SALT Report 3049 – The Washington Department of Revenue issued a notice regarding the business and occupation tax exemptions available to manufacturers of dairy products. The exemptions were expanded to include wholesale sales by a dairy product manufacturer to a purchaser who will use the dairy products as an ingredient or component of another dairy product.
However, effective July 1, 2015 the B&O tax exemptions for dairy product manufacturers, as provided in RCW 82.04.260, will be replaced with a reduced a B&O tax rate of 0.138%. In addition, this statute was also expanded to include wholesale sales by a dairy product manufacturer to a purchaser who will use the dairy products as an ingredient or component of another dairy product. The reduced B&O tax rate applicable to these sales will expire on June 30, 2023
Manufacturers who claim the B&O exemption for wholesale sales must maintain adequate records for up to five years that can establish that the goods were:
- Transported by the purchaser in the ordinary course of business out of the state, or
- Sold to a manufacturer in the state to produce another dairy product for sale
Adequate records include a letter from the buyer stating one of the above reasons and a copy of the buyer’s reseller permit.
Unless otherwise noted, the exemptions are effective October 1, 2013 and expire on July 1, 2015.
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