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Contaminated site cleanup and other environmental remedial action are taxable based on the specific activity performed. Tax treatment for specific activities is discussed below.
Service activities
The following activities, which may be performed relative to the cleanup of a contaminated site, are service activities:
- Monitoring.
- Treating groundwater.
- Waste disposal.
- Testing.
- Surveying.
- Engineering and design services.
- Consulting.
- Planning services.
- Other activities, not elsewhere defined in Chapter 82.04 RCW.
If you perform the above activities, you are subject to B&O tax under the service and other activities classification. Service providers owe sales tax or use tax on all materials consumed in providing such services.
Retail activities
Improvements to real property are a retail activity if performed for a consumer, unless otherwise provided by law (for example, improvements to buildings for the federal government are not a retail activity). Retail activities include the following:
- Repairing, improving, or cleaning an existing building or structure.
- Razing an existing building or structure.
- Removing underground tanks.
- Installing a cap over contaminated soil.
- "Cleaning" contaminated soil when performed in conjunction with the razing and/or construction of a building or structure such as a dry cleaner or a gas station (See Combination contracts – services rendered in respect to construction section below.)
If you perform these services you are subject to the retailing B&O tax and must collect sales tax from the consumer. Subcontractors performing these activities that receive a completed reseller permit from a contractor are subject to the wholesaling B&O tax (sales tax is not collected).
Hauling activities
Hauling for hire, for example, transporting contaminated materials from point A to point B, is subject to either the motor or urban transportation classification of the public utility tax. Hauling for hire includes loading and unloading but does not include hauling for disposal purposes.
Cleaning bare land or water
The cleanup of unimproved land or water such as might occur at the site of an oil spill on an undeveloped beach receives specific tax treatment. Gross revenue from these types of clean-ups is subject to the service and other activities B&O tax classification. The activities may include the following:
- Skimming oil off water.
- Using absorbents to remove oil from land or water.
- Pumping oily water from a vessel and disposing of the waste water.
- Cleaning contaminated fowl or mammals.
- High pressure washing of land.
- Cleaning contaminated soil.
Combination contracts - services rendered in respect to construction
Contracts that include a combination of services are taxable in accordance with the predominant activity of the contract. For example, if you are responsible for razing a gas station, removing the underground tanks, and cleaning contaminated soil, all income associated with these activities will be subject to the same tax treatment as the razing and removal, that is, as a retailing activity.
