WAC 458-20-177
Sales of motor vehicles, campers, and
trailers to nonresident consumers. (1) Introduction. This
section applies to any sale of a vehicle to a consumer who is
not a resident of the state, including nonresident military
personnel temporarily stationed in Washington. The section
describes the different business and occupation (B&O) and
retail sales tax consequences that result from vehicle sales
to nonresidents, particularly the sales tax exemption provided
by RCW 82.08.0264. It also describes the documentation a
seller must retain to demonstrate that a sale is exempt.
For information on use tax liability associated with
vehicles, see WAC 458-20-178, Use tax.
For sales of vehicles to Indians or Indian tribes and
required documentation, see WAC 458-20-192, Indians -- Indian
country.
Questions regarding vehicle licensing or registration
requirements should be directed to the department of
licensing.
(2) What is a "vehicle"? For the purposes of this
section, a "vehicle" is any vehicle of a type that may be
lawfully licensed under chapter 46.16 RCW for operation on a
public highway in this state, except that the term does not
include any machinery and implements for use in conducting a
farming activity subject to RCW 82.08.0268. The term
"vehicle" includes, but is not limited to, a car, truck,
camper, trailer, bus, motorhome, and motorcycles equipped for
road use. It does not include farm tractors, bicycles,
mopeds, motorized scooters, snowmobiles, or vehicles that are
manufactured for exclusively off-road use.
(3) What are the tax consequences when a vehicle sold to
a nonresident is delivered in-state? A sale of a vehicle to a
nonresident where the vehicle is delivered in-state is exempt
from retail sales tax if the sale meets the requirements of
RCW 82.08.0264. In all other cases where the vehicle is
delivered to the buyer in this state, the retail sales tax
applies and must be collected at the time of sale, unless
otherwise exempt by law. The mere fact that the buyer may be
or claims to be a nonresident or that the buyer intends to,
and actually does, use the vehicle in some other state does
not, by itself, entitle the buyer to the exemption. In any
case where the seller licenses or registers the vehicle in
Washington on the buyer's behalf, the retail sales tax
applies.
In computing the B&O tax liability of persons engaged in
the business of selling vehicles, no deduction is allowed for
a sale made to a nonresident for use outside this state if the
nonresident buyer takes delivery in Washington. This is true
even if the buyer is entitled to an exemption from the retail
sales tax.
(a) Exemption requirements. If a vehicle is delivered
within this state to a nonresident buyer, retail sales tax
does not apply if the vehicle is purchased for use outside
this state and, immediately upon delivery, the vehicle:
(i) Is removed from the state under the authority of a
trip permit issued by the department of licensing pursuant to
RCW 46.16.160 or any agency of another state that has
authority to issue similar permits; or
(ii) Is registered and licensed in the state of the
buyer's residence, will not be used in this state more than
three months, and will not be legally required to be
registered and licensed in this state.
If the vehicle bears Washington state license plates, the
seller must remove the Washington plates before delivering the
vehicle and retain evidence of that removal to avoid liability
for collection and payment of the retail sales tax.
(b) Seller obligations; documentation. For sales
completed before July 22, 2007, the seller must properly
document the following facts:
(i) The buyer is a nonresident of Washington;
(ii) The vehicle is for use outside this state;
(iii) The vehicle is to be removed from the seller's
premises under the authority of either:
(A) A trip permit; or
(B) Valid license plates issued for that vehicle by the
state of the buyer's residence, with the plates actually
affixed to the vehicle upon final delivery; and
(iv) If the vehicle bears Washington state license
plates, the seller has removed the Washington plates before
delivery.
