Washington Administrative Code › Title 458 - Revenue, Department of › Chapter 458-20 - Excise tax rules › Section 458-20-115 - Sales of packing materials and containers

Current through Register Vol. 24-14, July 15, 2024
(1)
Introduction.
This section
			 explains the B&O, retail sales, and use taxes which apply to persons who
			 sell packing materials and to those who use packing materials.
(2)
Definitions.
The term
			 "packing materials" means and includes all boxes, crates, bottles, cans, bags,
			 drums, cartons, wrapping papers, cellophane, twines, gummed tapes, wire, bands,
			 excelsior, waste paper, and all other materials in which tangible personal
			 property may be contained or protected within a container, for transportation
			 or delivery to a purchaser.
(3)
Business and occupation tax.
(a)
			 Sales of packing materials to persons who sell tangible personal property
			 contained in or protected by packing materials are sales for resale and subject
			 to tax under the wholesaling classification. Sellers must obtain resale
			 certificates for sales made before January 1, 2010, or reseller permits for
			 sales made on or after January 1, 2010, from purchasers to document the
			 wholesale nature of any sale as provided in WAC
			 458-20-102A (Resale certificates)
			 and WAC 458-20-102 (Reseller permits).
			 Even though resale certificates are no longer used after December 31, 2009,
			 they must be kept on file by the seller for five years from the date of last
			 use or December 31, 2014.
(b) Sales
			 of containers to persons who sell tangible personal property contained within
			 the containers, but who retain title to such containers which are to be
			 returned, are sales for consumption and subject to tax under the retailing
			 classification. This class includes wooden or metal bottle cases, barrels, gas
			 tanks, carboys, drums, bags and other items, when title to the container
			 remains with the seller of the tangible personal property contained within the
			 container, and even though a deposit is not made for the containers, and when
			 such articles are customarily returned to the seller. If a charge is made
			 against a customer for the container, with the understanding that such charge
			 will be canceled or rebated when the container is returned, the amount charged
			 is deemed to be made as security for the return of the container and is not
			 part of the selling price for tax purposes. However, refer to the comments
			 below for sales of containers for beverages and foods.
(c) Title to containers, whether designated
			 as returnable or nonreturnable, for beverages and food sold at retail,
			 including beer, milk, soft drinks, mixers and the like, will be deemed to pass
			 to the customer along with the contents. In such cases, amounts charged for the
			 containers are part of the selling price of the food or beverage and subject to
			 retailing tax when sold to consumers. Sales to persons who will resell the food
			 or beverages are wholesale sales.
(d) Persons who perform custom or commercial
			 packing for others are generally taxable under the service B&O tax
			 classification on the income from the packing activity.
(i) Under
			 RCW
			 82.04.190, persons taxable under the service
			 B&O tax classification are consumers of any materials used in performing
			 the service. Sales of packing materials to persons engaged in the business of
			 custom or commercial packing are sales for consumption and are subject to the
			 retail sales tax. However, there is a specific statutory exemption from the
			 B&O tax for persons who perform packing of fresh perishable horticultural
			 products for the grower. These persons are also exempt from retail sales tax on
			 the purchase of any materials and supplies used in performing the packing
			 service.
(ii) Persons who perform
			 custom or commercial packing for others and who also manufacture the boxes,
			 containers, or other packaging materials used by them in the packing are
			 subject to the manufacturing tax and use tax on the value of the packing
			 materials which they manufacture. Refer to WAC
			 458-20-136 Manufacturing,
			 processing for hire, fabricating.
(e) Persons who operate cold storage
			 warehouses or who perform processing for hire for others, which includes
			 packaging the processed items, are not the consumers of the containers or other
			 packaging materials. Sales of boxes, cartons, and packaging materials to these
			 persons are taxable under the wholesaling tax classification. Refer to WAC
			 458-20-136 and
			 458-20-133 Frozen food
			 lockers.
(f) Persons who
			 manufacture packing materials for delivery outside Washington or for their own
			 commercial or industrial use are manufacturers and should refer to WAC
			 458-20-136,
			 458-20-134 Commercial or
			 industrial use, and WAC
			 458-20-112 Value of
			 products.