WAC 238

Guide for Vessel Brokers & Dealers/Vessel Dealer Manual (DOL)

Exemptions -- Sales to nonresidents of tangible personal property which becomes a component of property of the nonresident by installing, repairing, etc. -- Labor and services for installing, repairing, etc.

Exemptions -- Sales of watercraft to nonresidents for use outside the state.

Vessels purchased by nonresident individuals; exemption for 1 year

Sales of watercraft to nonresidents.

Sales of watercraft to nonresidents. Effective 1/6/96Updated 12/2/00.

"New Buyers" Retail Sales Tax Exemption Certificate

Vessels and Nonresident Individuals Tax Exemptions and Use Permit

Vessels and Nonresident Individuals Tax Exemptions and Use Permit

Nonresident Vessel Permits for entity-owned vessels

FORTY-FIVE DAYS LIMITATION. Conducting sea trials prior to acceptance and delivery of a watercraft, even if done personally by the owner of the vessel, does not constitute "use" for purposes of the 45 day limitation in RCW 82.08.0266 for a nonresident's use.

EXEMPTION -- WATERCRAFT -- NONRESIDENT. If a "bona fide" nonresident purchases a custom built yacht in this state, that persona does not become a resident and subject to retail sales tax on the purchase of the yacht if he or she temporarily lives within the state solely to oversee construction of the yacht.

The taxpayer in this determination is engaged in the business of escrow and closing of vessel sale transactions. Standard practice had been that upon closing of a transaction involving a vessel dealer the taxpayer would remit the sales tax collected on the sale to the selling vessel dealer. The taxpayer requested a ruling that it be permitted to collect and pay sales or use tax directly to the Department of Licensing when the vessel dealer was acting as an agent or broker for a vessel owner.

RETAIL SALES TAX -- SELLING PRICE -- LIKE-KIND TRADE-IN EXCLUSION -- CONSIGNMENT. In order for the like-kind trade-in exclusion in RCW 82.08.010(1) and Rule 247 to apply, both requirements set out in Det. No. 99-005, 19 WTD 223 (2000) must be met. That is, the seller or the seller's agent must actually accept ownership of the trade-in property, and must actually reduce the price of the property it is selling to the person trading in property, at the time of sale, by the value of the trade-in property.

RETAIL SALES TAX - SELLING PRICE -- LIKE-KIND TRADE-IN EXCLUSION -- CONSIGNMENT. In order for the like-kind trade-in exclusion in RCW 82.08.010(1) and Rule 247 to apply, both requirements set out in Det. No. 99-005, 19 WTD 223 (2000) must be met. That is, the seller or the seller's agent must actually accept ownership of the trade-in property, and must actually reduce the price of the property it is selling to the person trading in property, at the time of sale, by the value of the trade-in property.

LATE PAYMENT PENALTY -- USE TAX -- YACHT -- UNREGISTERED TAXPAYER.A foreign corporation, which owned a yacht that was in Washington waters for more than 60 days in a twelve month period, incurred a use tax assessment on the value of the yacht and a 20% late payment penalty for failure to pay the use tax before the first day after the last day of the second month following the due date.Because the taxpayer was not registered with the Department of Revenue at the time it incurred its use tax liability and had not engaged in business activities in this state up to that time the taxpayer was no

USE TAX -- NONRESIDENT -- VESSEL PRESENT FOR REPAIR -- REQUIREMENT THAT BE COVERED BY NONRESIDENT REPAIR AFFIDAVIT. Effective January 6, 1996, the Department has presumed that usage of an article of tangible personal property within the state by a nonresident which exceeds 60 days in any 12-month period is more than temporary usage and use tax is due, unless the property is present for repair and is exempt from the state's vessel registration requirements under RCW 88.02.030(5), which exempts vessels present more than 60 days if they are covered by a nonresident repair affidavit.

USE TAX -- VESSEL -- EXEMPTION -- NONRESIDENT VESSEL LOCATED IN WASHINGTON EXCLUSIVELY FOR REPAIRS. The vessel was not in Washington exclusively for repairs where the taxpayer intended to use the boat in a Washington charter business and boat was based in Washington. Furthermore, the taxpayer, a corporation organized under the laws of another state, was not a nonresident of Washington.

USE TAX -- VESSEL -- USE AS A CONSUMER -- BAREBOAT CHARTER. The taxpayer failed to prove it purchased the vessel solely for resale as tangible personal property in the ordinary course of business. Evidence suggested that the taxpayer intended to engage in crewed charter and that the taxpayer had used the boat for personal enjoyment.

USE TAX -- VESSEL -- EXEMPTION -- NONRESIDENT USING PROPERTY IN WASHINGTON ON A TEMPORARY BASIS. The use tax exemption for tangible personal property brought to Washington by nonresidents for temporary use in this state did not apply where the vessel was based in Washington and the vessel was used in a nontransitory business in Washington. Furthermore, the taxpayer, a corporation organized under the laws of another state, was not a nonresident of Washington.