(c) Seller obligations effective July 22, 2007. For
sales completed on or after July 22, 2007, the seller must
retain the following documents, which must be made available
upon request by the department of revenue (department):
(i) A copy of the buyer's currently valid out-of-state
driver's license or other official picture identification
issued by a jurisdiction other than Washington state;
(ii) A copy of any one of the following documents, on
which there is an out-of-state address for the buyer:
• A current residential rental agreement;
• A property tax statement from the current or previous
year;
• A utility bill, dated within the previous two months;
• A state income tax return from the previous year;
• A voter registration card;
• A current credit report; or
• Any other document determined by the department to be
acceptable, with buyer's street address, such as:
(A) A bank statement issued within the previous two
months;
(B) A government check issued within the previous two
months;
(C) A pay check issued within the previous two months;
(D) Mortgage documents of current residence;
(E) Current vehicle insurance card;
(F) Letter or other documentation issued by the
postmaster within the previous two months;
(G) Other government document issued within the previous
two months;
(iii) A witnessed declaration in the form designated by
the department, signed by the buyer, and stating that the
buyer's purchase meets the requirements of this section
(buyer's affidavit); and
(iv) A seller's certification, in the form designated by
the department, that either a vehicle trip permit was issued
or the vehicle was immediately registered and licensed in
another state as required by RCW 82.08.0264.
To comply with these requirements, the seller must retain
a properly completed buyer's affidavit and seller's
certificate (in-state delivery). If the nonresident buyer is
a corporation, the seller must also retain the number of the
corporate nonresident permit.
(d) What are the consequences for noncompliance?
(i) Any seller that makes sales without collecting the
tax to a person who does not provide the documents required
under (c) of this subsection, and any seller who fails to
retain the documents required under (c) of this subsection for
the period prescribed by RCW 82.32.070 is personally liable
for the amount of tax due.
(ii) Any seller that makes sales without collecting the
retail sales tax under RCW 82.08.0264 and who has actual
knowledge that the buyer's documentation required by (c) of
this subsection is fraudulent is guilty of a misdemeanor and,
in addition, is liable for the tax and subject to a penalty
equal to the greater of one thousand dollars or the tax due on
such sales. In addition, both the buyer and the seller are
liable for any penalties and interest assessable under chapter 82.32 RCW.
(4) What are the tax consequences when a vehicle sold to
a nonresident is delivered out-of-state? A sale of a vehicle
to a nonresident where the seller delivers the vehicle
out-of-state is exempt from retail sales tax. If the vehicle
is delivered to the buyer outside the state, the seller may
also deduct the sale amount from the gross proceeds of sales
for B&O tax purposes. The deductible amount must be included
in the gross income reported on the excise tax return and then
deducted on the return to determine the amount of taxable
income. The deduction must be identified on the deduction
detail page of the return as an "interstate and foreign sales"
deduction.
(a) Requirements. If a vehicle is delivered outside the
state to a nonresident buyer, retail sales tax does not apply
if:
(i) The seller, as required by the contract of sale,
delivers possession of the vehicle to the buyer at a point
outside Washington; and
(ii) The vehicle is not licensed or registered in this
state. If the vehicle bears Washington state license plates,
the seller must remove the Washington plates before delivery
and retain evidence of that removal to avoid liability for
collection and payment of the retail sales tax.
(b) Seller obligations; documentation. The seller must
properly document the following facts:
(i) The buyer's out-of-state address;
(ii) The vehicle is not licensed or registered in this
state or the Washington state license plates have been removed
from the vehicle before delivery;
(iii) Under the terms of the sales agreement, the seller
is required to deliver the vehicle to the buyer at a point
outside this state; and
(iv) The out-of-state delivery was actually made by the
seller or by a common carrier acting as the seller's agent.
To comply with these requirements, the seller must retain
a properly completed buyer's certificate and seller's
certificate (out-of-state delivery). The seller's certificate
must be signed by the person who actually delivers the vehicle
to the buyer at the out-of-state location and may be completed
only after delivery occurs.
(c) Documentation when delivery is made by common
carrier. When a vehicle is delivered outside the state by
common carrier acting as the seller's agent, no buyer's
certificate or seller's certificate is required. Instead, the
seller must retain:
(i) Evidence that the vehicle's license plates (if
licensed in Washington) were removed; and
(ii) A signed copy of the bill of lading issued by the
carrier. The bill of lading must show the seller as the
consignor and indicate that the carrier agrees to transport
the vehicle to a point outside the state.
