax applies to the purchase of spray materials used to control weeds and pests in timber areas.This document is no longer needed as the taxability of spray materials is addressed in WAC 458-20-13501. Cancelled by ETA 2003-3s 07/16/2001

Farmworker Drinking Water

Tax Incentives to Reduce Agricultural Burning

Sales and Use Tax Exemption to Farmers and Veterinarians for Animal Pharmaceuticals

Farm Fuel Users - Sales and Use Tax Exemption

Tax Incentives to Reduce Agricultural Burning to Change

The Tax Application for Tree and/or Stump Removal from Existing Orchards

Pesticides and the Hazardous Substance Tax

Dairy Nutrient Management Sales/Use Tax Exemption & Dairy Farmer Sample Application

Update--Sales and Use Tax Exemption for Animal Pharmaceuticals Sold to Farmers or Veterinarians

Tax on Equipment Used to Reduce Agricultural Burning

USE TAX EXEMPTION -- CHEMICAL SPRAYS OR WASH:Flotation salts such as pear float/sodium silicate prevent fungal decay of harvested fruit and thus are exempt from sales/use tax for persons who purchase them for post-harvest treatment of fruit.Det. No. 90-386, 10 WTD 336 (1990).

USE TAX -- INTERVENING USE.When taxpayer first uses a substance for purposes other than one which is tax exempt, such use is intervening use and negates the exemption.The use tax test is first use, not primary use. An exemption in a tax statute will be strictly construed in favor of taxation.Accord: Det. 87-298, 4 WTD 87 (1987), Budget Rent-a-Car vs. Dept. of Rev., 81 Wn 2d 171, 174 (1972).

USE TAX EXEMPTION -- COMMERCIAL FERTILIZERS.The legislature intended to exempt from sales/use tax all recognized commercial fertilizers which are purchased and first used as such by agricultural producers covered by RCW 82.04.330.Rule 122 is construed to exempt fertilizers applied by spraying plants directly as well as those fertilizers added to the soil.

This determination as been overruled in part by Det. No. 91-305S, 11 WTD 281 (1991).

HYDRATED LIME -- POST-HARVEST TREATMENT OF FRUIT -- SALES AND USE TAXES -- EXEMPTION.The purchase of hydrated lime when first used in cold storage to prevent carbon dioxide injury to fruit, including scald or decay, is exempt from sales and use taxes as a post-harvest treatment of the fruit. (This determination overrules the decision in Det. 90-386, 10 WTD 336 (1990), that the purchase of hydrated lime was subject to retail sales tax.)

FERTILIZER -- SALES TAX -- USE TAX -- INTERVENING USE.When taxpayer sells its customers a substance for purposes other than one which is tax exempt, such use is intervening use and negates the exemption.The test is first use, not primary or subsequent use.An exemption in a tax statute will be strictly construed in favor of taxation.Accord: Det. No. 90-386, 10 WTD 336 (1990); Det. No. 87-298, 4 WTD 87 (1987); Budget Rent-a-Car vs. Dept. of Rev., 81 Wn 2d 171, 174 (1972).

FERTILIZER -- SALES TAX -- EXEMPTION.The sale of sawdust does not qualify for the sales tax exemption for fertilizers.

RETAIL SALES TAX -- RESALE CERTIFICATE -- FARMER -- FEEDLOT.A feedlot which fattens its own cattle for longer than sixty days before selling them at wholesale will be treated as a farmer and may give its vendors resale certificates for its purchases of feed.

RETAIL SALES TAX - LIQUID NITROGEN - CHERRIES -ASPARAGUS - DECAY.Sales of liquid nitrogen applied directly on post-harvest cherries to prevent decay are not retail sales.Sales of liquid nitrogen applied in asimilar manner to asparagus are retail sales.

RETAIL SALES TAX - M&E TAX EXEMPTION - CONDITIONING OF SEED.An agricultural business is not entitled to a refund of sales tax it paid for the purchase, installation, and repair of machinery and equipment it uses to condition seed for planting because conditioning of seed for use in planting is not a manufacturing activity.

WHOLESALING B&O TAX -- SALES OF SPRAY TO FARMERS -- FARMER DEFINED.Sales of spray materials to farmers for the purpose of producing for sale any agricultural product are classified as wholesale sales.However, if a person uses agricultural products as ingredients in a manufacturing process, the person does not qualify as a farmer.A person will qualify as a farmer, provided:1) the person grows or produces an agricultural product on the person's own land or land in which the person has a present right of possession; and 2) the person does not use such products as ingredients in a manufactu

SALES TAX - USE TAX -DEDUCTION -- SPRAY MATERIALS - PACKING MATERIALS.The definition of "packing materials" does not encompass spray materials.The definition of packing materials is limited to "materials in which tangible personal property may be contained or protected within a container, for transportation or delivery to a purchaser."Because the spray materials do not contain or protect the potatoes, nor are they used for transportation or delivery, spray materials do not qualify for the deduction

SALES TAX - USE TAX - DEDUCTION --CHEMICAL USED IN PROCESSING - SPRAY MATERIALS.Even if spray materials qualified as a "chemical" for purposes of the exemption, in this case their use appears to occur prior to any processing taking place because the potatoes are sprayed at the time of harvest, when they are put into storage.

SALES OF CHEMICAL SPRAYS FOR THE POSTHARVEST TREATMENT OF FRUIT - SALES TAX - USE TAX - DEDUCTION --POTATOES.The exception from the definition of a retail sale set forth in RCW 82.04.050(3) applies to sales of spray for fruit and not vegetablesAs such, it does not apply to sales of spray for potatoes.

RETAIL SALES TAX - EXEMPTION - MACHINERY - FIELD BURNING - COMBINES - MAJORITY USE TEST.To satisfy the majority use test for field burning equipment, a taxpayer must prove that a combine is used more time in a qualifying use (i.e., to reduce field burning) than in a nonqualifying use (i.e., to harvest wheat).Where a combine simultaneously performs different functions, one of which is arguably an exempt function (reducing field burning through processing straw) and one of which is not exempt, it is not used to reduce field burning more than half of the time and does not qualify for the retai

BUSINESS AND OCCUPATION TAX -- EXEMPTION -- AGRICULTURAL -- CUSTOM FEEDERS.Persons engaged in business of raising livestock, owned by others, i.e. "custom feeding," are exempt from B&O tax irrespective of whether they charge the livestock owner separately for the cost of feed separately for the cost of feed.

SALES/USE TAX -- FERTILIZER EXEMPTION -- HOPS -- COIR YARN.Coir yarn is a rope-like material used by hops farmers in the above ground level growth of hop vines.The fact that after such use the yarn is plowed into the ground with the harvested vines does not make it exempt of sales/use tax as a fertilizer.

AGRICULTURAL EXEMPTION -- FEED --USE TAX.The exemption provided in Rule 122 applies only to feed purchased or used in the production of agricultural products for wholesale sale.It does not apply to feed purchased or used for boarding horses, and it does not apply to feed purchased for horses held for retail sales.