Washington – Exemption for Dairy Product Manufacturers

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.

For Further Information

Washington Department of Revenue – Special Notice