Date of Adoption: December 1, 2000.

Purpose: Chapter 458-40 WAC, Taxation of forest land and timber, describes the policies and procedures for classifying, designating, grading, and assessing forest lands for the purposes of the property and timber excise taxes under chapter 84.33 RCW, Timber and forest lands. The information provided in the rules identified below is being updated, reorganized, and consolidated into fewer and more comprehensive rules.

Citation of Existing Rules Affected by this Order: Amending WAC 458-40-530 Property tax, forest land -- Land grades -- Operability classes, 458-40-610 Timber excise tax -- Definitions, 458-40-626 Timber excise tax -- Tax liability -- Private timber, tax due when timber harvested, 458-40-628 Timber excise tax -- Tax liability -- Public timber, lump sum and scale sales, 458-40-670 Timber excise tax -- Chipwood and small log destinations, 458-40-680 Timber excise tax -- Volume harvested -- Approved scaling and grading methods -- Sample scaling -- Conversions and 458-40-690 Timber excise tax -- Credit for property tax; and repealing WAC 458-40-500 Property tax, forest land -- Statement of purpose, 458-40-510 Property tax, forest land -- Definitions, 458-40-520 Property tax, forest land -- Classification, designation, removal by assessor, compensating taxes, 458-40-535 Property tax, forest land -- Operability classes, 458-40-600 Timber excise tax -- Statement of purpose, 458-40-615 Timber excise tax -- Stumpage values -- Reporting of private stumpage sales to the department, 458-40-620 Timber excise tax -- Tax liability -- Harvester as taxpayer, harvester defined, 458-40-622 Timber excise tax -- Tax liability -- Government entity as harvester, 458-40-624 Timber excise tax -- Tax liability -- Reclassified reforestation lands, 458-40-630 Timber excise tax -- Stumpage value -- General definition, 458-40-632 Timber excise tax -- Taxable stumpage value -- Private timber, 458-40-634 Timber excise tax -- Taxable stumpage value -- Small harvester option, 458-40-636 Timber excise tax -- Taxable stumpage value -- Public timber, 458-40-682 Timber excise tax -- Volume harvested -- Sample scaling, 458-40-684 Timber excise tax -- Volume harvested -- Conversions to Scribner Decimal C Scale for Western Washington, and 458-40-686 Timber excise tax -- Volume harvested -- Conversions to Scribner Decimal C Scale for Eastern Washington.

Statutory Authority for Adoption: RCW 82.32.300 and 84.33.096.

Adopted under notice filed as WSR 00-21-120 on October 18, 2000.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 7, Repealed 16.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 7, Repealed 16. Effective Date of Rule: Thirty-one days after filing.

December 1, 2000

Russell W. Brubaker

Assistant Director

Legislation and Policy Division

OTS-4448.2

AMENDATORY SECTION(Amending Order 86-4, filed 12/31/86)

WAC 458-40-530   Property tax, forest land -- Land grades -- Operability classes.   ((The following shall constitute the conversion of species and site indices to forest land grades:)) (1) Introduction. RCW 84.33.120 requires that the department of revenue annually adjust and certify forest land values to be used by county assessors in preparing assessment rolls. These values are based upon land grades and operability classes. The assessors use maps that provide the land grades and operability classes for forest land in Washington.

     This rule explains how the land grades and operability classes provided in the maps used by the assessors were established. The forest land values are annually updated in WAC 458-40-540. For the purposes of this rule and WAC 458-40-540, the term "forest land" is synonymous with timberland and means all land in any contiguous ownership of twenty or more acres which is primarily devoted to and used for growing and harvesting timber and means land only.

     (2) Land grades. The land grades are established based upon timber species and site index. "Site index (plural site indices)" is the productive quality of forest land, determined by the total height reached by the dominant and codominant trees on a particular site at a given age.

WASHINGTON STATE PRIVATE FOREST LAND GRADES

*2     (((MFP))) Marginal forest productivity ((will be)) is land grade 7 operability class 3, in the following townships.      All ((MFP)) marginal forest productivity in other townships ((will be)) is land grade 8.

WESTERN WASHINGTON

     Whatcom County - all townships east of Range 6 East, inclusive.

     Skagit County - all townships east of Range 7 East, inclusive.

     Snohomish County - all townships east of Range 8 East, inclusive.

     King County - all townships east of Range 9 East, inclusive.

     Pierce County - T15N, R7E; T16N, R7E; T17N, R7E; T18N, R7E; T19N, R9E; T19N, R10E; T19N, R11E.

EASTERN WASHINGTON

     Chelan County - all townships west of Range 17 East, inclusive.

     Kittitas County - all townships west of Range 15 East, inclusive.

     Yakima County - all townships west of Range 14 East, inclusive.

