Washington Administrative Code › Title 458 - Revenue, Department of › Chapter 458-20 - Excise tax rules › Section 458-20-175 - Persons engaged in the business of operating as a private or common carrier by air, rail or water in interstate or foreign commerce

Current through Register Vol. 24-14, July 15, 2024
The term "private carrier" means every carrier, other than a
				common carrier, engaged in the business of transporting persons or property for
				hire.
The term "watercraft" includes every type of floating equipment
				which is designed for the purpose of carrying therein or therewith persons or
				cargo. It includes tow boats, but it does not include floating dry docks,
				dredges or pile drivers, or any other similar equipment.
The term "carrier property" means airplanes, locomotives,
				railroad cars or watercraft, and component parts of the same.
The term "component part" includes all tangible personal
				property which is attached to and a part of carrier property. It also includes
				spare parts which are designed for ultimate attachment to carrier property. The
				said term does not include furnishings of any kind which are not attached to
				the carrier property nor does it include consumable supplies. For example, it
				does not include, among other things, bedding, linen, table and kitchen ware,
				tables, chairs, ice for icing perishables or refrigerator cars or cooling
				systems, fuel or lubricants.
"Such persons," and "such businesses" mean the persons and
				businesses described in the title of this rule.
Business and Occupation Tax, Public Utility
				Tax
Persons engaged in such businesses are not subject to business
				tax or utility tax with respect to operating income received for transporting
				persons or property in interstate or foreign commerce. (See WAC
				458-20-193.)
When such persons also engage in intrastate business activities
				they become taxable at the rates and in the manner stated in WAC
				458-20-179,
				458-20-181 and
				458-20-193. For example, such
				persons are taxable under the retailing business tax classification upon the
				gross proceeds of sales of tangible personal property, including sales of
				meals, when such sales are made within this state.
Persons selling tangible personal property to, or performing
				services for, others engaged in such businesses, are taxable to the same extent
				as they are taxable with respect to sales of property or services made to other
				persons in this state. However, on July 1, 1985, a statutory business and
				occupation tax deduction became effective for sales of fuel for consumption
				outside the territorial waters of the United States by vessels used primarily
				in foreign commerce. In order to qualify for this deduction sellers must take a
				certificate signed by the buyer or the buyer's agent stating: The name of the
				vessel for which the fuel is purchased; that the vessel is primarily used in
				foreign commerce; and, the amount of fuel purchased which will be consumed
				outside of the territorial waters of the United States. Sellers must exercise
				good faith in accepting such certificates and are required to add their own
				signed statement to the certificate to the effect that to the best of their
				knowledge the information contained in the certificate is correct. The
				following is an acceptable certificate form:
Foreign Fuel Exemption
							 Certificate
SELLER: . . . . . . . . . . . .
VESSEL: . . . . . . . . . . . .
WE HEREBY CERTIFY that this purchase of
(kind and
				amount of product)
from
(seller)
will be
				consumed as fuel outside the territorial waters of the United States by the
				above-named vessel. We further certify that said vessel is used primarily in
				foreign commerce and that none of the fuel purchased will be consumed within
				the territorial boundaries of the State of Washington.
DATED . . . . . . . , 19 . .
. . . . . . . . . . . . . . . . . . . . . . .
Purchaser
. . . . . . . . . . . . . . . . . . . . . . .
Purchaser's Agent
By: . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . .
Title or Office
When a completed certification such as this is taken in good
				faith by the seller, the sale is exempt of business and occupation tax, whether
				made at wholesale or retail, and even though the fuel is delivered to the buyer
				in this state.
Retail Sales Tax
Sales of meals (including those sold to employees, see WAC
				458-20-119 ) and retail sales of
				other tangible personal property, made by such persons, are subject to the
				retail sales tax when such sales are made within this state.