(5) What forms should be used to document an exempt sale?
The documents: "Buyer's Affidavit," "Seller's Certificate
In-State Delivery," "Buyer's Certificate Out-of-State
Delivery," and "Seller's Certificate Out-of-State Delivery"
are necessary to substantiate exempt sales to nonresidents. Do not send the documents to the department, but keep them as
part of the seller's permanent records for five years.
Without this documentation, claims that a transaction was
exempt from tax will be disallowed.
Copies of the forms can be obtained:
• From the department's internet web site at
http://dor.wa.gov
• By facsimile by calling fast fax at 360-705-6705 or
800-647-7706 (using menu options)
• By writing to:
Taxpayer Services
Washington State Department of Revenue
P.O. Box 47478
Olympia, Washington 98504-7478
Documents in substantially the same form as the
department's forms will be accepted in lieu of the
department's documents.
(a) In-state delivery. A sale with in-state delivery
requires a completed buyer's affidavit and seller's
certificate-in-state delivery.
(b) Delivery out-of-state by seller. A sale with
out-of-state delivery by a seller requires a completed buyer's
certificate and seller's certificate-out-of-state.
(6) What are a seller's obligations to verify a buyer's
statements on nonresidency?
(a) Prior to July 22, 2007, completion of a buyer's
affidavit documents the exempt nature of a sale under RCW 82.08.0264 unless there are facts that negate the presumption
that the seller relied on the buyer's affidavit in good faith.
The seller, however, must exercise a reasonable degree of
care in accepting statements regarding a buyer's nonresidence.
If delivery occurs in-state, the seller must examine and
retain a copy of at least one form of documentary evidence
showing the buyer's out-of-state residence. Lack of good
faith on the part of the seller or lack of the exercise of the
degree of care required is indicated, for example, in the
following circumstances:
(i) If the seller knows that the buyer is living in
Washington;
(ii) If the buyer gives a Washington address for the
purpose of financing the purchase of the vehicle;
(iii) If, at the time of sale, arrangements are made for
future servicing of the vehicle in the seller's shop and a
Washington address or telephone number is shown for the shop
customer; or
(iv) If the seller has ready access to any other
information that discloses that the buyer may be a resident of
Washington.
(b) What if the department questions the authenticity of
the information provided by the buyer? For sales completed on
or after July 22, 2007, if the department has information
indicating the buyer is a Washington resident, or if the
addresses for the buyer shown on the documentation provided
under subsection (3)(c) of this section are not the same, the
department may contact the buyer to verify the buyer's
eligibility for the exemption provided by RCW 82.08.0264. If
the department subsequently determines the buyer was not
eligible for an exemption, the department will pursue
collection of the retail sales tax from the buyer. The seller
will not be liable for the retail sales tax except as provided
in subsection (3)(d)(ii) of this section.
(7) Do military personnel qualify for the nonresident
exemptions? A member of the armed services who is temporarily
stationed in Washington is presumed to be a nonresident,
unless that person was a resident of this state when inducted.
This presumption does not apply to a civilian employee of the
armed services. Nonetheless, a sale to a nonresident member
of the armed forces must meet all of the statutory
requirements for a retail sales tax exemption or B&O tax
deduction. If a vehicle sold to a member of the armed forces
will remain in Washington for more than three months, retail
sales tax is due on the sale, even if the vehicle is
registered in the home state of the armed forces member.
(a) Military temporary license. In addition to the
exemptions provided under RCW 82.08.0264, a member of the
armed forces may alternatively qualify for the retail sales
tax and use tax exemptions provided by RCW 46.16.480 if the
member obtains a forty-five day nonresident military temporary
license from the department of licensing under RCW 46.16.460
and satisfies the requirements of RCW 46.16.480.
(b) Additional documentation required. In addition to
the documentation otherwise required by this section, for a
sale to a member of the armed forces a seller must retain a
copy of military orders showing that the buyer:
(i) Is temporarily stationed in Washington and will leave
within three months of the date of purchase; or
(ii) Is permanently reassigned to a new duty station
outside Washington and will leave within three months of the
date of purchase.
