Propane or natural gas to heat structures housing chickens

Farmers pay no Washington sales or use tax on propane or natural gas used only to heat barns and sheds that house only chickens sold as agricultural products. The test is "exclusively" twice over: the fuel only heats the chicken houses, and the buildings only house chickens. Gas for incubation rooms, egg rooms or the farmhouse stays taxable.

Who qualifies

• A farmer, as defined in RCW 82.04.213, raising chickens that are sold as agricultural products.
• WAC 458-20-210, Example 12: hens kept for eggs and later sold to food processors still count; "It is immaterial that Farmer primarily houses these chickens to produce eggs."

What qualifies

• Propane or natural gas.
• Used exclusively to heat "structures": barns, sheds and other similar buildings in which chickens are housed.
• The structures must be used exclusively to house chickens sold as agricultural products.

Not covered

• Gas used to heat structures for incubating chicken eggs, or for washing, packing and storing eggs (WAC 458-20-210, Example 13).
• Gas that also heats the farmhouse, a shop or any other building. The fuel must be used exclusively to heat the chicken structures.
• Other fuels and energy, such as electricity or heating oil. The statute names propane or natural gas only.
• Buildings that house other animals or are also used for storage. The structures must be used exclusively to house chickens.

What the buyer gives

Form REV 27 0036 (revision 7/13/23), Section B line 4a: "Propane or natural gas used to heat structures used to house chickens." The instructions add: "The chickens must be raised by a farmer and sold as agricultural products." Because propane is usually delivered on a recurring schedule, a blanket certificate fits. The signature block asks for Account ID (if applicable), type of entity, name of buyer, farm name, mailing address, authorized signature, date, title and phone number. By signing, the buyer states it qualifies, that it "must keep records to verify the exempt nature of the sale," and that misuse "will result in taxes due, applicable interest, and possible penalties." The form has no field for the seller's name. The buyer ticks single use or blanket; a blanket certificate stays valid while there is at least one sale within 12 months. Cannabis growers and producers cannot use the form.

What the seller keeps

RCW 82.08.910(2): "The seller must retain a copy of the certificate for the seller's files." Form REV 27 0036 says the seller "must retain the original of this certificate for their records" and must not send a copy to the Department, and: "A seller who accepts this completed certificate is relieved of the responsibility to collect retail sales or use tax unless the seller fraudulently fails to collect the tax or solicits the purchaser to participate in unlawfully claiming the exemption." The certificate does not expire while buyer and seller have at least one sale within twelve consecutive months; after a longer gap the seller must obtain a new form. WAC 458-20-210(10): "Without proper documentation, sellers are liable for payment of the retail sales tax on sales claimed as exempt." RCW 82.32.070(1) requires records to be kept for five years, and RCW 82.08.050(7)(a)-(b) gives the 90-day and 120-day windows for obtaining a fully completed certificate.

Common mistakes

• Claiming the whole delivery from a tank that also serves the house or an egg room. The fuel must be used exclusively to heat structures that exclusively house chickens.
• Heating a hatchery room with exempt gas. Incubation structures are named as not exempt in Example 13.
• Treating electric brooder heat as covered. Only propane or natural gas is in the statute.

Common questions

Is propane for a broiler house exempt from Washington sales tax?

Yes, if the propane is used only to heat that house, the house is used only for chickens, and the chickens are sold as agricultural products.

Our natural gas meter serves the chicken barn and the egg cooler room. Is any of it exempt?

The exemption requires the gas to be used exclusively to heat structures used exclusively to house chickens, and WAC 458-20-210 Example 13 says gas heating egg washing, packing and storage structures is not exempt.

Does use tax apply?

Not on qualifying fuel. RCW 82.12.910 exempts the use on the same exclusive-use terms.

Sources

• RCW 82.08.910 (1)-(3) exemption, certificate and definitions
• RCW 82.12.910 Matching use tax exemption
• RCW 82.04.213 (1) agricultural product; (3) farmer
• WAC 458-20-210 (9)(k) propane or natural gas, Examples 12 and 13; (10) certificates
• DOR form REV 27 0036 (7/13/23), Farmer's Certificate for Wholesale Purchases and Sales Tax Exemptions Page 1 line 4a; page 2 signature and seller text; page 4 line 4a instructions
• RCW 82.08.050 (4), (7)(a)-(c) seller records and certificate timing
• RCW 82.32.070 (1) five-year record retention