WAC 257

Extended Warranty Repealed 6/30/2000 - This document was issued to explain how the Department would administer the change in tax-reporting responsibilities for extended warranties to implement the Thurston County Superior Court’s decision in Sound Hyundai, Inc. v. State of Washington.WAC 458-20-257 currently provides accurate and complete tax-reporting instructions and AD 8257.1 is no longer needed.

"Sale at retail," "retail sale."

Records to be preserved--Examination--Estoppel to question assessment--Unified business identifier account number records.

Warranties and maintenance agreements.Effective 6/2/90

Warranties and maintenance agreements.

WAC 458-20-257 Tangible personal property warranties and service contracts. This rule, previously titled “Warranties & maintenance agreements,” explains the tax reporting responsibilities of persons selling or performing services covered by warranties, service contracts, and mixed agreements.

Distinguishing Warranties and Maintenance Agreements Has been revised and is no longer in effect as of June 28, 2005.

Distinguishing Warranties and Maintenance Agreements Revised 2/2/09 See ETA 3103.2009

Distinguishing warranties and maintenance agreements

Corrected Extended Warranties Now Subject to Sales Tax 12/09

Extended Warranties Now Subject to Sales Tax

CAB MAINTENANCE -- RETAILING B&O -- SALES TAX. Charges to drivers/lessees for cab maintenance are subject to Retailing B&O and retail sales tax.

RETAIL SALE -- USE/DEFERRED SALES TAX -- CANNED SOFTWARE -- COMPUTER TELEPHONE SUPPORT SERVICES -- COMPUTER TRAINING -- WARRANTY -- MAINTENANCE -- MIXED AGREEMENTS -- SEGREGATION OF CHARGES. Payments to a vendor of canned software for the training of employees are not subject to sales tax if separately stated from the charges for software maintenance.However, charges for maintenance of canned software are subject to use/deferred sales tax. Where payments are not adequately segregated, the combined charge will be subject to use/deferred sales tax.

B&O TAX -- RETAIL SALES TAX/USE TAX -- WARRANTY V. MAINTENANCE V. "MIXED" AGREEMENTS -- CONTRACT -- CONSTRUCTION -- INTENT OF THE PARTIES.

USE TAX -- EXTENDED WARRANTIES -- EXCHANGES AND REPLACEMENTS -- REPAIR PARTS. When a company under an extended warranty provides for the replacement of defective equipment with refurbished equipment, it must pay use tax on the parts it uses to refurbish the equipment because it is the consumer of those parts.

RETAIL SALES TAX -- B&O TAX -- COMPUTER SERVICES -- COMBINED BILLINGS.A computer system company’s receipts from billings, which include charges for updates and modifications to “canned software” are taxable under the retailing classification and subject to retail sales tax unless records adequately segregate charges for software and services taxable under the retailing classification from other services normally taxed under other classifications, ACCORD: Det. No. 93-158, 13 WTD 302 (1994); Det. No. 89-43A, 8 WTD (1989).

RETAILING B&O TAX – RETAIL SALES TAX – PERSONAL COMPUTERS - EXTENDED WARRANTY REPAIRS.When a person other than the warrantor makes a repair for the warrantor under an extended warranty not included in the retail selling price of the article, that person is making a retail sale of the repair service to the warrantor.The person making the repair must collect retail sales tax from the warrantor as measured by the labor and materials provided.That person must also report its gross income from making such repairs under the retailing B&O tax classification.

RETAIL SALE -- USE/DEFERRED SALES TAX -- CANNED SOFTWARE -- COMPUTER TELEPHONE SUPPORT SERVICES -- COMPUTER TRAINING -- WARRANTY -- MAINTENANCE --MIXED AGREEMENTS -- SEGREGATION OF CHARGES.Charges for mixed services to canned software are subject to use/deferred sales tax.Software maintenance includes "extended warranty" of installed software; annual software releases to fix "bugs"; new codes, security records, and tables; written documentation on the changes made, including installation instructions; and testing and distribution of system software upgrades.These services include both warra

USE TAX -- EXTENDED WARRANTIES.A retail tire dealer is subject to use tax on new replacement tires it provides customers who return defective tires pursuant to extended warranties the dealer sold to the customers.

RCW 82.04.320, RCW 48.14.080: B&O TAX – INSURANCE PREMIUMS TAX – EXTENDED VEHICLE WARRANTIES. Sales of vehicle service contracts, which are not insurance policies and extend warranties on cars, are subject to B&O tax with no deduction for insurance premiums paid by the seller when the seller was personally liable to its customers, and not an agent of the insurer. ACCORD Det. No. 01-089E, 21 WTD 219 (2002).