USE TAX -- WATERCRAFT -- EXEMPTION -- TEMPORARY USE BY NONRESIDENT. Taxpayer was not entitled to the exemption for watercraft temporarily used in Washington by a nonresident because the taxpayer was found to be a resident

RETAIL SALES TAX-- SALE OF WATERCRAFT TO NONRESIDENT -- 45-DAY REMOVAL REQUIREMENT -- REQUIREMENT OF REPAIR AFFIDAVIT IF REMAINS MORE THAN 45 DAYS FOR COMMISSIONING. Watercraft sold to nonresidents are exempt from retail sales tax only when the watercraft will not be used in Washington for more than 45 days. The Department has a policy of tolling the running of the 45-day period while a vessel remains in Washington for commissioning if the vessel is present under a nonresident repair affidavit filed with the Department.

WATERCRAFT EXCISE TAX -- NONRESIDENT REPAIR EXEMPTION -- LATE-FILED AFFIDAVITS INEFFECTIVE TO EXTEND REPAIR EXEMPTION. To extend the repair exemption from vessel registration in RCW 88.02.030 beyond sixty days, and therefore be exempt from Watercraft Excise Tax under RCW 82.49.020, the nonresident must file a nonresident repair affidavit with the Department on or before the sixty-first day while the vessel is located upon the waters of the state exclusively for repair. A nonresident repair affidavit that is filed late is not effective to extend the repair exemption.

USE TAX --WATERCRAFT EXCISE TAX (WET) -- NONRESIDENT. A resident for tax purposes is a "person who manifests an intent to live or be located in this state on more than a temporary or transient basis. "Where a person was in the process of moving to Washington from another state, purchased and moved into a home in Washington and obtained a Washington driver's license and voter registration, that person is a Washington resident.

USE TAX -- TEMPORARY PRESENCE OF PROPERTY IN STATE. Where a Washington resident's vessel passed through Washington waters, the vessel is subject to use tax because the taxpayer assumed possession, dominion and control of the vessel while it was within the state.

WET -- EXEMPTION -- REGISTRATION REQUIREMENTS -- 60 DAY EXEMPTION. A resident vessel owner is entitled to rely on the 60-day exemption from registration and WET where the vessel had valid U.S. Coast Guard documentation.

WATERCRAFT EXCISE TAX -- NONRESIDENT REPAIR EXEMPTION -- LATE-FILED AFFIDAVITS INEFFECTIVE TO EXTEND REPAIR EXEMPTION. To extend the repair exemption from vessel registration in RCW 88.02.030 beyond sixty days, and therefore be exempt from Watercraft Excise Tax under RCW 82.49.020, the nonresident must file a nonresident repair affidavit with the Department on or before the sixty-first day while the vessel is located upon the waters of the state exclusively for repair. A nonresident repair affidavit that is filed late is not effective to extend the repair exemption.

USE TAX -- NONRESIDENT REPAIR EXEMPTION -- LATE-FILED AFFIDAVITS INEFFECTIVE TO EXTEND REPAIR EXEMPTION. To extend the nonresident repair exemption from use tax beyond sixty days, the nonresident must file a nonresident repair affidavit with the Department on or before the sixty-first day while the vessel is located upon the waters of the state exclusively for repair. A nonresident repair affidavit that is filed late is not effective to extend the repair exemption.

RETAIL SALES TAX -- EXEMPTION --SALES OF WATERCRAFT TO NONRESIDENTS FOR USE OUTSIDE THE STATE -- APPLICABLE WATERCRAFT -- PROOF REQUIRED. The exemption for sales of watercraft to nonresidents for use outside the state is limited to sales of watercraft that require either (1) U.S. Coast Guard registration, or (2) registration with the state in which the vessel will be principally used if that state has assumed the registration and numbering function under the Federal Boating Act of 1958.

RULE 238; RCW 82.08.0266: RETAIL SALES TAX—VESSEL – SUFFICIENT DOCUMENTATION. Sales tax exemption certificates used by the nonresidents for sales of watercraft requiring United States Coast Guard documentation must state that the watercraft will be used outside of Washington and identify the state of principal use.

RCW 82.08.0265: RETAIL SALES TAX – EXEMPTION – SALES TO NONRESIDENTS – VESSEL – REPAIRS MADE IN WASHINGTON – OUT OF STATE DELIVERY. Taxpayer failed to submit sufficient evidence to sustain its argument that the motor vessel it modified and repaired was delivered to its nonresident customer at a point outside the state after completion of services in Washington.

RETAIL SALES TAX -- SALE TO NON -- RESIDENT FOR USE OUTSIDE THE STATE -- WATERCRAFT -- UNATTACHED OUTBOARD MOTOR. RCW 82. 08. 0266 and Rule 238 limits the exemption to the seller of the watercraft only, and does not extend to a separate seller of unattached component parts even though these parts are installed in the watercraft prior to its being accepted and paid for by the customer.