Sales tax now applies to some services

Starting October 1: Some business services are now subject to retail sales tax, as required by state law, ESSB 5814. When you buy these services, vendors should add sales tax to your bill. If you sell these services, you should begin collecting retail sales tax. Learn more about Services newly subject to retail sales tax.

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Manufacturing activities

When you take tangible personal property (grapes) and, by applying labor or skill manually or by machinery, turn the grapes into a new and different product (wine) that will be sold, you are conducting a manufacturing activity.

B&O tax

Income from the sale of wine made from purchased fruit juice or slurry should be reported under the Manufacturing B&O tax classification. This income must also be reported under the Wholesaling or Retailing classification.

Multiple activities tax credit (MATC)

The MATC is a B&O tax credit that is available to manufacturers that file under more than one B&O tax classification on the sale of the same product. A credit is allowed so that B&O tax is only paid once.

To take the credit, you must complete the MATC under Credits when filing your return in MyDOR.

B&O tax exemption

Wine manufactured from fresh fruit is exempt from Manufacturing B&O tax.

Note: This exemption expires on July 1, 2035. It will then be replaced by a reduced B&O tax rate.

For a more information about manufacturing, including sales and use tax exemptions on purchases, see our Manufacturing Industry Tax Guide and WAC 458-20-136.

References

RCW 82.04.4266 Exemptions-Fruit and vegetable businesses.

RCW 82.04.260 Tax on manufacturers and processors of various foods and by-products.

WAC 458-20-136 Manufacturing, processing for hire, fabricating.

WAC 458-20-19301 Multiple activities tax credits.