((*3 (NC) Noncommercial)) (3) Operability classes. Operability classes are established according to intrinsic characteristics of soils and geomorphic features. The criteria for each class apply state-wide.

     (a) Class 1-Favorable. Stable soils that slope less than thirty percent. Forest operations do not significantly impact soil productivity and soil erosion. Forest operations, such as roading and logging, are carried out with minimal limitations.

     (b) Class 2-Average. Stable soils that slope less than thirty percent, but on which significant soil erosion, compaction, and displacement may occur as a result of forest operations.

     (c) Class 3-Difficult. Soils with one or both of the following characteristics:

     (i) Stable soils that slope between thirty and sixty-five percent; and

     (ii) Soils that slope between zero and sixty-five percent, but display evidence that rapid mass movement may occur as a direct result of forest operations.

     (d) Class 4-Extreme. All soils that slope more than sixty-five percent.

     (e) Variations. Unique conditions found in any one geographic area may impact forest operations to a greater degree than the above classes permit. With documented evidence, the department of revenue may place the soil in a more severe class.

[Statutory Authority: Chapter 84.33 RCW.      87-02-023 (Order 86-4), § 458-40-530, filed 12/31/86.]

OTS-4433.1

AMENDATORY SECTION(Amending WSR 96-02-054, filed 12/29/95, effective 1/1/96)

WAC 458-40-610   Timber excise tax -- Definitions.   (1) Introduction. The purpose of WAC 458-40-610 through 458-40-690 is to prescribe the policies and procedures for the taxation of timber harvested from public and private forest lands as required by RCW 84.33.010 through 84.33.096.

     Unless the context clearly requires otherwise, the definitions in this ((section)) rule apply to WAC ((458-40-600)) 458-40-610 through 458-40-690. In addition to the definitions found in this rule, definitions of technical forestry terms may be found in The Dictionary of Forestry, 1998, edited by John A. Helms, and published by the Society of American Foresters.

     (((1))) (2) Codominant trees.      Trees whose crowns form the general level of the ((crown cover)) main canopy and receive full light from above, but comparatively little light from the sides.

     (((2))) (3) Competitive sales.      The offering for sale of timber which is advertised to the general public for sale at public auction under terms wherein all qualified potential buyers have an equal opportunity to bid on the sale, and the sale is awarded to the highest qualified bidder.      The term "competitive sales" includes making available to the general public permits for the removal of forest products.

     (((3) Department.      The department of revenue of the state of Washington.))

     (4) Cord measurement. A measure of wood with dimensions of 4 feet by 4 feet by 8 feet (128 cubic feet).

     (5) Damaged timber. Timber where the stumpage values have been materially reduced from the values shown in the applicable stumpage value tables due to damage resulting from fire, blow down, ice storm, flood, or other sudden unforeseen causes.

     (6) Dominant trees.      Trees whose crowns are higher than the general level of the main canopy and which receive full light from the sides as well as from above.

     (((5))) (7) Harvest unit.      An area of timber harvest, defined and mapped by the harvester before harvest, having the same ((forest excise tax permit number,)) stumpage value area, hauling distance zone, harvest adjustments, ((and)) harvester, and harvest identification. The harvest identification may be a department of natural resources forest practice application number, public agency harvesting permit number, public sale contract number, or other unique identifier assigned to the timber harvest area prior to harvest operations. ((It)) A harvest unit may include more than one section((: Provided, A)), but harvest unit may not overlap a county boundary.

     (((6))) (8) Harvester. Every person who from the person's own land or from the land of another under a right or license granted by lease or contract, either directly or by contracting with others for the necessary labor or mechanical services, fells, cuts, or takes timber for sale or for commercial or industrial use. The term "harvester" does not include persons performing under contract the necessary labor or mechanical services for a harvester. In cases where the identity of the harvester is in doubt, the department of revenue will consider the owner of the land from which the timber was harvested to be the harvester and the one liable for paying the tax.

     The definition above applies except when the United States or any instrumentality thereof, the state, including its departments and institutions and political subdivisions, or any municipal corporation therein so fells, cuts, or takes timber for sale or for commercial or industrial use. When a governmental entity described above fells, cuts, or takes timber, the harvester is the first person, other than another governmental entity as described above, acquiring title to or a possessory interest in such timber.

     (9) Harvesting and marketing costs. Only those costs directly and exclusively associated with harvesting the timber from the land and delivering it to the buyer. The term includes the costs of slash disposal required to abate extreme fire hazard. Harvesting and marketing costs do not include the costs of reforestation, permanent road construction, or any other costs not directly and exclusively associated with the harvesting and marketing of the timber. The actual harvesting and marketing costs must be used in all instances where documented records are available. When the taxpayer is unable to provide documented proof of such costs, the deduction for harvesting and marketing costs is thirty-five percent of the gross receipts from the sale of the logs.

