Livestock Nutrient Exemptions - Implementation Update

Dear Jay, Jack, and Chris:

July 1st, when changes to the livestock nutrient management sales and use tax exemptions (RCW 82.08.890 and 82.12.890) take effect, is right around the corner. As you know, the changes to these exemptions are the result of ESSB 6170 (chapter 469, Laws of 2009), Sections 601 and 602. This e-mail is to let you know what the Department is doing to implement the legislative changes.

Special Notice
We are in the final stages of preparing a Special Notice that explains how the exemptions apply beginning July 1. In addition to being available on the Department’s Internet site, the Special Notice will, by June 25th, be sent to:

Persons who currently posses an exemption certificate for the livestock nutrient management sales tax exemption.
Retailers who have reported exempt sales to farmers.
The Washington Dairy Federation, Washington Cattlemen’s Association, Washington Fryer Commission, Washington Farm Bureau, and Washington State Grange.
The Washington Conservation Commission, Washington Association of Conservation Districts, and local conservation districts.
Washington State Departments of Agriculture and Ecology.
Capital Press.

New Exemption Certificates
We are also in the final stages of revising the exemption certificate used for claiming the livestock nutrient management sales tax exemption. A revised exemption certificate, along with the Special Notice, will be sent to those persons who currently possess an exemption certificate and continue to be eligible for the exemption under the narrowed eligibility requirements.

Beginning July 1st, the Department will issue one of two exemption certificates to eligible taxpayers. The first exemption certificate will not have an expiration date. It will be issued to eligible persons who produce milk and who have a certified dairy nutrient management plan as required under chapter 90.64 RCW or who own an AFO and have a permit issued under chapter 90.48 RCW.

The second exemption certificate will be issued to AFOs who qualify for the exemption because they have a livestock nutrient management plan that has been approved by a conservation district as meeting natural resource conservation service field office technical guide standards and possess an exemption certificate for replacement parts and services for farm machinery and equipment The exemption certificate issued to these AFOs will include an expiration date that coincides with the expiration date of their exemption certificate for replacement parts and services for farm machinery and equipment. We will advise AFOs that receive this exemption certificate that their exemption certificate for the livestock nutrient management sales tax exemption will be renewed at the same time as their exemption certificate for replacement parts and services for farm machinery and equipment is renewed. These AFOs will not be required to separately apply for both exemption certificates.

Persons who may no longer qualify for the exemptions under the narrowed eligibility requirements
We have completed an analysis to determine how many of the AFOs that currently qualify for the exemptions by having a nutrient management plan approved by a conservation district do not possess an exemption certificate for replacement parts and services for farm machinery and equipment. There are 11 such AFOs who do not possess this exemption certificate.

By July 1st we will contact these AFOs to let them know that their eligibility for the livestock nutrient management exemptions has been impacted by the new legislation. We will advise them of the new eligibility requirements and how to apply for the exemption certificate for replacement parts and services for farm machinery and equipment. The Department will automatically issue an exemption certificate for the livestock nutrient management sales tax exemption to any of these 11 AFOs that apply and are approved for an exemption certificate for replacement parts and services for farm machinery and equipment.

Please let me know if you have any questions about the Department’s implementation plans.

JoAnne Gordon
Tax Policy Specialist
Legislation & Policy Division
Department of Revenue
(360) 570-6121