Washington Administrative Code › Title 458 - Revenue, Department of › Chapter 458-20 - Excise tax rules › Section 458-20-24001A - Sales and use tax deferral-Manufacturing and research/development activities in rural counties-Applications filed prior to July 1, 2010

Current through Register Vol. 24-14, July 15, 2024
(1)
Introduction.
Chapter 82.60 RCW establishes a sales and use tax
			 deferral program. The purpose of the program is to promote economic
			 stimulation, create employment opportunities, and reduce poverty in certain
			 areas of the state. The legislature established this program to be effective
			 solely in those areas and for those circumstances where the deferral is for
			 investments that result in the creation of a specified minimum number of jobs
			 or investment for a qualifying project.
The program applies to sales and use taxes on materials and
				labor and services rendered in the construction of qualified buildings or
				acquisition of qualified machinery and equipment and requires the recipient of
				the deferral to maintain the manufacturing or research and development activity
				for an eight-year period. This rule does not address
				RCW
				82.08.02565 and
				82.12.02565, which provide a
				statewide sales and use tax exemption for machinery and equipment used directly
				in a manufacturing operation. Refer to WAC
				458-20-13601 for more information
				regarding the statewide exemption.
(2)
Program background.
This
			 program was enacted in 1985. The legislature made major revisions to program
			 criteria in 1993, 1994, 1995, 1996, 1999, 2004, 2009, and 2010, specifically to
			 the definitions of "eligible area," "eligible investment project," "qualified
			 building," and "qualifying county." Each revision created additional criteria
			 for prospective applicants. This rule is written in five parts and covers
			 applications made prior to July 1, 2010. Each part sets forth the requirements
			 on the basis of the period of time in which application is made. Refer to the
			 year during which application was made for information on an individual
			 application. For applications made after June 30, 2010, see WAC
			 458-20-24001.
The employment security department and the department of
				community, trade, and economic development administer additional programs for
				distressed areas and job training and should be contacted directly for
				information concerning these programs.
PART I
Applications from March 31, 2004, to June 30,
				2010
(101)
Who
			 is eligible for the sales and use tax deferral program?
A person engaged
			 in manufacturing or research and development activity is eligible for this
			 deferral program for its eligible investment project.
(a)
What does the term "person" mean
			 for purposes of this rule?
"Person" has the meaning given in
			 RCW
			 82.04.030. "Person" does not include the
			 state of Washington or its institutions. "Person" can be either a lessee or a
			 lessor, who can apply separately for individual investment projects at the same
			 site, if they comply with the other requirements of chapter 82.60 RCW.
(i) The lessor or owner of the qualified
			 building is not eligible for deferral unless:
(A) The underlying ownership of the
			 buildings, machinery, and equipment vests exclusively in the same person;
			 or
(B) All of the following
			 conditions are met:
(I) The lessor has by
			 written contract agreed to pass the economic benefit of the deferral to the
			 lessee;
(II) The lessee that
			 receives the economic benefit of the deferral agrees in writing with the
			 department to complete the annual survey required under
			 RCW
			 82.60.070;
(III) The economic benefit of the deferral
			 passed to the lessee is no less than the amount of tax deferred by the lessor;
			 and
(IV) Upon request, the lessor
			 must provide the department with written documentation to support the
			 eligibility of the deferral, including any type of payment, credit, or other
			 financial arrangement between the lessor or owner of the qualified building and
			 the lessee.
For example, economic benefit of the deferral is passed through
				to the lessee when evidenced by written documentation that the amounts paid to
				the lessor for construction of tenant improvements are reduced by the amount of
				the sales tax deferred, or that the lessee receives more tenant improvements
				through a credit for tenant improvements or other mechanism in the lease equal
				to the amount of the sales tax deferred.