     (10) Hauling distance zone.      An area with specified boundaries as shown on the state-wide stumpage value area and hauling distance zone maps contained in WAC 458-40-640, having similar accessibility to timber markets.

     (((7))) (11) Legal Description. A description of an area of land using government lots and standard general land office subdivision procedures. If the boundary of the area is irregular, the physical boundary must be described by metes and bounds or by other means that will clearly identify the property.

     (12) Log grade.      Those grades listed in the "Official Log Scaling and Grading Rules" ((handbook)) developed and authored by the Northwest Log Rules Advisory Group (Advisory Group).      "Utility grade" means logs that do not meet the minimum requirements of peeler or sawmill grades as defined in the ((handbook)) "Official Log Scaling and Grading Rules" published by the Advisory Group but are suitable for the production of firm useable chips to an amount of not less than fifty percent of the gross scale; and meeting the following minimum requirements:

     (a) Minimum gross diameter -- two inches.

     (b) Minimum gross length -- twelve feet.

     (c) Minimum volume -- ten board feet net scale.

     (d) Minimum recovery requirements -- one hundred percent of adjusted gross scale in firm useable chips.

     (((8))) (13) Lump sum sale.      Also known as a cash sale or an installment sale, it is a sale of timber ((wherein the total sale price is dependent upon an estimate of the total volume of timber in the sale rather than the actual volume harvested)) where all the volume offered is sold to the highest bidder.

     (((9))) (14) MBF.      One thousand board feet measured in Scribner Decimal C Log Scale Rule.

     (((10))) (15) Noncompetitive sales.      Sales of timber in which the purchaser has a preferential right to purchase the timber or a right of first refusal.

     (((11))) (16) Other consideration.      Value given in lieu of cash as payment for stumpage, such as improvements to the land that are of a permanent nature.      ((It may include, but is not limited to, the construction of permanent roads and the installation of permanent bridges.)) Some examples of permanent improvements are as follows: Construction of permanent roads; installation of permanent bridges; stockpiling of rock intended to be used for construction or reconstruction of permanent roads; installation of gates, cattle guards, or fencing; and clearing and reforestation of property.

     (((12))) (17) Permanent road.      A road built as part of the harvesting operation which is ((intended)) to have a useful life subsequent to the completion of the harvest.

     (((13))) (18) Private timber.      All timber harvested from privately owned lands((, including timber on reclassified reforestation land under chapters 84.28 and 84.33 RCW)).

     (((14))) (19) Public timber.      Timber harvested from federal, state, county, municipal, or other government owned lands.

     (((15))) (20) Remote island.      An area of land which is totally surrounded by water at normal high tide and which has no bridge or causeway connecting it to the mainland.

     (((16) Sale price.      The amount paid for timber in cash or other consideration.

     (17))) (21) Scale sale.      A sale of timber in which the ((sale price)) amount paid for timber in cash and/or other consideration is the arithmetic product of the actual volume harvested and the unit price at the time of harvest.

     (((18))) (22) Small harvester. A harvester who harvests timber from privately or publicly owned forest land in an amount not exceeding two million board feet in a calendar year.

     (23) Species.      A grouping of timber based on biological or physical characteristics.      In addition to the designations of species or subclassifications defined in Agriculture Handbook No. 451 Checklist of United States Trees (native and naturalized) found in the state of Washington, the following ((shall be)) are considered separate species for the purpose of harvest classification used in the stumpage value tables:

     (a) Other conifer.      All conifers not separately designated in the stumpage value tables.      See WAC 458-40-660.

     (b) Other hardwood.      All hardwoods not separately designated in the stumpage value tables. See WAC 458-40-660.

     (c) Special forest products.      The following are considered to be separate species of special forest products: Christmas trees (various species), posts (various species), western redcedar flatsawn and shingle blocks, western redcedar shake blocks and boards.

     (d) Chipwood.      All timber processed to produce chips or chip products delivered to ((a designated)) an approved chipwood destination that has been approved in accordance with the provisions of WAC 458-40-670 or otherwise reportable in accordance with the provisions of WAC 458-40-670 (((4) or (5))).

     (e) Small logs.      All conifer logs harvested in stumpage value areas 6 or 7 generally measuring seven inches or less in scaling diameter, ((delivered to and)) purchased by weight measure at designated small log destinations that have been approved in accordance with the provisions of WAC 458-40-670(((6))).      Log diameter and length is ((determined by merchandizer scanner)) measured in accordance with USFS scaling rules with length not to exceed twenty feet.

     (f) Sawlog.      For purposes of timber harvest in stumpage value areas 6 and 7, a sawlog is a log having a net scale of not less than 33 1/3% of gross scale, nor less than ten board feet and meeting the following minimum characteristics: Gross scaling diameter of five inches and a gross scaling length of eight feet.

