Diesel, biodiesel or aircraft fuel bought by a farm fuel user

Farmers, and businesses that provide soil preparation, cultivation or harvesting services to farmers, pay no Washington sales or use tax on diesel, biodiesel or aircraft fuel used for agricultural purposes. The line is drawn at the farm gate and the house: fuel for hauling on public roads or heating living space is taxable.

Who qualifies

• A "farm fuel user": a farmer, or a person who provides horticultural services for farmers, such as soil preparation, crop cultivation and crop harvesting services.

What qualifies

• Diesel fuel, biodiesel fuel and aircraft fuel.
• A fuel blend, if every component fuel would be exempt if sold separately.
• Used for "agricultural purposes": activities directly related to growing, raising or producing agricultural products. WAC 458-20-210 describes these as nonhighway uses for producing agricultural products and providing horticultural services to farmers.

Not covered

• Fuel used to heat space for human habitation or water for human consumption.
• Fuel used to transport people, agricultural products, farm machinery or other property on public roads, except when that transport is incidental to transport on private property and the fuel is not subject to fuel tax under chapter 82.38 RCW.
• Gasoline and other fuels the statute does not name.
• Blends with a component that would not be exempt on its own.

What the buyer gives

Form REV 27 0036 (revision 7/13/23), Section B line 5: "Diesel, biodiesel, or aircraft fuel used by a farmer or a horticultural service provider for farmers." RCW 82.08.865(1): the exemption "is available only if the buyer provides the seller with an exemption certificate in a form and manner prescribed by the department." 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

WAC 458-20-210(9)(l): the buyer must provide a completed certificate, and "The seller must retain a copy of the exemption certificate for their records." 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

• Fueling the truck that hauls crops to market from the exempt tank. Transport on public roads is excluded unless incidental to private-property transport and the fuel is not subject to fuel tax under chapter 82.38 RCW.
• Using exempt fuel for the farmhouse furnace or water heater.
• A custom harvester or soil-preparation contractor assuming it does not qualify. Horticultural service providers for farmers are farm fuel users.

Common questions

Is dyed diesel for tractors exempt from Washington sales tax?

Diesel bought by a farmer and used in tractors for growing, raising or producing agricultural products is exempt from sales and use tax when the farmer gives the seller a completed REV 27 0036 with line 5 checked.

Does a custom harvesting business qualify?

Yes. A person providing horticultural services for farmers, such as crop harvesting, is a farm fuel user.

Is heating fuel for farmworker quarters covered?

No. Agricultural purposes exclude heating space for human habitation or water for human consumption.

Sources

• RCW 82.08.865 (1)-(2) exemption, certificate and definitions
• RCW 82.12.865 Matching use tax exemption
• RCW 82.04.213 (1) agricultural product; (3) farmer
• WAC 458-20-210 (9)(l) diesel, biodiesel and aircraft fuel; (10)
• DOR form REV 27 0036 (7/13/23), Farmer's Certificate for Wholesale Purchases and Sales Tax Exemptions Page 2 line 5; page 2 signature and seller text; page 4 line 5 instructions
• RCW 82.08.050 (4), (7)(a)-(c) seller records and certificate timing
• RCW 82.32.070 (1) five-year record retention