WAC 174

Use Tax - Trucks and Trailers Used in Interstate Commerce Repealed 6/30/2000 - This document is no longer needed. WAC 458-20-17401 (Use tax liability for motor vehicles, trailers, and parts used by motor carriers operating in interstate or foreign commerce) currently explains that in the absence of a readily available fair market value, the Department will accept a value based on depreciation schedules used by the Department of Licensing. In addition, the depreciation schedules provided in AD 8174.1 are out of date.

"Sale at retail," "retail sale."

Tax on Retailers

Retail Sales Tax Imposed

Exemptions--Sales of airplanes, locomotives, railroad cars, or watercraft for use in interstate/s or foreign commerce.

Exemptions-- Sales of motor vehicles and trailers for use in transporting persons or property in interstate or foreign commerce.

Use Tax imposed

Exemptions--Use of airplanes, locomotives, railroad cars, or watercraft used in interstate/s or foreign commerce.

Sales and Use Taxes Authorized - Additional Taxes Authorized - Maximum Rates

Sales of motor vehicles, trailers, and parts to motor carriers operating in interstate or foreign commerce explains the retail sales tax exemptions provided in RCW 82.08.0262 & 82.08.0263 for sales to for-hire motor carriers operating in interstate or foreign commerce. This rule has been revised to recognize that effective July 1, 2008, a blanket exemption certificate continues as long as the seller has a recurring business relationship with the buyer, which is defined by law as making at least one purchase from the vendor within a period of 12 consecutive months.

Sales of motor vehicles, trailers, and parts to motor carriers operating in interstate or foreign commerce. Effective 6/13/97.

WAC 458-20-174 Sales of motor vehicles, trailers, and parts to motor carriers operating in interstate or foreign commerce; WAC 458-20-17401 Use tax liability for motor vehicles, trailers, and parts used by motor carriers operating in interstate or foreign commerce. Rule 174 explains the application of the business & occupation tax and the retail sales tax on sales to for hire motor carriers operating in interstate or foreign commerce. Rule 17401 explains the use tax and use tax exemptions that apply to for hire motor carriers.

ICC Sales and Use Tax Exemption Requirements Eased

"New Buyers" Retail Sales Tax Exemption Certificate

USE TAX -- MOTOR CARRIERS -- PALLETS, TARPAULINS, BUNGE CORDS. Pallets, tarps, and tie downs used by a Washington-based interstate carrier not designed for a specific vehicle are subject to use tax.

USE TAX -- VEHICLES USED SUBSTANTIALLY IN INTERSTATE COMMERCE -- 25% TEST APPLIED ON A VEHICLE BY VEHICLE BASIS. For determining whether a vehicle has been used "in substantial part in the normal and ordinary course of the user's business for transporting therein persons or property for hire across the boundaries of the state" the Department requires that the vehicle be used in actually transporting property or persons for hire across state boundaries at least 25% of the time. This test is to be applied on a vehicle by vehicle basis. Accord: UPS v.

RETAIL SALES TAX -- EXEMPTION -- MOTOR VEHICLES -- TRAILERS -- USE IN INTERSTATE COMMERCE. For the RCW 82. 08.0263 sales tax exemption to apply, 1) the purchaser must be the holder of a carrier permit issued by the Interstate Commerce Commission, 2) the vehicle or trailer must be purchased to transport persons or property for hire in interstate or foreign commerce, and 3) the vehicle or trailer must first move upon the highways of this state from the point of delivery in this state to a point outside of this state under the authority of a one-transit permit.

RETAIL SALES TAX -- TRANSFER -- ADJUSTMENT OF BENEFICIAL INTEREST -- TRUCKS AND TRAILERS. A change in the "mere form of ownership" of property under Rule 106 is deemed not a "retail sale" as defined under RCW 82.04.050. When trucks and vehicles are transferred in exchange for stock under Rule 106, a "sale" has not taken place. The RCW 82.08.0262 requirements are therefore not required to further exempt the transfer from retail sales tax.

RETAIL SALES TAX -- EXEMPTION -- PROPERTY WHICH BECOMES A COMPONENT OF A MOTOR VEHICLE OR TRAILER. For the RCW 82.08.0262 sales tax exemption to apply to the purchase of tangible personal property, 1) the property must become a component part of a motor vehicle or trailer, and 2) the motor vehicle or trailer will be used by the holder of a carrier permit issued by the Interstate Commerce Commission authorizing transportation by motor vehicle across the boundaries of this state. "Components" must become an integral part of the vehicle or trailer.

SERVICES IN RESPECT TO CONSTRUCTING – ADMINISTRATIVE SERVICES – ARCHITECTURAL SERVICES. The review of the progress of capital upgrades is not a service in respect to constructing where the service is included within the overall management service provided because the review was not the predominant activity performed under the management services contract.

RETAIL SALES TAX—USE TAX—EXEMPTION FOR INTERSTATE CARRIERS—COMPONENT PARTS. Retail sales tax and use tax exemptions are provided for component parts purchased by interstate motor carriers. Included are such items as tires, engine repair parts, and items permanently attached to vehicles or held by brackets. Tire chains are also exempt when they are stored in boxes permanently attached to the vehicles.