     (g) Piles.      All logs sold for use or processing as piles that meet the specifications described in the most recently published edition of the Standard Specification for Round Timber Piles (Designation: D 25) of the American Society for Testing and Materials.

     (h) Poles.      All logs sold for use or processing as poles that meet the specifications described in the most recently published edition of the National Standard for Wood Poles -- Specifications and Dimensions (ANSI 05.1) of the American National Standards Institute.

     (((19))) (24) Stumpage.      ((Standing or fallen trees, live or dead, having commercial value which have not been severed from the stump.

     (20))) Timber, having commercial value, as it exists before logging.

     (25) Stumpage value. The true and fair market value of stumpage for purposes of immediate harvest.

     (26) Stumpage value area (SVA).      An area with specified boundaries which contains timber having similar growing, harvesting and marketing conditions.

     (((21))) (27) Taxable stumpage value. The value of timber as defined in RCW 84.33.035(7), and this chapter. Except as provided below for small harvesters and public timber, the taxable stumpage value is the appropriate value for the species of timber harvested as set forth in the stumpage value tables adopted under this chapter.

     (a) Small harvester option. Small harvesters may elect to calculate the excise tax in the manner provided by RCW 84.33.073 and 84.33.074. The taxable stumpage value must be determined by one of the following methods as appropriate:

     (i) Sale of logs. Timber which has been severed from the stump, bucked into various lengths and sold in the form of logs has a taxable stumpage value equal to the actual gross receipts for the logs, less any costs associated with harvesting and marketing the timber.

     (ii) Sale of stumpage. When standing timber is sold and harvested within twenty-four months of the date of sale, its taxable stumpage value is the actual purchase price in cash and/or other consideration for the stumpage for the most recent sale prior to harvest. If a person purchases stumpage, harvests the timber more than twenty-four months after purchase of the stumpage, and chooses to report under the small harvester option, the taxable stumpage value is the actual gross receipts for the logs, less any costs associated with harvesting and marketing the timber. See WAC 458-40-626 for timing of tax liability.

     (b) Public timber. The taxable stumpage value for public timber sales is determined as follows:

     (i) Competitive sales. The taxable stumpage value is the actual purchase price in cash and/or other consideration. The value of other consideration is the fair market value of the other consideration; provided that if the other consideration is permanent roads, the value is the appraised value as appraised by the seller. If the seller does not provide an appraised value for roads, the value is the actual costs incurred by the purchaser for constructing or improving the roads.

     (ii) Noncompetitive sales. The taxable stumpage value is determined using the department of revenue's stumpage value tables as set forth in this chapter. Qualified harvesters may use the small harvester option.

     (iii) Sale of logs. The taxable stumpage value for public timber sold in the form of logs is the actual purchase price for the logs in cash and/or other consideration less appropriate deductions for harvesting and marketing costs. Refer above for a definition of "harvesting and marketing costs."

     (iv) Defaulted sales and uncompleted contracts. In the event of default on a public timber sale contract, wherein the taxpayer has made partial payment for the timber but has not removed any timber, no tax is due. If part of the sale is logged and the purchaser fails to complete the harvesting, taxes are due on the amount the purchaser has been billed by the seller for the volume removed to date. See WAC 458-40-628 for timing of tax liability.

     (28) Thinning.      Timber removed from a harvest unit ((meeting all the following conditions:

     (a))) located in stumpage value area((s)) 1, 2, 3, 4, 5, ((and)) or 10((;)):

     (((b))) (a) When the total volume removed is less than forty percent of the total merchantable volume of the harvest unit prior to harvest; and

     (((c) Leave)) (b) The harvester leaves a minimum of one hundred undamaged, evenly spaced, dominant or codominant trees per acre of a commercial species or combination thereof.

     (((22) Timber.      Forest trees, standing or down, on privately or publicly owned land, and except as provided in RCW 84.33.170, includes Christmas trees.))

[Statutory Authority: RCW 82.32.330, 84.33.096 and 84.33.091.      96-02-054, § 458-40-610, filed 12/29/95, effective 1/1/96.      Statutory Authority: RCW 82.32.330 and 84.33.096.      95-18-026, § 458-40-610, filed 8/25/95, effective 8/25/95.      Statutory Authority: RCW 84.33.096 and 82.32.300.      90-14-033, § 458-40-610, filed 6/29/90, effective 7/30/90.      Statutory Authority: Chapter 84.33 RCW.      87-02-023 (Order 86-4), § 458-40-610, filed 12/31/86.]

