Washington Administrative Code › Title 458 - Revenue, Department of › Chapter 458-20 - Excise tax rules › Section 458-20-195 - Taxes, deductibility

Current through Register Vol. 24-14, July 15, 2024
(1)
Introduction.
This rule explains the circumstances under which
			 taxes may be deducted from the gross amount reported as the measure of tax
			 under the business and occupation tax, retail sales tax, and public utility
			 tax. It also lists deductible and nondeductible taxes.
(2)
Deductibility of taxes.
In
			 computing tax liability, the amount of certain taxes may be excluded or
			 deducted from the gross amount reported as the measure of tax under the
			 business and occupation (B&O) tax, the retail sales tax, and the public
			 utility tax. These taxes may be deducted provided they have been included in
			 the gross amount reported under the classification with respect to which the
			 deduction is sought, and have not been otherwise deducted through inclusion in
			 the amount of another allowable deduction, such as credit losses.
The amount of taxes which are not allowable as deductions or
				exclusions must in every case be included in the gross amount reported.
License and regulatory fees are not deductible. Questions
				regarding the deductibility or exclusion of a tax that is not specifically
				identified in this rule should be submitted to the department of revenue for
				determination.
(3)
Motor vehicle fuel taxes.
RCW
			 82.04.4285 provides a B&O tax deduction
			 for certain state and federal motor vehicle fuel taxes when the taxes are
			 included in the sales price. These taxes include:
Fuel tax..................
chapter 82.38 RCW;
Federal tax on diesel and special motor fuels
						  (including leaking underground storage tank taxes), except train and aviation
						  fuels.............
26
						  U.S.C.A. Sec. 4041;
Federal tax on inland waterway commercial
						  fuel..........
26
						  U.S.C.A. Sec. 4042;
Federal tax on gasoline and diesel fuel for use in
						  highway vehicles and motorboats.....
26
						  U.S.C.A. Sec. 4081.
(4)
Taxes collected as an agent of municipalities, the state, or the federal
			 government.
The amount of taxes collected by a taxpayer, as agent for
			 municipalities, the state of Washington or its political subdivisions, or the
			 federal government, may be deducted from the gross amount reported. These taxes
			 are deductible under each tax classification of the Revenue Act under which the
			 gross amount from such sales or services must be reported.
This deduction applies only where the amount of such taxes is
				received by the taxpayer as collecting agent and is paid by the agent directly
				to a municipality, the state, its political subdivisions, or to the federal
				government. When the taxpayer is the person upon whom a tax is primarily
				imposed, no deduction or exclusion is allowed, since in such case the tax is a
				part of the cost of doing business. The mere fact that the amount of tax is
				added by the taxpayer as a separate item to the price of goods sold, or to the
				charge for services rendered, does not in itself, make such taxpayer a
				collecting agent for the purpose of this deduction. Examples of deductible
				taxes include:
FEDERAL-
Tax on communications services (telephone and
						  teletype-writer exchange services).................
26
						  U.S.C.A. Sec. 4251;
Tax on transportation of
						  persons..................
26
						  U.S.C.A. Sec. 4261;
Tax on transportation of
						  property.................
26
						  U.S.C.A. Sec. 4271;
STATE-
988 crisis hotline tax collected from
						  subscribers...........
chapter 82.86 RCW;
Aviation fuel tax collected from buyers by a
						  distributor as defined by
						  RCW
						  82.42.010........................
chapter 82.42 RCW;
Leasehold excise tax collected from
						  lessees..............
chapter 82.29A RCW;
Oil spill response tax collected from taxpayers by
						  marine terminal operators. ..
chapter 82.23B RCW;
Retail sales tax collected from
						  buyers...................
chapter 82.08 RCW;
Solid waste collection tax collected from
						  buyers.......
chapter 82.18 RCW;
State 911 tax collected from
						  subscribers...............
chapter 82.14B RCW;
Use tax collected from buyers...................
chapter 82.12 RCW;
MUNICIPAL-
City admission tax.........
