Washington Administrative Code › Title 458 - Revenue, Department of › Chapter 458-20 - Excise tax rules › Section 458-20-145 - Sourcing retail sales for business and occupation tax and state and local retail sales tax-Sourcing of use tax for purchasers

Current through Register Vol. 24-14, July 15, 2024
Part 1.
General Information.
(101)
Introduction.
This rule
			 explains how to determine where sales of tangible personal property, retail
			 services, extended warranties, digital products, digital codes, and leases of
			 tangible personal property are sourced for purposes of the business and
			 occupation (B&O) tax and the combined state and local retail sales tax. See
			 RCW
			 82.32.730. This rule also explains how to
			 determine where use occurs for purposes of sourcing combined state and local
			 use tax.
(102)
Organization
			 of rule.
This rule is divided into five parts as follows:
Part 1. General information.
Part 2. General sourcing rules for most
			 retail sales of tangible personal property, extended warranties, digital
			 products, digital codes, and other retail services.
Part 3. Special sourcing rules for retail
			 sales of certain goods and services.
Part
			 4. Sourcing rules for leases and rentals of tangible personal
			 property.
Part 5. Sourcing rules
			 for use tax purposes - Purchasers.
(103)
Other rules may apply.
Readers may also want to refer to the following rules:
(a) WAC
			 458-20-153 Funeral
			 establishments.
(b) WAC
			 458-20-15502 Taxation of computer
			 software.
(c) WAC
			 458-20-15503 Digital
			 products.
(d) WAC
			 458-20-158 Florists and
			 nurserymen.
(e) WAC
			 458-20-211 Leases or rentals of
			 tangible personal property, bailments.
(f) WAC
			 458-20-245 Taxation of
			 competitive telephone service, telecommunications service, and ancillary
			 service.
(104)
Examples.
This rule contains examples that identify a number of
			 facts and then state a conclusion. These examples should be used only as a
			 general guide. The tax results of all situations must be determined after a
			 review of all the facts and circumstances.
(105)
Definitions.
The following
			 definitions apply to this rule:
(a)
"Extended warranty"
means an agreement for a specified duration to
			 perform the replacement or repair of tangible personal property at no
			 additional charge or at a reduced charge for tangible personal property, labor,
			 or both, or to provide indemnification for the replacement or repair of
			 tangible personal property, based on the occurrence of specified events. The
			 term "extended warranty" does not include an agreement otherwise meeting the
			 definition of extended warranty in this subsection, if no separate charge is
			 made for the agreement and the value of the agreement is included in the sales
			 price of the tangible personal property covered by the agreement. See
			 RCW
			 82.04.050(7).
(b)
"Florist"
means a person
			 whose primary business activity is the retail sale of fresh cut flowers, potted
			 ornamental plants, floral arrangements, floral bouquets, wreaths, or any
			 similar products, used for decorative and not landscaping purposes. See
			 RCW
			 82.32.730(9)(e). "Primary
			 business activity" means more than 50 percent of a person's gross sales revenue
			 is derived from the activity.
(c)
"Lease"
and
"rental"
mean any transfer of possession
			 or control of tangible personal property for a fixed or indeterminate term for
			 consideration. See
			 RCW
			 82.04.040 for a complete definition of the
			 term "lease or rental."
(d)
"Motor vehicle"
generally means every vehicle that is
			 self-propelled and every vehicle that is propelled by electric power obtained
			 from overhead trolley wires, but not operated upon rails. See
			 RCW
			 46.04.320. A vehicle is a device capable of
			 being moved upon a public highway. See
			 RCW
			 46.04.670.
(e)
"Primary property location"
means the property's physical address as provided by the lessee and kept in the
			 lessor's records maintained in the ordinary course of business, provided use of
			 this address does not constitute bad faith. The primary property location will
			 not change merely by intermittent use of the leased property in different local
			 jurisdictions, e.g., use of leased business property on business trips or
			 service calls to multiple jurisdictions.
(f)
"Purchaser"
has the same
			 meaning as in
			 RCW
			 82.08.010 and
			 82.12.010, and includes the
			 purchaser's agent.
(g)
"Purchaser's donee"
means a person, other than the purchaser, to
			 whom the purchaser directs shipment of goods (e.g., a gift
			 recipient).
(h)
"Receive"
and
"receipt"
mean taking possession of, or
			 having dominion and control over, tangible personal property and making first
			 use of services. "Receive" and "receipt" do not include possession by a
			 shipping company on behalf of the purchaser. See
			 RCW
			 82.32.730(9)(f). The term
			 also means making first use of digital automated services, or taking possession
			 or making first use of digital goods or digital codes, whichever comes
			 first.
