Effective July 1, 2015 eligible apiarists are now “farmers” for excise tax purposes. Engrossed Substitute Senate Bill 6057, Chapter 6, Laws of 2015 [1].
Updated October 2015
Eligible Apiarist: Means a person who:
(For more information about the Dept. of Agriculture's hive registration program, please visit http [3]://agr.wa.gov/Plantsinsects/apiary/ [3] or call (360) 902-2070)
Farmer: Any person engaged in the business of growing, raising, or producing, upon the person's own lands or upon the lands in which the person has a present right of possession, any agricultural product to be sold, and the growing, raising, or producing honey bee products for sale, or providing bee pollination services, by an eligible apiarist. "Farmer" does not include a person growing, raising, or producing such products for the person's own consumption; a person selling any animal or substance obtained therefrom in connection with the person's 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.
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 including honey bee products. "Agricultural product" does not include marijuana, useable marijuana, or marijuana-infused products, or animals defined as pet animals under RCW 16.70.020.
Bee colony: A natural group of honey bees containing 7,000 or more worker bees and one or more queen bees, housed in a man-made hive with moveable frames, and operated as a beekeeping unit. RCW 15.62.020
Honey bee products: Queen honey bees, packaged honey bees, honey, pollen, beeswax, propolis, or other substances obtained from honey bees. Honey bee products do not include manufactured substances or articles.
Business and occupation (B&O) tax is based upon the specific activity. Below are some typical activities performed by apiarists and the tax application for such activities.
Income from providing bee pollination services to a “farmer” by an eligible apiarist is exempt from business and occupation (B&O) tax. If you are an eligible apiarist and your business only provides pollination services to farmers, then you are not required to register with the Department of Revenue.
Income from providing pollination services to persons other than “farmers” is subject to B&O tax under the Service and Other Activities classification. Retail sales tax does not apply.
Wholesale sales (sales to someone who will resell your product) of honey bee products by an eligible apiarist are exempt from B&O tax. This includes sales of honey bees to farmers for the purpose of producing agricultural products for sale or for providing bee pollination services. If you are an eligible apiarist and your business only makes wholesale sales of honey bee products then you are not required to register with the Department of Revenue.
Retail sales (sales to the end consumer) of honey bee products are subject to B&O tax under the Retailing classification. Retail sales of honey bee products are also subject to litter tax. (WAC 458-20-243 [4]) Sales of honey for human consumption are exempt from sales tax as a food product; see (WAC 458-20-244 [5]).
If you manufacture (make) and sell other items (e.g. candles, soaps, etc.) then your income is subject to B&O tax under the Manufacturing classification. Additionally, the sale of such items is subject to B&O tax under either the Wholesaling or Retailing classification, depending on the type of sale. A Multiple Activities Tax Credit (MATC) [6] is allowed, so that you only pay tax under one classification on items manufactured and sold in Washington. Additionally, you must collect retail sales tax on retail sales of such items.
Purchases of honey bees by an eligible apiarist are not subject to sales tax if the apiarist provides the vendor with a completed Farmers' Certificate for Wholesale Purchases and Sales Tax Exemptions [7].
Purchases of feed for Honey bees by an eligible apiarist are not subject to sales tax if the apiarist provides the vendor with a completed Farmers' Certificate for Wholesale Purchases and Sales Tax Exemptions [7].
Eligible apiarists are allowed a retail sales tax exemption on replacement parts and repair services on qualifying machinery and equipment: The definition of farmer for this exemption now includes:
A replacement part is a part that replaces an existing part, or which is essential to maintain the working condition of a piece of qualifying farm machinery and equipment.
A replacement part does not include an item that may be desirable but is not essential for maintaining the working condition of a piece of qualifying farm machinery and equipment, unless the item replaces an existing part. A replacement part does not include paint, fuel, oil, grease, hydraulic fluids, anti-freeze, and similar items except when the seller incorporates these items when installing exempt replacement parts or making repairs to qualifying farm machinery and equipment.
The exemption applies to charges for:
If exempt installation or repair services are provided in a single transaction that also involves the provision of nonexempt services, the exemptions apply to the exempt services as long as the charge for the exempt services are separately itemized and does not exceed the seller's usual and customary charge for such services. The exemptions do not apply if the seller makes a single non-itemized charge for all of the services.
Qualifying farm machinery and equipment means machinery and equipment used primarily by an eligible farmer for growing, raising, or producing agricultural products including farm tractors and other farm implements. As of July 22, 2007, qualifying farm machinery and equipment includes vehicles licensed as farm vehicles.
A “farm tractor” is a motor vehicle that is designed and used primarily as a farm implement for drawing plows, mowing machines, and other farm implements of husbandry. (RCW 46.04.180)
“Farm vehicles” are vehicles used primarily in agricultural pursuits on farms for the purpose of transporting machinery, equipment, implements, farm products, supplies and or farm labor and are only incidentally operated on or moved along public highways for the purpose of going from one farm to another. (RCW 46.04.181) For example, sales tax does not apply to replacement parts for motor vehicles licensed with the Department of Licensing (DOL) specifically for “farm use,” “farm exempt,” or “farm combination,” including farm tractors and farm implements, unless it is specifically excluded from the definition of farm machinery and equipment (as discussed below).
A “farm implement” is machinery or equipment that is manufactured, designed, or reconstructed for agricultural purposes and used primarily by an eligible farmer to grow, raise, or produce agricultural products, but does not include lawn tractors and all-terrain vehicles.