OTS-4434.1

AMENDATORY SECTION(Amending Order 86-4, filed 12/31/86)

WAC 458-40-626   Timber excise tax -- Tax liability -- Private timber, tax due when timber harvested.   (1) Introduction. For purposes of determining the proper calendar quarter in which the harvester is to pay tax on timber harvested from private land(( -- including reclassified reforestation lands -- ))the tax ((shall be)) is due and payable on the last day of the month following the end of the calendar quarter in which the timber was harvested.

     (2) Personal use of harvested timber by landowner. A landowner harvesting timber for commercial or industrial use is subject to the timber excise tax upon the value of harvested timber. See RCW 84.33.041, 84.33.035 and 84.33.073. A landowner cutting timber for that landowner's own personal use is not subject to the timber excise tax.

     A landowner selling, bartering, or trading timber is making commercial use of that timber. A landowner providing that individual's own business with timber is making commercial or industrial use of that timber. For example, a logging contractor using timber by-products for hog fuel has made industrial use of that timber. An individual engaged in the construction industry using lumber from that landowner's timber to build a structure meant for sale by that individual or that individual's business has also made industrial use of the timber. On the other hand, a landowner makes personal use of timber when that individual uses the timber, a portion of the cut timber, or a by-product from the timber as:

     (a) Firewood in that individual's stove or fireplace;

     (b) Lumber for that individual's personal residence, garage or storage structure;

     (c) Lumber for a fence around that individual's personal residence or private property not used for commercial purposes; or

     (d) Sawdust or shavings for that individual's garden or yard.

[Statutory Authority: Chapter 84.33 RCW.      87-02-023 (Order 86-4), § 458-40-626, filed 12/31/86.]

OTS-4435.1

AMENDATORY SECTION(Amending WSR 90-02-049, filed 12/29/89, effective 1/29/90)

WAC 458-40-628   Timber excise tax -- Tax liability -- Public timber, lump sum ((vs.)) and scale sales.   For purposes of determining the proper quarter in which the harvester is to pay taxes on timber harvested from public land, the taxes due under RCW 84.33.041 ((shall be)) are due and payable as follows:

     (1) ((LUMP SUM SALE:)) Lump-sum sale. The tax ((shall be)) is due and payable on the last day of the month following the quarter in which the purchaser is billed by the seller for the timber: Provided, That if payments are made to the seller before any harvest, road construction or other work has begun on the timber sale contract, payment of taxes may be ((deferred)) postponed until the quarter in which harvest or other contract work begins.      In the quarter that harvest commences, taxes ((shall become)) are due and payable on all billings accrued by the buyer in all prior quarters as well as the current quarter.

     (2) ((SCALE SALE:)) Scale sale. The tax ((shall be)) is due and payable on the last day of the month following the ((end of the)) calendar quarter in which the ((timber was harvested.      For tax purposes the timber is to be considered harvested in the quarter for which the volumes and values appear on the monthly billing statements)) purchaser is billed by the seller for the timber: Provided, That if payments are made to the seller before any harvest, road construction or other work has begun on the timber sale contract, payment of taxes may be postponed until the quarter in which harvest or other contract work begins. In the quarter that harvest commences, taxes are due and payable on all billings accrued by the buyer in all prior quarters as well as the current quarter.      Indexing or escalation amounts ((shall)) must be included in the quarter in which they apply.

     (3) ((OTHER CONSIDERATIONS:)) Other considerations. Tax due on considerations other than cash ((shall be)) is due and payable the first quarter of harvest, or the first quarter the costs are incurred, but not later than the last quarter of harvest: Provided, That if effective road credits (United States Forest Service Sales) are used as payment for stumpage, the tax is due in the quarter in which the road credits are applied as payment.

[Statutory Authority: RCW 84.33.096 and 82.32.300.      90-02-049, § 458-40-628, filed 12/29/89, effective 1/29/90.      Statutory Authority: Chapter 84.33 RCW.      87-02-023 (Order 86-4), § 458-40-628, filed 12/31/86.]

OTS-4449.1

AMENDATORY SECTION(Amending WSR 95-18-027, filed 8/25/95, effective 9/25/95)

WAC 458-40-670   Timber excise tax -- ((Stumpage value adjustments -- ))Chipwood and small log destinations.   (1) Introduction. This ((section explains the harvest value adjustments to the stumpage value tables (WAC 458-40-660) for various logging and harvesting conditions. It also)) rule describes the procedure by which businesses that process chipwood, chipwood products, and/or small logs can become ((designated)) approved chipwood or small log destinations.

     (2) ((Harvest value adjustments. Harvest value adjustments relating to the various logging and harvest conditions shall be allowed against the stumpage values as set forth in WAC 458-40-660 for the designated stumpage value areas with the following limitations:

     (a) No harvest adjustment shall be allowed against special forest products, chipwood, or small logs as those terms are defined in WAC 458-40-610.

     (b) Stumpage value rates for conifer and hardwoods shall be adjusted to a value no lower than one dollar per MBF.