RCW 35.21.280;
County admissions and recreations
						  tax............
chapter 36.38 RCW;
County 911 tax collected from
						  subscribers...............
chapter 82.14B RCW;
Local retail sales and use taxes collected from
						  buyers...................
chapter 82.14 RCW.
(5)
Specific taxes which are not deductible.
Examples of specific
			 taxes which may be neither deducted nor excluded from the measure of the tax
			 include the following:
Agricultural Adjustment Act (A.A.A.) compensating tax
						  .................
7
						  U.S.C.A. Sec. 615(e);
A.A.A. processing tax. Aviation fuel .........
7
						  U.S.C.A. Sec. 609;
						  26 U.S.C. A. Sec.
						  4091;
Distilled spirits, wine, and beer taxes ........
26 U.S.C.A. chapter 51;
Diesel and special motor fuel tax for fuel used for
						  purposes other than motor vehicles and motorboats ..........
26
						  U.S.C.A. Sec. 4041;
Employment taxes. . ..
26 U.S.C.A. chapters 21-25;
Estate taxes ..........
26 U.S.C.A. chapter 11;
Firearms, shells, and cartridges ...........
26
						  U.S.C.A. Sec. 4181;
Gift taxes ...........
26 U.S.C.A. chapter 12;
Importers, manufacturers, and dealers in firearms. . .
						  .
26
						  U.S.C.A. Sec. 5801;
Income taxes ........
26 U.S.C.A. Subtitle A;
Insurance policies issued by foreign insurers
						  .............
26
						  U.S.C.A. Sec. 4371;
Sale and transfer of firearms tax .........
26
						  U.S.C.A. Sec. 5811;
Sporting goods .......
26
						  U.S.C.A. Sec. 4161;
Superfund tax ........
26
						  U.S.C.A. Sec. 4611;
Tires ...............
26
						  U.S.C.A. Sec. 4071;
Tobacco excise taxes..
26 U.S.C.A. chapter 52;
Wagering taxes .......
26 U.S.C.A. chapter 35;
STATE -
Ad valorem property taxes ...............
Title 84 RCW;
Alcoholic beverages licenses and stamp taxes
						  (Breweries, distillers, distributors, and wineries) ........
chapter 66.24 RCW;
Aviation fuel tax when not collected as agent for the
						  state ..........
chapter 82.42 RCW;
Boxing, sparring and wrestling tax .........
chapter 67.08 RCW;
Business and occupation tax .......
chapter 82.04 RCW;
Cigarette tax .........
chapter 82.24 RCW;
Estate tax ...........
Title 83 RCW;
Insurance premiums tax
Hazardous substance tax .................
chapter 48.14 RCW; chapter 82.21 RCW;
Litter tax ............
chapter 82.19 RCW;
Pollution liability insurance fee ........
RCW
						  70A.330.070;
Parimutuel tax .......
RCW 67.16.100;
Petroleum products -underground storage tank tax
						  .............
chapter 82.23A RCW;
Public utility tax ......
chapter 82.16 RCW;
Real estate excise tax...........
chapter 82.45 RCW;
Tobacco products tax..........
chapter 82.26 RCW;
Use tax when not collected as agent for state
						  ...............
chapter 82.12 RCW;
MUNICIPAL-
Local use tax when not collected as agent for cities or
						  counties ......
chapter 82.14 RCW;
Municipal utility taxes.
chapter 54.28 RCW;
Municipal and county real estate excise taxes.
chapter 82.46 RCW.
Statutory Authority:
				  RCW
				  82.32.300. 00-16-015, § 458-20-195,
				  filed 7/21/00, effective 8/21/00; 99-13-053, § 458-20-195, filed 6/9/99,
				  effective 7/10/99; 83-08-026 (Order ET 83-1), § 458-20-195, filed 3/30/83;
				  Order ET 70-3, § 458-20-195 (Rule 195), filed 5/29/70, effective
				  7/1/70.