(c) Military personnel of NATO-member nations. Pursuant
to treaty, a member of the armed forces of any NATO-member
nation who is stationed in Washington is considered to be a
nonresident for purposes of the RCW 82.08.0264 retail sales
tax exemption. The buyer must meet all otherwise applicable
requirements for exemption. In addition, the seller must
retain proof of the buyer's military assignment in Washington
as a member of a NATO-member nation's armed forces.
(8) Are sales to residents of noncontiguous states exempt
from Washington retail sales tax? RCW 82.08.0269 exempts
purchases of tangible personal property from the retail sales
tax if the property is purchased for use in states,
territories, and possessions of the United States that are not
contiguous with any other state. However, the exemption only
applies if, as a necessary incident to the contract of sale,
the seller delivers the property to the purchaser or the
purchaser's designated agent at the usual receiving terminal
of the carrier selected to transport the goods, under such
circumstances that it is reasonably certain that the goods
will be transported directly to a destination in a
noncontiguous state, territory, or possession.
RCW 82.08.0269 applies to the sale of motor vehicles when
the requirements stated above are met. Therefore, in addition
to being exempt from retail sales tax under RCW 82.08.0264
(discussed above), a sale of a motor vehicle to a resident of
a noncontiguous state, territory, or possession may qualify
for exemption under RCW 82.08.0269. If so, the sale is exempt
from retail sales tax but does not qualify for a B&O tax
deduction. For more information on the requirements of the
RCW 82.08.0269 exemption, including the documentation
requirements, see WAC 458-20-193, Inbound and outbound
interstate sales of tangible personal property.
(9) Are sales to residents of states with no sales tax
exempt from Washington retail sales tax? RCW 82.08.0273
exempts purchases of tangible personal property from the
retail sales tax if the purchaser is a resident of another
state or possession or a province of Canada that does not
impose a retail sales tax or use tax of three percent or more.
That statute does not apply to purchases of vehicles. Because
RCW 82.08.0264 more specifically applies to the sale of
vehicles, it takes precedence over RCW 82.08.0273. A resident
of another state or possession or a province of Canada that
does not impose a retail sales tax or use tax of three percent
or more may purchase and take delivery of a vehicle in
Washington free of retail sales tax only if the person meets
the requirements of RCW 82.08.0264 or 82.08.0269.
(10) Examples. The following examples identify a number
of facts and then state a conclusion. These examples should
be used only as a general guide. The tax results of other
situations must be determined after a review of all facts and
circumstances.
(a) Buyer purchases a vehicle from Dealer. Buyer
provides identification indicating that Buyer is a resident of
California and provides California license plates for the
vehicle. However, Buyer also states that he intends to use
the vehicle in the state of Washington for four months before
returning to California. Buyer does not qualify for a sales
tax exemption because Buyer will use the vehicle for more than
three months in the state.
(b) Buyer provides proof of residency in Idaho; there are
no contrary facts regarding Buyer's residency. Buyer
completes the buyer's affidavit, stating that the vehicle is
for use out-of-state. Buyer obtains and uses a trip permit
issued under authority of RCW 46.16.160 to remove the vehicle
from Washington. The Dealer completes a seller's certificate
and certifies that the Dealer removed the Washington license
plates before delivering the vehicle to Buyer. This sale
qualifies for the retail sales tax exemption but not the B&O
tax deduction.
(c) Buyer is a Washington resident, employed by
out-of-state Corporation X. On behalf of Corporation X, Buyer
purchases and accepts in-state delivery of a vehicle from
Dealer. The vehicle will be used as a company car
out-of-state and will not be used or garaged in Washington.
Payment is made by corporate check. Buyer provides a trip
permit for transport of the vehicle out of Washington. This
sale qualifies for the retail sales tax exemption (but not for
the B&O tax deduction) notwithstanding the Washington
residency of its employee. The Dealer must record in its
records the number of the corporate nonresident permit.