     (c) Timber harvesters planning to remove timber from areas having damaged timber may apply to the department for adjustment in stumpage values. The application shall contain a map with the legal descriptions of the area, a description of the damage sustained by the timber with an evaluation of the extent to which the stumpage values have been materially reduced from the values shown in the applicable tables, and a list of estimated additional costs to be incurred resulting from the removal of the damaged timber. The application must be received by the department before the harvest commences. Upon receipt of an application, the department will determine the amount of adjustment allowed and notify the harvester. In the event the extent of the damage or additional costs is not known at the time the application is filed, the harvester may provide relevant information to the department for a period not exceeding ninety days following completion of the harvest unit.

     (d) The harvest adjustment tables are set forth in WAC 458-40-660(3).

     (3))) Chipwood destinations. Businesses that process logs to produce chips or chip products may be designated as approved "chipwood destinations." Logs delivered to the log yards ((designated)) approved as "chipwood destinations" for the purpose of being chipped may be reported as chipwood and have the volume measured by weight.

     (a) The department of revenue will maintain a current list of approved chipwood destinations. This list will be updated as necessary and will be formally reviewed by the department of revenue at least twice a year. A list of approved chipwood destinations is available from the ((special programs division,)) forest tax section of the department of revenue.

     (b) A log processor in the business of processing logs to produce chips or chip products that has not been designated as an approved destination may file an application to be listed as an approved chipwood destination. The application should be submitted to the Department of Revenue, Forest Tax Section, P. O. Box 47472, Olympia, Washington 98504-7472((, to be included in this listing)). To qualify as an approved destination, not less than ninety percent of the weight volume of logs delivered to and purchased by the log processor for chipping at a specified log yard or location must be processed to produce chips or chip products.

     (c) Any applicant seeking administrative review of the department(('s)) of revenue's decision made under (b) of this subsection may appeal the decision in accordance with WAC 458-20-100 (Appeals, small claims and settlements).

     (((4))) (3) Logs chipped in the woods. Logs chipped in the woods may also be reported as chipwood. Volume ((shall)) must be measured in net weight of green chips.

     (((5))) (4) Other chipwood processing locations. Logs processed at locations other than those listed on the approved list of chipwood destinations maintained by the department of revenue and other than as provided in subsection (((4))) (3) of this ((section)) rule may be reported as chipwood volume when scaled as utility grade logs, based on log scaling or upon approved sample log scaling methods.

     If a harvester reports chipwood volume that was delivered to a location that is not listed as an approved chipwood destination and there has been no log scaling or approved sample log scaling, the chipwood volume so reported will be converted by the department of revenue to the appropriate sawlog volume in accordance with WAC ((458-40-684 and 458-40-686)) 458-40-680 for purposes of timber excise taxation.

     (((6))) (5) Small log destinations. Businesses that process small logs as defined in WAC 458-40-610 may be designated as approved "small log destinations."

     (a) The department of revenue will maintain a current list of approved small log destinations. This list will be updated as necessary and will be formally reviewed by the department of revenue at least twice a year. A list of approved small log destinations is available from the ((special programs division,)) forest tax section of the department of revenue.

     (b) A log processor in the business of processing small logs that has not been designated as an approved destination may file an application to be listed as an approved small log destination. The application should be submitted to the Department of Revenue, Forest Tax Section, P. O. Box 47472, Olympia, Washington 98504-7472((, to be included in this listing)).

     (c) Any applicant seeking administrative review of the department(('s)) of revenue's decision made under (b) of this subsection may appeal the decision in accordance with WAC 458-20-100 (Appeals, small claims and settlements).

[Statutory Authority: RCW 82.32.330, 84.33.096 and 84.33.200. 95-18-027, § 458-40-670, filed 8/25/95, effective 9/25/95. Statutory Authority: RCW 84.33.091, 84.32.300 [82.32.300] and 84.33.096. 94-14-048, § 458-40-670, filed 6/30/94, effective 7/1/94; 94-02-047, § 458-40-670, filed 12/30/93, effective 1/1/94; 93-14-051, § 458-40-670, filed 6/30/93, effective 7/1/93; 93-02-025, § 458-40-670, filed 12/31/92, effective 1/1/93; 92-14-083, § 458-40-670, filed 6/29/92, effective 7/1/92; 92-02-067, § 458-40-670, filed 12/31/91, effective 1/1/92. Statutory Authority: RCW 84.33.096 and 82.32.300. 91-14-077, § 458-40-670, filed 6/28/91, effective 7/1/91; 91-02-088, § 458-40-670, filed 12/31/90, effective 1/31/91; 90-14-033, § 458-40-670, filed 6/29/90, effective 7/30/90; 90-02-049, § 458-40-670, filed 12/29/89, effective 1/29/90. Statutory Authority: Chapter 84.33 RCW and RCW 84.33.091. 89-14-051 (Order FT-89-2), § 458-40-670, filed 6/30/89; 89-02-027 (Order FT-88-5), § 458-40-670, filed 12/30/88; 88-14-032 (Order FT-88-2), § 458-40-670, filed 6/30/88; 88-02-026 (Order FT-87-5), § 458-40-670, filed 12/31/87. Statutory Authority: Chapter 84.33 RCW. 87-14-042 (Order 87-2), § 458-40-670, filed 6/30/87; 87-02-023 (Order 86-4), § 458-40-670, filed 12/31/86.]

