Washington State

Office of the Attorney General

Attorney General

Bob Ferguson

AGO 1953 No. 185 - Dec 22 1953
Attorney General Don Eastvold


Whether the retail sales tax applies to farm sales of livestock depends upon individual facts.  In any event, however, if the sales tax is not applicable, the use tax is.

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                                                               December 22, 1953

Honorable Lloyd J. Andrews
Washington State Senate
Chairman Subcommittee on Agriculture
206-C Administration Building
University of Washington
Seattle 5, Washington                                                                                                             Cite as:  AGO 53-55 No. 185

Dear Sir:

            You request our opinion whether or not

            the retail sales or use tax applies to (1) purchases of cows by dairy farmers for replacements, or (2) to the sale of such cows by the farmer.

            We advise that the application of the sales tax depends upon the facts of the individual case, but the use tax applies if the sales tax does not.

            You further inquire

            whether enforcement of the tax against one individual is valid if there was or is wide scale nonpayment.

             [[Orig. Op. Page 2]]

            The enforcement of the tax in all instances coming to the attention of the Tax Commission is not only valid but any other action would be less than their duty.


            Proper consideration of your several questions requires exposition of the various statutes involved.

            For tax purposes the definition of "sale" is broader than normal connotation.  A taxable sale means

            "* * *any transfer of the [1] ownership of, [2] title to, or [3] possession of property for a valuable consideration * * *."  (Emphasis and Enumeration Supplied) RCW 82.04.040.

            A sale at retail, as it relates to your inquiries, is defined as

            "* * *every sale of tangible personal property * * * other than a sale to one who purchases

            "[1] for the purpose of resale as tangible personal property

            "[and 2] in the regular course of business * * *."  (Emphasis and Enumeration Supplied) RCW 82.04.050.

            The livestock transactions defined are retail sales.  Such sales are termed "casual or isolated" when

            "madeby a person who is not engaged in the business of selling the type of property involved."  (Emphasis Supplied) RCW 82.04.040.

            As can be seen, the nature of the sale is determined not only by the purposes for the buyer's purchase, but in some instances by the business nature of the seller.

            The retail sales tax is imposed

            "* * * oneach retail sale in this state," (Emphasis Supplied) RCW 82.08.020.

             [[Orig. Op. Page 3]]

            excepting only those sales specifically exempted by statute.  If the sale is exempt, the consumptive use of the article purchased may be subject to the use tax also set at 3% unless exempted under the various use tax exemptions.

                        I. APPLICATION OF TAX TO CASUAL SALES (FARM)

            A. Retail Sales Tax:

            We assume from the explanatory matter accompanying your request that neither the buyer nor seller were engaged generally in the business of buying and selling livestock as that phrase is commonly understood.  Such sales were therefore "casual or isolated" in statutory nature.

            The sales tax applies to all casual or isolated sales, RCW 82.08.030 (1) unless it is made by a personnot engaged in a business activity taxable under chapter 82.04 RCW (Business and Occupation Tax), chapter 82.16 RCW (Public Utility Tax), or chapter 82.28 RCW (Tax on Mechanical Devices).

            Farmers, dairy or otherwise, are engaged in business under the business and occupation tax, RCW 82.04.140 and 82.04.150.  They must register with the Tax Commission as set forth in RCW 82.32.030 and Tax Commission Rule No. 101.  However, sales atwholesale by farmers acting as individuals, of their farm products grown or produced for sale by them upon their own lands (or lands in which they have a present right of possession) are exempt the wholesaling tax, RCW 82.04.330.  That statute also provides:

            "* * * This exemption shall not apply to any person selling such products at retail; * * * nor to any association of persons whatever, whether mutual, cooperative or otherwise, engaging in any business activity with respect to which tax liability is imposed under the provisions of this chapter."  (Emphasis Supplied)

            Note again that the exemption applies only to farmers acting as individuals, not to farmer associations, corporations, etc.  Again we must assume that it is the individual farmer situation toward which your inquiries are directed.

             [[Orig. Op. Page 4]]

            The business and occupation tax applies as well to casual or isolated sales, since such sales are not included in the exemption or deduction statutes, see also the specific language of RCW 82.04.300 and 82.04.440, except as they fall within the minimum business section (RCW 82.04.300) exempting $600 gross business per bi-month.

            Thus the answer to the first portion of your question‑-whether purchases of cowsby a dairy farmer are subject to the sales tax depends upon whether (a) the seller is within the agricultural exemption RCW 82.04.330, and/or (b) within the minimum business exemption, RCW 82.04.300.

