WAC 458-20-174
Sales of motor vehicles, trailers, and
parts to motor carriers operating in interstate or foreign
commerce. (1) Introduction. This section explains the retail
sales tax exemptions provided by RCW 82.08.0262 and 82.08.0263
for sales to for hire motor carriers operating in interstate
or foreign commerce. Addressed are the requirements which
must be met and the documents which must be preserved to
substantiate a claim of retail sales tax exemption. Motor
carriers should refer to WAC 458-20-17401 for a discussion of
the use tax and use tax exemptions available to motor carriers
for the purchase or use of vehicles and parts under RCW 82.12.0254.
(2) Business and occupation tax. Business and occupation
(B&O) tax is due on all sales to motor carriers when delivery
is made in Washington, notwithstanding that the retail sales
tax may not apply because of the specific statutory exemptions
provided by RCW 82.08.0262 and 82.08.0263.
(a) Retailing of interstate transportation equipment.
This B&O tax classification, with respect to sales to motor
carriers, applies to retail sales which are exempt from retail
sales tax because of the provisions of RCW 82.08.0262 or 82.08.0263. (See RCW 82.04.250.) The retailing of interstate
transportation B&O tax applies to the following, but only when
the retail sales tax exemption requirements for RCW 82.08.0262
or 82.08.0263 are met:
(i) Sales of motor vehicles, trailers, and component
parts thereof;
(ii) The lease of motor vehicles and trailers without
operator; and
(iii) Charges for labor and services rendered in respect
to constructing, cleaning, repairing, altering or improving
vehicles and trailers or component parts thereof. The term
"component parts" means any tangible personal property which
is attached to and becomes an integral part of the motor
vehicle or trailer. It includes such items as motors, motor
and body parts, batteries, paint, permanently affixed decals,
and tires. "Component parts" includes the axle and wheels,
referred to as "converter gear" or "dollies," which is used to
connect a trailer behind a tractor and trailer. "Component
parts" can include tangible personal property which is
attached to the vehicle and used as an integral part of the
motor carrier's operation of the vehicle, even if the item is
not required mechanically for the operation of the vehicle. It includes cellular telephones, communication equipment, fire
extinguishers, and other such items, whether themselves
permanently attached to the vehicle or held by brackets which
are permanently attached. If held by brackets, the brackets
must be permanently attached to the vehicle in a definite and
secure manner with these items attached to the bracket when
not in use and intended to remain with that vehicle. It does
not include antifreeze, oil, grease, and other lubricants
which are considered as consumed at the time they are placed
into the vehicle, even though required for operation of the
vehicle. It does include items such as spark plugs, oil
filters, air filters, hoses and belts.
(b) Retailing. The retailing B&O tax applies to the
following:
(i) Sales and services as described in (a)(i) through
(iii) of this subsection, which do not meet the exemption
requirements provided in RCW 82.08.0262 or 82.08.0263;
(ii) Sales of equipment, tools, parts and accessories
which do not become a component part of a motor vehicle or
trailer used in transporting persons or property therein;
(iii) Sales of consumable supplies, such as oil,
antifreeze, grease, other lubricants, cleaning solvents and
ice; and
(iv) Towing charges.
(c) Interstate sales deduction for lease income. Persons
who lease motor vehicles and trailers to motor carriers at
retail (without operator) may claim an interstate sales
deduction for the amount of the lease income attributable to
the actual out-of-state use of the vehicles and trailers. Documentation substantiating such a claim must be retained by
the lessor. This deduction may be taken even if the vehicle
is not used substantially in interstate hauls for hire. The
B&O tax applies to that portion of use of the vehicle while
the vehicle is being used in Washington, even if the usage is
in connection with interstate hauls and the vehicle is used
substantially in hauling for hire in interstate commerce. See
also WAC 458-20-193 Inbound and outbound interstate sales of
tangible personal property.