OTS-4450.1

AMENDATORY SECTION(Amending WSR 96-02-056, filed 12/29/95, effective 1/29/96)

WAC 458-40-680   Timber excise tax -- Volume harvested -- Approved scaling and grading methods -- Sample scaling -- Conversions.   (1) ((Acceptable log scaling and grading rules -- Stumpage value areas 1, 2, 3, 4, 5, and 10:)) Introduction. The acceptable log scaling and grading ((rule shall be)) standard for stumpage value areas 1, 2, 3, 4, 5, and 10 is the Scribner Decimal C log rule as described in the most current edition of the "Official Log Scaling and Grading Rules" ((handbook)) developed and authored by the Northwest Log Rules Advisory Group.      ((These are the official rules for the following log scaling and grading bureaus: Columbia River, Grays Harbor, Northern California, Puget Sound, Southern Oregon, and Yamhill.

     (2) Acceptable log scaling rule -- Stumpage value areas 6 and 7:)) The acceptable log scaling ((rule shall be)) standard for stumpage value areas 6 and 7 is the Scribner Decimal C log rule described in the most current edition of the "National Forest Log Scaling Handbook" (FSH 2409.11) as published by the United States Forest Service.      ((Provided, the maximum scaling length is twenty feet and maximum trim allowance shall be six inches for logs eight to twenty feet in length; and provided, further, that)) Lodgepole pine harvested in stumpage value areas 6, 7, or 10 ((shall)) must be scaled using a one inch taper allowance per log segment.

     (((3))) (2) Special services scaling((:)). Special services scaling as described in the "Official Log Scaling and Grading Rules" developed and authored by the Northwest Log Rules Advisory Group ((handbook shall)) may not be used for tax reporting purposes without prior written approval of the department((; and all measurements and grades must be converted to standard Scribner Decimal C log rules as they are described in the handbook)) of revenue.

     (3) Sample scaling. Sample scaling may not be used for tax reporting purposes without prior written approval of the department of revenue. To be approved, sample scaling must be in accordance with the following guidelines:

     (a) Sample selection, scaling, and grading must be conducted on a continuous basis as the unit is harvested.

     (b) The sample must be taken in such a manner to assure random, unbiased sample selection in accordance with accepted statistical tests of sampling.

     (c) The sample used to determine total volume, species, and quality of timber harvested for a given reporting period must have been taken during that period.

     (d) Sample frequency must be large enough to meet board foot variation accuracy limits of plus or minus two and five-tenths percent standard error at the ninety-five percent confidence level.

     (e) Harvesters must maintain sufficient supporting documentation to allow the department of revenue to verify source data, and test statistical reliability of sample scale systems.

     (f) Exceptions: Sampling designs and accuracy standards other than those described herein may only be used with the prior written approval of the department of revenue.

     (4) Conversions to Scribner Decimal C Scale. The following definitions, tables, and conversion factors must be used in determining taxable volume for timber harvested that was not originally scaled by the Scribner Decimal C Log Rule. Conversion methods other than those listed are not to be used for tax reporting purposes without prior written approval of the department of revenue. Harvesters who wish to use a method of conversion other than those listed below must obtain written approval from the department of revenue before harvesting.

     (a) Weight measurement. If the original unit of measure was by weight, and the harvester has not applied for approval of sample scaling, the following tables must be used for converting to Scribner Decimal C. Harvesters must keep records to substantiate the species and quality codes reported. For tax reporting purposes, a ton equals 2,000 pounds.

(Stumpage Value Areas 1, 2, 3, 4, 5, & 10) BOARD FOOT WEIGHT SCALE FACTORS (TONS/MBF)
Species
Douglas-fir1	7.50
Western Hemlock2	8.25
Western Redcedar3	7.00
Red Alder4	7.75
Chipwood	9.00

1	Includes Douglas-fir, Western Larch, and Sitka Spruce.

2	Includes Western Hemlock, Mountain Hemlock, Pacific Silver Fir, Noble Fir, Grand Fir, Subalpine Fir, and other conifers not separately designated. Pacific Silver Fir, Noble Fir, Grand Fir, and Subalpine Fir are all commonly referred to as "White Fir."