(d) Buyer is a resident of Alaska and purchases a vehicle
from Dealer in Washington. The sales contract requires Dealer
to deliver the vehicle to Buyer in Anchorage, Alaska. Before
shipping the vehicle, Dealer removes the vehicle's Washington
state license plates and retains a photocopy of the plates as
evidence of the removal. Seller ships the vehicle to Alaska
by common carrier. Seller retains a signed copy of the bill
of lading, indicating the Seller as consignor and the Buyer as
consignee. This sale qualifies for the retail sales tax
exemption and a B&O tax deduction.
(e) Buyer is a resident of Alaska and purchases a vehicle
from Dealer in Washington. Dealer delivers the vehicle to the
Buyer at dockside in Seattle to be shipped to Anchorage,
Alaska by common carrier. Dealer retains the exemption
certificate and dock receipt required by WAC 458-20-193. This
sale qualifies for the retail sales tax exemption provided by
RCW 82.08.0269 but not for a B&O tax deduction.
(f) Buyer is a member of the armed forces and provides a
copy of her orders showing that she is temporarily stationed
in Washington. Before entering military service, buyer
resided in another state. Buyer purchases a vehicle from
Dealer and licenses it in her home state, but intends to keep
the vehicle in this state for over three months. This sale
does not qualify for any exemption or deduction. If the
vehicle were to be removed from the state within three months,
the sale would qualify for the RCW 82.08.0264 retail sales tax
exemption but not for a B&O tax deduction.
(g) Buyer owns homes in Washington and Arizona, spending
summers in Washington and winters in Arizona. In October,
Buyer purchases a vehicle from Dealer, asserting that he will
immediately drive the vehicle to Arizona and license it in
that state. Buyer presents an Arizona driver's license for
identification and provides a trip permit to remove the
vehicle from Washington. Dealer is aware that Buyer lives in
Washington for a significant portion of each year. In such a
case, the sale would not qualify for the retail sales tax
exemption. Under these facts, Buyer has dual residency in
Washington and Arizona for tax purposes.
(h) Buyer purchases a motorcycle from Dealer in
Vancouver, Washington. The motorcycle is equipped for use on
public highways. Buyer provides an Oregon driver's license
and asserts that the motorcycle will be licensed in Oregon.
Buyer also states that the motorcycle will only be used
outside of Washington. Buyer places the motorcycle in the
back of a truck for transport to Oregon. This sale does not
qualify for any exemption or deduction. To qualify for the
sales tax exemption, RCW 82.08.0264 requires the Buyer to
obtain a trip permit or provide license plates from another
state before removing the vehicle from Washington.
(11) Buyer obligations when claiming exemption. It is
the buyer's responsibility to provide the seller with valid
identification that entitles the buyer to purchase a motor
vehicle, trailer, or camper exempt from retail sales tax as
provided by RCW 82.08.0264.
(a) A buyer making fraudulent statements, which includes
the offer of fraudulent identification or fraudulently
procured identification to a seller, in order to purchase a
motor vehicle, trailer, or camper without paying retail sales
tax is guilty of perjury under chapter 9A.72 RCW.
(b) Any buyer making tax exempt purchases under RCW 82.08.0264 by displaying proof of identification not his or
her own, or counterfeit identification, with intent to violate
the provisions of RCW 82.08.0264 is guilty of a misdemeanor
and, in addition, is liable for the tax and subject to a
penalty equal to the greater of one hundred dollars or the tax
due on such purchases.
[Statutory Authority: RCW 82.32.300, 82.01.060(2), and82.08.0264
. 08-16-041, § 458-20-177, filed 7/29/08, effective
8/29/08. Statutory Authority: RCW 82.32.300 and 82.01.060(2). 05-14-086, § 458-20-177, filed 6/30/05,
effective 7/31/05. Statutory Authority: RCW 82.32.300. 83-08-026 (Order ET 83-1), § 458-20-177, filed 3/30/83; Order
ET 70-3, § 458-20-177 (Rule 177), filed 5/29/70, effective
7/1/70.]