By reason of specific exemptions contained in
				RCW
				82.08.0261 and
				82.08.0262 the retail sales tax
				does not apply upon the following sales:
(1) Sales of airplanes, locomotives, railroad
			 cars, or watercraft for use in conducting interstate or foreign commerce by
			 transporting therein or therewith property and persons for hire;
(2) Sales of tangible personal property which
			 becomes a component part of such carrier property in the course of
			 constructing, repairing, cleaning, altering or improving the same;
(3) Sales of or charges made for labor or
			 services rendered with respect to the constructing, repairing, cleaning,
			 altering or improving of such carrier property;
(4) Sales of any tangible personal property
			 other than the type referred to in 1 and 2 above, for use by the purchaser in
			 connection with such businesses, provided that any actual use thereof in this
			 state shall, at the time of actual use, be subject to the use tax.
Except as to sales of or charges made for labor or services
				rendered with respect to the constructing, repairing, cleaning, altering or
				improving of carrier property, the foregoing exemptions are limited to sales of
				tangible personal property. Hence the retail sales tax applies upon the sales
				of or charges made for labor or services rendered in respect to (1) the
				installing, repairing, cleaning, altering, imprinting or improving of any other
				type of tangible personal property; and in respect to (2) the constructing,
				repairing, decorating or improving of new or existing buildings or other
				structures. Thus the retail sales tax applies upon the charge made for
				repairing within this state of such things as switches, frogs, office
				equipment, or any other property which is not carrier property. It also applies
				upon the charge made for laundering linen and bedding. The tax also applies
				upon the charge made for constructing buildings, such as depots, wharves and
				hangars, or for repairing, decorating or improving the same.
However, the cost of installing, repairing, cleaning, altering,
				imprinting or improving of tangible personal property prior to its initial use
				by the carrier is considered as part of the initial cost of the property
				involved and therefore exempt from the sales tax. Thus, for example, the
				treating of railroad ties prior to their initial use is considered as part of
				the original cost of the ties and therefore exempt from the sales tax under
				RCW
				82.08.0261.
Exemption certificates required.
Persons selling
				tangible personal property or performing services which come within any of the
				foregoing exemptions are required to obtain from the purchaser, or his
				authorized agent, a certificate evidencing the exempt nature of the
				transaction. This certificate must identify the operator of the carrier by name
				and by its department of revenue registration number, if registered, and if not
				registered, by address.
The certificate may be in blanket form -- that is, may certify
				as to all future purchases, or individual certificates may be made for each
				purchase. Also the certificate may be incorporated in or stamped upon the
				purchase order.
The certificate should be in substantially the following
				form:
Exemption Certificate
WE HEREBY CERTIFY that all the tangible personal property to be
				purchased from you will be for use in connection with our business of operating
				as a
(private or common)
carrier by
(air, rail or water)
in
(interstate or foreign)
commerce; that all
(airplanes, locomotives, railroad
				cars or watercraft)
or component parts thereof, to be
				constructed, repaired, cleaned, altered or improved by you, will be used in
				conducting
(interstate or foreign)
commerce; and
				that all such sales are entitled to exemption from the Retail Sales Tax under
				the provisions of
				RCW
				82.08.0261 and
				82.08.0262.
Dated . . . . . . . . , 19. . .
. . . . . . . . . . . . . . . . . . . . . . .
(Purchaser)
By . . . . . . . . . . . . . . . . . . . .
(Title-Officer or Agent)
Address . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
Department of Revenue Registration No.
. . . . . . . . . . . .
Use Tax
The use tax does not apply upon the use of airplanes,
				locomotives, railroad cars or watercraft, including component parts thereof,
				which are used primarily in conducting such businesses.
"Actual use within this state," as used in
				RCW
				82.08.0261 does not include use of durable
				goods aboard carrier property while engaged in interstate or foreign commerce.
