Washington Administrative Code › Title 458 - Revenue, Department of › Chapter 458-20 - Excise tax rules › Section 458-20-208 - Exemptions for wholesale sales of new motor vehicles between new car dealers and for accommodation sales

Current through Register Vol. 24-14, July 15, 2024
(1)
Introduction.
This rule discusses the business and occupation
			 (B&O) tax exemptions for certain wholesale sales of new motor vehicles
			 between new car dealers. The rule also discusses the B&O tax exemption for
			 accommodation sales and clarifies the applicability of the accommodation sale
			 exemption to exchanges of fungible products, such as gasoline and
			 oil.
(2)
Wholesale sales of
			 new motor vehicles by new car dealers.
Effective July 1, 2001,
			 RCW
			 82.04.422 provides a B&O tax exemption
			 for wholesale sales of new motor vehicles by new car dealers to other new car
			 dealers. This exemption does not apply to amounts derived by a manufacturer,
			 distributor, or factory branch as defined in
			 chapter
			 46.70 RCW.
New car dealers will in most cases find the statutory
				requirements of this exemption to be less restrictive than those of the
				accommodation sales exemption discussed in subsection (3) of this rule. Unlike
				the exemption for accommodations sales, there is no restriction on the amount
				that the selling dealer can charge the buying dealer, nor is there any
				requirement that the sale be made to fill an existing order from a customer.
				While these circumstances may be present in a particular transaction, there is
				no need to use or rely upon the B&O tax exemption for accommodation sales
				when the requirements for the exemption for wholesale sales between new car
				dealers are met. The exemption for wholesale sales of new motor vehicles
				between new car dealers provided by
				RCW
				82.04.422 is subject to the following
				conditions.
(a)
New motor
			 vehicle.
The property sold must be a new motor vehicle. For the purposes
			 of this rule, "new motor vehicle" means every motor vehicle that is
			 self-propelled and is required to be registered and titled under
			 Title
			 46 RCW, has not been previously
			 titled to a retail purchaser, and is not a "used motor vehicle" as defined
			 under RCW
			 46.04.660.
			 RCW
			 46.70.011. Examples of motor vehicles include
			 passenger cars, trucks, motorcycles, and motor homes.
(b)
Wholesale sale between new car
			 dealers selling the same make of new motor vehicles.
The sale must be a
			 wholesale sale and must occur between new car dealers selling the same make of
			 vehicle. For purposes of determining whether the exemption applies to
			 transactions involving trades, the trade of each new motor vehicle is
			 considered a separate sale.
(i)
Example
			 1.
A new car dealer sells a new light pick-up truck, Make A, to another
			 new car dealer. The purchasing dealer also sells new Make A passenger vehicles.
			 This sale qualifies for the exemption.
(ii)
Example 2.
New Car Dealer
			 ABC and New Car Dealer XYZ both sell new motor vehicles by Make A and Make X.
			 New Car Dealer ABC sells Make A passenger vehicle to Dealer XYZ. Dealer XYZ
			 sells Make X passenger vehicle to Dealer ABC. Both dealers regularly engage in
			 the business of selling both new motor vehicle makes. Both sales qualify for
			 the exemption.
(iii)
Example
			 3.
A new car dealer sells a new passenger vehicle, Make X, to another
			 new car dealer. The purchasing dealer is not regularly engaged in the business
			 of selling new Make X vehicles. This sale does not qualify for the
			 exemption.
(iv)
Example
			 4.
New Car Dealer DEF sells new motor vehicles by Make A and Make X. New
			 Car Dealer LMN sells new motor vehicles by Make A and Make Y. New Car Dealer
			 DEF sells Make A passenger truck to New Car Dealer LMN. New Car Dealer LMN
			 sells Make Y passenger truck to New Car Dealer DEF. Both dealers regularly
			 engage in the business of selling Make A new motor vehicles while only New Car
			 Dealer DEF engages in the business of selling Make Y. The sale of new motor
			 vehicle Make A by Dealer DEF qualifies for the exemption while the sale of Make
			 Y by Dealer LMN does not.
(c)
Documentation.
A person
			 claiming the B&O tax exemption under
			 RCW
			 82.04.422 for a wholesale sale of a new motor
			 vehicle must maintain sufficient documentation to verify the exemption. The
			 documentation should identify:
(i) The buyer's
			 name and address;
(ii) The seller's
			 name and address;
(iii) The buyer's
			 UBI/tax registration number;
(iv)
			 The make, model, and serial number of the motor vehicle;
(v) The date of purchase;
(vi) That the buyer and seller both regularly
			 engage in making sales of the same make of new motor vehicle; and
(vii) The buyer's signature and
			 title.