(i)
"Retail
			 sale"
has the same meaning as provided in
			 RCW
			 82.04.050 and includes, but is not limited
			 to, sales and leases of tangible personal property, sales of retail services,
			 sales of extended warranties, digital goods, digital codes, and digital
			 automated services.
(j)
"Retail service"
means those services described in
			 RCW
			 82.04.050 as retail sales. This definition
			 includes retail sales of labor and services rendered with respect to tangible
			 personal property.
(k)
"Semi-trailer"
means every vehicle without motive power designed
			 to be drawn by a vehicle, motor vehicle, or truck tractor and so constructed
			 that an appreciable part of its weight and that of its load rests upon and is
			 carried by such other vehicle, motor vehicle, or truck tractor. See
			 RCW
			 46.04.530.
(l)
"Shipping company"
means a
			 separate legal entity that ships, transports, or delivers tangible personal
			 property on behalf of another, such as a common carrier, contract carrier, or
			 private carrier either affiliated or unaffiliated with the seller or purchaser.
			 A "shipping company" is not a division or branch of a seller or purchaser that
			 carries out shipping duties for the seller or purchaser,
			 respectively.
(m)
"Source,"
			 "sourced,"
or
"sourcing"
refer to the location (as in a
			 local taxing district, jurisdiction, or authority) where a sale or lease is
			 deemed to occur and is subject to retail sales tax. It also, for purposes of
			 this rule, refers to the location where "use" is deemed to occur for purposes
			 of use tax paid by purchaser as a consumer. The department assigns location
			 codes to identify the specific taxing locations that receive the local taxes.
			 These location codes are used on tax returns to accurately identify the correct
			 taxing location and tax rate.
Sellers and their agents are responsible for determining the
				appropriate tax rate for all their taxable retail sales in Washington. Sellers
				and their agents are also responsible for collecting from their purchasers the
				correct amount of tax due upon each sale and remitting that tax to the
				department.
(n)
"Tangible personal property"
means property that can be seen,
			 weighed, measured, felt, or touched, or that is in any other manner perceptible
			 to the senses and, for sales and use tax purposes, includes prewritten
			 software. See
			 RCW
			 82.08.010(7),
			 82.08.950, and
			 82.12.950 for more
			 information.
(o)
"Trailer"
means every vehicle without motive power designed for
			 being drawn by or used in conjunction with a motor vehicle constructed so that
			 no appreciable part of its weight rests upon or is carried by such motor
			 vehicle, but does not include a municipal transit vehicle, or any portion
			 thereof. See
			 RCW
			 46.04.620.
(p)
"Transportation equipment"
means:
(i) Locomotives and railcars used to
			 carry people or property in interstate commerce;
(ii) Trucks and truck tractors with gross
			 vehicle weight ratings of 10,000 pounds or greater, trailers, and
			 semi-trailers, or passenger buses that are:
(A) Registered through an International
			 Registration Plan (International Registration Plan is a reciprocity agreement
			 among states of the United States and provinces of Canada providing for payment
			 of license fees on the basis of total distance operated in all
			 jurisdictions);
(B) Operated under
			 authority of a carrier authorized and certificated by the U.S. Department of
			 Transportation (or other federal authority) to engage in carrying people or
			 property in interstate commerce;
(iii) Aircraft operated by air carriers
			 authorized and certificated by the U.S. Department of Transportation (or other
			 federal or foreign authority) to carry people or property by air in interstate
			 or foreign commerce; and
(iv)
			 Containers designed for use on, and component parts attached or secured on, the
			 items described in (p)(i) through (iii) of this subsection.
			 RCW
			 82.32.730(8)(e).
(106)
Other
			 resources.
The department offers a number of resources to assist
			 taxpayers in sourcing retail sales. These resources include:
(a)
The "
Local Sales & Use
			 Tax Flyer
."
This publication is updated every quarter and is
			 available online on the department's website at
www.dor.wa.gov
. The publication provides a listing
			 of all local taxing jurisdictions, location codes, and their corresponding tax
			 rates.
(b)
The online sales
			 and use tax rate look up application (GIS).
This is an online
			 application that provides current and past sales and use tax rates and location
			 codes based on an address or a selected location on a map. It also allows users
			 to download data that they can incorporate into their own systems to retrieve
			 the proper tax rate for a specific address. Visit the department's website at
			 dor.wa.gov for more information on this topic.