            In other words:

            (1) If the individual farmer-seller engages only in wholesaling his own farm products, produced on his land, and his retail sales (and other business, if any) gross less than $600 for the bimonthly period, the casual sale is exempt the sales tax (but not the use tax).

            (2) If the sale is by an individual farmer within the wholesaling exemption but whose retail sale or sales exceed the minimum, the sales tax applies.

            (3) If the purchase is from a farmer association whose bimonthly gross exceeds the minimum, the sales tax applies.

            This does not mean that the farmer-purchaser must buy from a fellow farmer at his tax peril, since in any event, if the sales tax does not apply or was not paid, the use tax, also at 3%, is applicable and is also to be normally collected by the seller, RCW 82.12.040.

            Whether the sale by the farmer is subject to the retail sales tax is determined by the same criteria applied to himself.  The Tax Commission may proceed directly against the buyer, RCW 82.08.050.

            The only other retail sales tax exemptions relating to farm transactions are found in RCW 82.08.030, exempting:

             [[Orig. Op. Page 5]]

            "(7) Auction sales made by or through auctioneers of tangible personal property (including household goods) which have been used in conducting a farm activity, when the seller thereof is a farmer and the sale is held or conducted upon a farmand not otherwise;

            "* * *

            "(9) Sales of purebred livestock for breeding purposes where the animals are registered in a nationally recognized breed association."  (Emphasis Supplied)


            "* * * sales offeed, seed, fertilizer and spray materials to persons for the purpose of producing for sale any agricultural product whatsoever, including milk, eggs, wool, fur, meat, honey, or other substances obtained from animals, birds or insects."  (Emphasis supplied) RCW 82.04.050.

            The legislative exemptions of particular types of farm transactions can only be construed as an intent to tax all others.  Other farm sales fall within the broad but specific coverage of the applicable statutes, as well as within the well known general legislative policy in this field to tax all transactions not specifically exempted by statute, see St. Paul & Tacoma Lumber Co. v. State, 40 Wn. (2d) 347 (1952).  Purchases by a farmer of livestock for use are no different under the statutes than his purchases of farm machinery or other items upon which the sales tax is assessed and collected.

            B. Compensating Tax:

            This tax applies

            "* * * to the use of every article of tangible personal property including property acquired at a casual or isolated sale."  RCW 82.12.020.

             [[Orig. Op. Page 6]]

            Relative to farmers, the only retail uses exempted are:

            (1) the consumer's use of property, the sale of which the retail sales tax is applicable toand has been paid.  RCW 82.12.030 (2);

            (2) the use of property acquired at a farm auction under the limitations set forth in RCW 82.12.030 (8) (which is complementary to RCW 82.08.030 (7) set forth above); and

            (3) the use of purebred livestock for breeding purposes, etc., RCW 82.12.030 (10).

            Thus, the compensating (or use) tax applies to the use of all tangible personal property, including livestock, acquired by retail purchase, gift, lease, casual sale, or even produced by the person using the same, RCW 82.12.020 and St. Paul & Tacoma Lumber Co. v. State, supra, unless a retail sales tax has been paid thereon.


            The final portion of your inquiry refers to a statement made to you that most, if not all, farmers do not pay the above taxes and that the individual you mentioned was in effect "singled out" because he happened to engage in another separate business.  During the audit of that business these types of sales were discovered and taxed.

            Our excise taxes are on a "self-assessment" basis.  The Tax Commission cannot audit all taxpayers, but must rely for checking on spot audits.  These are continually conducted of registered taxpayers and audits are always made of persons found unregistered.

            Taxes constitute a vital, although perhaps unpleasant, duty of each citizen.  They are the proportional contribution of each of us to the burden of supporting our government.  If some pay less, they in effect receive a "free ride" and others must pay their share.  Any self-assessment tax program must rely heavily upon the inherent honesty of the individuals concerned.

             [[Orig. Op. Page 7]]

            The law binds all citizens, taxpayers, and Tax Commission alike.  Only the legislature may grant exemptions, seeFisher Flour Mills v. State, 35 Wn. (2d) 482 (1950) and cases cited therein.  Thus the Tax Commission has no choice except to assess these taxes in all instances coming to its attention, which it informs us it uniformly does.

            The Commission also informs us that in its experience, instances of nonpayment or evasion are not as widespread as was stated to you.  We ourselves cannot believe that farmers, comprising many of our most stalwart Americans and finest citizens, are a race of tax evaders.

Very truly yours,

Attorney General

Assistant Attorney General