RETAIL SALES TAX—USE TAX—EXEMPTION FOR INTERSTATE CARRIERS—MOTOR VEHICLES AND TRAILERS—VALUATION WHEN USE NO LONGER INTERSTATE. Purchases of motor vehicles by interstate motor carriers may be exempt from retail sales tax at the time of purchase, yet use tax may come due on subsequent use when a vehicle is no longer used in substantial part in transporting persons or property for hire across state boundaries. When use tax becomes due, it is based on the fair market value of the vehicle at the time of first non-exempt use.

B&O TAX -- LESSOR -- TRUCKS/TRAILERS -- USE INSIDE AND OUTSIDE OF WASHINGTON. When a truck or trailer is leased to a person other than a motor carrier, the result is the same as for motor carriers. The taxable incident takes place in this state when the property is "used" in this state by the lessee.

B&O TAX -- VEHICLE/TRAILER LEASE -- LEASE PAYMENTS GENERATED OUTSIDE WASHINGTON. Lease payments generating income for a Washington district of a vehicle/trailer lessor are not taxable in Washington to the extent the use of the vehicles or trailers are used outside of Washington.

B&O TAX -- LESSOR -- TRUCKS/TRAILERS -- USE INSIDE AND OUTSIDE OF WASHINGTON. Retailing B&O tax liability may be reduced by an interstate sales deduction if adequate records are maintained to substantiate the amount of use claimed outside this state.

B&O TAX -- LESSOR -- VEHICLES/TRAILERS -- USE OUTSIDE WASHINGTON -- VEHICLE REGISTRATION FEE. Because a passed-on charge representing the vehicle registration fee is considered as part of the lessee's lease payment, it is subject to an interstate commerce deduction for vehicle usage outside Washington just as normal lease payments are.

RETAIL SALES -- USE TAX -- INTERSTATE FOR HIRE CARRIERS -- COMPONENT PARTS. The retail sales and use tax exemption for the purchase of component parts of motor vehicles and trailers applies to the holders of interstate carrier permits as long as the motor vehicle or trailer to which the parts are attached will be used in hauling for hire, and even if it will not be used substantially in interstate hauls.

B&O TAX -- LESSOR -- TRUCKS/TRAILERS -- USE INSIDE AND OUTSIDE OF WASHINGTON. When a truck or trailer is leased to motor carriers, the lessor may claim an interstate sales deduction against retailing B&O tax for the amount of the lease income attributable to the actual out-of-state use of the vehicles and trailers. This deduction may be taken even if the vehicle is not used substantially in interstate hauls for hire.

EXEMPTION -- USE TAX -- MOTOR VEHICLES -- USED IN SUBSTANTIAL PART. To be entitled to the use tax exemption for motor vehicles transporting property for hire across the state's boundaries, a taxpayer must show that the vehicles cross the state's borders at least 25 percent of the time. UPS v. Department of Revenue, 102 Wn.2d 355 (1984).

USE TAX -- EXEMPTION -- INTERSTATE COMMERCE -- MOTOR VEHICLES -- USED IN SUBSTANTIAL PART. To be entitled to the use tax exemption for motor vehicles transporting property for hire across the state's boundaries, a taxpayer must show that the vehicles cross the state's borders at least 25 percent of the time. UPS v. Department of Revenue, 102 Wn.2d 355 (1984)

RCW 82.12.025 -- USE TAX -- EXEMPTION -- MOTOR VEHICLES -- INTERSTATE COMMERCE -- USED IN SUBSTANTIAL PART. To be entitled to the use tax exemption for motor vehicles transporting property for hire across the state's boundaries, a taxpayer must show that the vehicles cross the state's borders at least 25 percent of its total trips in each year. UPS v. Dept. of Revenue, 102 Wn.2d 355 (1984 ).

RCW 82.08.0263 -- RCW 82.12.0254 -- SALES TAX -- USE TAX -- EXEMPTION -- MOTOR VEHICLES -- INTERSTATE COMMERCE -- FOR HIRE CARRIER -- TITLE TO GOODS CARRIED--CONTRACT FOR CARRIAGE. A seller/carrier transporting its own goods is not a "for hire" carrier. A seller/carrier transporting goods titled in the name of the purchaser with whom the seller/carrier has contracted for carriage is a "for hire" carrier.

USE TAX -- VEHICLES USED SUBSTANTIALLY IN INTERSTATE COMMERCE -- 25% TEST REVENUE VS MILEAGE. For determining whether a vehicle has been used "in substantial part in the normal and ordinary course of the user's business for transporting therein persons or property for hire across the boundaries of the state" the Department requires that the vehicle be used in actually transporting property or persons for hire across state boundaries at least 25% of the time.

RETAIL SALES TAX -- USE TAX -- EXEMPTIONS -- INTERSTATE MOTOR CARRIERS -- COMPONENT PARTS -- FORKLIFT VEHICLES -- TRANSPORTING GOODS ACROSS STATE BOUNDARIES. Where taxpayer's forklift vehicles do not transport goods across this state's boundaries, there is no use/deferred sales tax exemption on charges for component parts and retail taxable services with respect to the forklift vehicles. ETB 197. UPS v. Dept. of Revenue, 102 Wn.2d 355 ( 1984).