For the purposes of this exemption, qualifying farm machinery and equipment does not include:
For more information on this exemption please see our special notice [8].
With the passing of recent legislation (Engrossed Substitute Senate Bill 6057) the Department received several questions on how this new law applies to beekeepers. Below is a representative list of those questions and our answers.
The answer is yes if, in addition to registering with Washington State Department of Agriculture and owning or keeping at least one hive, the beekeeper must also meet the definition of an “eligible apiarist” (see description above)
If an apiarist doesn't register under RCW 15.60.021 [2](with WSDA), then they do not qualify as an “eligible apiarist” and would not be considered a “farmer” even if they make wholesale sales of honey bee products. They would not qualify for any of the exemptions listed in this document that are contingent on an apiarist being an “eligible apiarist” or a “farmer.”
Note: A beekeeper that does not register with WSDA, but provides bee pollination services would be subject to B&O tax under the Service and Other Activities classification on their charges for these services.
Does Washington's litter tax apply to the sale of honey?
Are sales of food generally sales tax free?
Sales of food and food ingredients for human consumption are exempt from sales tax. (WAC 458-20-244 [5])
Wholesale sales of honey bee products (see definition above) by an eligible apiarist are exempt from B&O tax. Such sales are also exempt from litter tax (RCW 82.19.050 [9]). If an eligible apiarist'sonly business activity is the wholesaling of honey bee products then they are not required to register with the Department of Revenue.
Retail sales (sales to end consumers) of honey bee products are subject to B&O tax under the Retailing classification and, in general, are subject to sales tax. Sales tax exemptions include:
Food and food ingredients: for example retail sales of honey are exempt from sales tax. (WAC 458-20-244 [5])
Interstate and foreign sales – Sales of honey products delivered by the seller to an out-of-state location are exempt from retail sales tax as interstate and foreign sales. Note: such sales are also exempt from B&O tax. (WAC 458-20-193 [10])
Note: Sales of honey bees by an eligible apiarist to a farmer for providing pollination services are exempt from B&O tax and sales tax.
“Feed" is any substance used as food to sustain or improve animals, birds, fish, or insects, including 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. Food additives that are given for their beneficial growth or weight effects are "feed." Hormones or similar products that do not make a direct nutritional or energy contribution to the body are not "feed," nor are products used as medicines.
The purchases of “feed” by an eligible apiarist, including items purchased to make feed (e.g. pollen patties), are exempt from sales tax, except for the purchases of hormones or similar products. When making such purchases the eligible apiarist must provide their vendor with a completed Farmers' Certificate for Wholesale Purchases and Sales Tax Exemptions [7].
Yes, both eligible and non-eligible apiarists are exempt from collecting retail sales tax on pollination services to farmers. (An eligible apiarist would not owe B&O tax. While a non-eligible apiarist would owe B&O tax under the service and other activities classification.)
Yes, eligible apiarists who have at least annual gross income from pollination services or from sales of agricultural products (including honey bee products) of at least $10,000, or both qualify for this exemption.
It is up to the individual eligible apiarist to determine if they qualify for this exemption and they must maintain records documenting that they qualify for the exemption. To obtain the exemption, the eligible apiarist must provide the seller with a completed Farmers' Certificate for Wholesale Purchases and Sales Tax Exemptions [7], and the eligible apiarist must mark block 9 (Replacement Parts and Repair Services for Qualifying Farm Machinery and Equipment).
Note: Only the replacement parts and repair services on such forklifts is exempt; the exemption does not extend to the purchase of a forklift.
Note: Only the replacement parts and repair services on extracting equipment is exempt; the exemption does not extend to the purchase of actual extracting equipment.
The exemption is limited to machinery and equipment used primarily in the growing, raising or producing the agricultural product. Here the refrigeration unit is used to store the product; not grow, raise or produce the product.
Note: The exemption only extends to parts that replace an existing part, not the entire piece of qualifying machinery or equipment.
If a frame breaks, the replacement of the frame would qualify. If a panel of a bee box is damaged and the damaged side of the bee box needs replacing, the replacement panel used to patch the bee box would be considered a replacement part.
Persons who are beekeepers, but who do not meet the definition of “eligible apiarist” should contact the Department for tax guidance.
If you have questions, please call us at 360-705-6705; or email us for a tax ruling at: rulings@dor.wa.gov [12].
Links
[1] http://lawfilesext.leg.wa.gov/biennium/2015-16/Pdf/Bills/Session%20Laws/Senate/6057-S.SL.pdf
[2] http://apps.leg.wa.gov/rcw/default.aspx?cite=15.60.021
[3] https://agr.wa.gov/Plantsinsects/apiary/
[4] http://apps.leg.wa.gov/wac/default.aspx?cite=458-20-243
[5] http://apps.leg.wa.gov/wac/default.aspx?cite=458-20-244
[6] http://app.leg.wa.gov/wac/default.aspx?cite=458-20-19301
[7] https://dor.wa.gov/sites/default/files/legacy/Docs/forms/ExcsTx/ExmptFrm/27-0036.pdf
[8] https://dor.wa.gov/sites/default/files/legacy/Docs/Pubs/SpecialNotices/2014/sn_14_RepairPartsFarmMachEquip.pdf
[9] http://apps.leg.wa.gov/rcw/default.aspx?cite=82.19.050
[10] http://apps.leg.wa.gov/wac/default.aspx?cite=458-20-193
[11] http://apps.leg.wa.gov/wac/default.aspx?cite=458-20-210
[12] mailto:rulings@dor.wa.gov