(3) Retail sales tax. RCW 82.08.0262 and 82.08.0263
provide retail sales tax exemptions for certain sales to motor
carriers when delivery is made in Washington.
(a) Sales of motor vehicles and trailers. RCW 82.08.0263
provides an exemption from the retail sales tax for sales of
motor vehicles and trailers to be used for transporting
therein persons or property for hire in interstate or foreign
commerce. This exemption is available whether such use is by
a for hire motor carrier, or by persons operating the vehicles
and trailers under contract with a for hire motor carrier. The for hire carrier must hold a carrier permit issued by the
Interstate Commerce Commission or its successor agency to
qualify for this exemption. The seller, at the time of the
sale, must retain as a part of its records an exemption
certificate which must be completed in its entirety. The
buyers' retail sales tax exemption certificate is available on
the department's internet site at http://dor.wa.gov, or can be
obtained by contacting the department at:
Taxpayer Services
Department of Revenue
P.O. Box 47478
Olympia, WA 98504-7478
1-800-647-7706
If the department's buyers' retail sales tax exemption
certificate is not used, the form used must be in
substantially the following form:
The lease of motor vehicles and trailers to motor
carriers, without operator, must satisfy all conditions and
requirements provided by RCW 82.08.0263 to qualify for the
retail sales tax exemption. Failure to meet these
requirements will require the lessor to collect the retail
sales tax on the lease. However, where the exemption from
retail sales tax has not been met, a retail sales tax
exemption may continue to apply to that portion of the lease
while the vehicle is being used outside Washington, provided
the lessor can substantiate the usage outside Washington. (See WAC 458-20-193.)
(b) Sales of component parts of motor vehicles and
trailers and charges for repairs, etc. RCW 82.08.0262
provides an exemption from the retail sales tax for sales of
component parts and repairs of motor vehicles and trailers. This exemption is available only if the user of the motor
vehicle or trailer is the holder of a carrier permit issued by
the Interstate Commerce Commission or its successor agency
which authorizes transportation by motor vehicle across the
boundaries of Washington. Since carriers are required to
obtain these permits only when the carrier is hauling for
hire, the exemption applies only to parts and repairs
purchased for vehicles which are used in hauling for hire. The exemption includes labor and services rendered in
constructing, repairing, cleaning, altering, or improving such
motor vehicles and trailers.
(i) This exemption is available whether the motor
vehicles or trailers are owned by, or operated under contract
with, persons holding the carrier permit. This exemption
applies even if the motor vehicle or trailer to which the
parts are attached will not be used substantially in
interstate hauls, provided the vehicles are used in hauling
for hire.
(ii) The seller must retain as a part of its records a
completed exemption certificate. This certificate may be:
(A) Issued for each purchase;
(B) Incorporated in or stamped upon the purchase order;
or
(C) In blanket form certifying all future purchases as
being exempt from sales tax. Blanket exemption certificates
are valid for as long as the buyer and seller have a recurring
business relationship. A "recurring business relationship"
means at least one sale transaction within a period of twelve
consecutive months. RCW 82.08.050 (7)(c).
(iii) The buyers' retail sales tax exemption certificate
is available on the department's internet site at
http://dor.wa.gov, or can be obtained by contacting the
department at:
Taxpayer Services
Department of Revenue
P.O. Box 47478
Olympia, WA 98504-7478
1-800-647-7706
If the department's buyers' retail sales tax exemption
certificate is not used, the form used must be in
substantially the following form:
(c) Taxable sales. The following sales do not qualify
for exemption under the provisions of RCW 82.08.0262 or 82.08.0263, and are subject to the retail sales tax when
delivery is made in Washington.
(i) Sales of equipment, tools, parts and accessories
which do not become a component part of a motor vehicle or
trailer used in transporting persons or property for hire. This includes items such as tire chains and tarps which are
not custom made for a specific vehicle.
(ii) Sales of consumable supplies, such as oil,
antifreeze, grease, other lubricants, cleaning solvents and
ice.