				Thus the use tax does not apply upon the use of furnishings and equipment
				(whether attached to the carrier or not) intended for use aboard carrier
				property while operating partly within and partly without this state. Included
				herein are such items as bedding, table linen and wares, kitchen equipment,
				tables and chairs, hand tools, hawsers, life preservers, parachutes, and other
				durable goods which are necessary, convenient or desirable for the proper
				operation of such carrier property.
The use tax does apply upon the actual use within this state of
				all other types of tangible personal property purchased at retail and upon
				which the sales tax has not been paid. Included herein are all consumable goods
				for use on and placed aboard carrier property while within this state, but only
				to the extent of that portion consumed herein. Thus the tax applies upon the
				use of the amount consumed in this state of ice, fuel and lubricants which are
				placed aboard in this state, and upon food supplies or catered meals placed
				aboard carrier property in this state and served to customers in this state by
				transportation companies when the meals so served are included in the charge
				for transportation. (The retail sales tax must be collected upon separate sales
				within this state of meals or other tangible personal property.) The tax does
				not apply upon the use within this state of any part of consumable goods for
				use on carrier property and placed aboard outside this state.
Liability for the use tax arises at the time of actual use
				thereof in this state.
Due to the difficulty in many cases of determining at the time
				of purchase whether or not the property purchased or a part thereof will be put
				to use in this state and due to the resulting accounting problems involved,
				persons engaged in the business of operating as private or common carriers by
				air, rail or water in interstate or foreign commerce will be permitted to pay
				the use tax directly to the department of revenue rather than to the seller,
				and such sellers are relieved of the liability for the collection of such tax.
				This permission is limited, however, to persons duly registered with the
				department. The registration number given on the certificate which will be
				furnished to the seller ordinarily will be sufficient evidence that the
				purchaser is properly registered.
As to persons operating in interstate or foreign commerce as
				carriers by air, rail or water who are not registered with the department and
				who, therefore, are not regularly filing tax returns with the department,
				sellers of durable goods must either collect the use tax at the time of the
				sale or require from such purchasers a further certificate to the effect that
				no part of the subject matter of the sale is for actual use in this
				state.
Similarly, where consumable goods, such as ice, bunker fuel, or
				lubricants are purchased by or for carriers not registered with the department,
				and delivered on board a carrier regularly engaged in interstate or foreign
				commerce for consumption while both within and without the territorial
				boundaries of the state of Washington, the seller is required to collect from
				the buyer the amount of use tax applicable to that portion of the products sold
				which will be consumed within this state.
It will be presumed that the entire amount of the goods
				purchased will be consumed within this state unless the seller obtains from the
				buyer a certificate certifying as to the amount thereof which will be consumed
				while within the territorial boundaries hereof.
The certificate shall be made by the master or chief engineer
				of the carrier, or by some other person known by the seller to be competent to
				make the same, and shall be substantially in the following form:
Certificate
. . . . . . . . . . . . . . . . . . . .
Seller
. . . . . . . . . . . . . . . . . . . .
Purchaser
. . . . . . . . . . . . . . . . . . . .
Name of Carrier
. . . . . . . . . . . . . . . . . . . .
Name of Owner or Agent
The undersigned does hereby certify as follows:
(1) The purchaser has this day purchased from
			 the seller in the State of Washington certain amounts of
(type of
			 goods purchased)
and has taken delivery thereof aboard said
			 carrier for its exclusive use while regularly engaged in transporting persons
			 or property for profit in interstate or foreign commerce.
(2) While the said carrier is within the
			 territorial boundaries of the state of Washington, it will consume the
			 following amounts of the commodities purchased:
. . . . . . . . . . . barrels of fuel oil
. . . . . . . . . . . gallons of lubricants
. . . . . . . . . . . pounds of grease
. . . . . . . . . . . other consumable goods
Dated . . . . . . . , 19. . .
. . . . . . . . . . . . . . . . . . . . . .
Name
. . . . . . . . . . . . . . . . . . . . . .
Office or Title