3	Includes Alaska-cedar.

4	Maple, Black Cottonwood and other hardwoods.

(Stumpage Value Areas 6 & 7) BOARD FOOT WEIGHT SCALE FACTORS (TONS/MBF)
	Quality code
Species	1	2
Ponderosa Pine	5.0	6.50
Douglas-fir1	5.50
Lodgepole Pine	6.0
Western Hemlock2	5.50
Englemann Spruce	4.50
Western Redcedar3	4.50
Chipwood	9.0
Small Logs	6.50

1	Includes Western Larch.

2	Includes Western Hemlock, Mountain Hemlock, Pacific Silver Fir, Noble Fir, Grand Fir, Subalpine Fir, and other conifers not separately designated. Pacific Silver Fir, Noble Fir, Grand Fir, and Subalpine Fir are all commonly referred to as "White Fir."

3	Includes Alaska-cedar.

     (b) Cord measurement. For the purposes of converting cords into Scribner volume:

     (i) In stumpage value areas 1, 2, 3, 4, 5, and 10 logs with an average scaling diameter of 8 inches and larger must be converted to Scribner volume using 400 board feet per cord. Logs having an average scaling diameter of less than 8 inches must be converted to Scribner volume using 330 board feet per cord.

     (ii) In stumpage value areas 6 and 7 logs with an average scaling diameter of 8 inches and larger must be converted to Scribner volume using 470 board feet per cord. Logs having an average scaling diameter of less than 8 inches must be converted to Scribner volume using 390 board feet per cord.

     (iii) A cord of Western Redcedar shake or shingle blocks must be converted to Scribner volume using 600 board feet per cord.

     (c) Cants or lumber from portable mills. To convert from lumber tally to Scribner volume:

     (i) In stumpage value areas 1, 2, 3, 4, 5, and 10 multiply the lumber tally for the individual species by 75%, and round to the nearest one thousand board feet (MBF); or

     (ii) In stumpage value areas 6 and 7 multiply the lumber tally for the individual species by 88%, and round to the nearest one thousand board feet (MBF).

     (d) Log scale conversion. Timber harvested in stumpage value areas 1, 2, 3, 4, 5, and 10 and which has been scaled by methods and procedures published in the "National Forest Log Scaling Handbook" (FSH 2409.11) must have the volumes reported reduced by eighteen percent. Timber harvested in stumpage value areas 6 and 7 and which has been scaled by methods and procedures published in the "Official Log Scaling and Grading Rules" developed and authored by the Northwest log rules advisory group, must have the volumes reported increased by eighteen percent.

     (e) Timber pole and piling volume tables. Harvesters of poles must use the following tables to determine the Scribner board foot volume for each pole length and class:

Total Scribner Board Foot Volume Stumpage Value Areas 1, 2, 3, 4, 5, and 10
	Pole Class1															Piling Class2
Length	H6	H5	H4	H3	H2	H1	1	2	3	4	5	6	7	9	10	A	B
20							50	50	40	40	30	30	20	20	20	80	70
25							60	60	50	50	40	40	30	30	30	100	90
30							110	70	60	60	50	50	40	40		130	110
35					160	160	130	100	80	80	60	60	50			130	110
40			240	200	180	180	150	120	120	90	70	60				150	120
45	380	340	340	280	230	230	190	150	120	120	90	90				150	120
50	430	370	370	300	260	260	210	160	140	140	100					160	140
55	470	410	410	330	280	280	230	180	150	150						180	150
60	540	470	470	410	340	340	290	220	190	190						190	160
65	610	520	520	420	380	380	320	260	210	210						210	180
70	650	560	560	480	400	400	350	270	230	230						230	190
75	700	600	600	520	520	520	440	290	250							230	200
80	820	700	700	600	600	540	440	360	290							250	210
85	910	800	800	660	660	660	570	490	360							260	210
90	1080	930	930	820	820	690	590	490	400							260	220
95	1170	1000	1000	870	870	750	640	540								290	240
100	1190	1030	1030	900	900	760	660	550								310	250
105	1310	1160	1160	1000	1000	860	740	610								330	270
110	1370	1220	1220	1050	1050	910	780	650								380	300
115	1440	1280	1280	1100	1100	960	860	680								400	310
120	1660	1460	1460	1300	1300	1140	970	820								500	400
125	1840	1600	1600	1410	1410	1250	1080	930
130	1920	1680	1680	1490	1490	1310	1120	970

1	Pole class definitions taken from American National Standard specifications and dimensions for wood poles as approved August 7, 1976, under American National Standard Institute, Inc. codified ANSI 05.1-1972.

2	Piling class definitions as per American Society for Testing and Materials for "round timber piles." As the designation: D 25-58 (reapproved 1964).

Total Scribner Board Foot Volume Stumpage Value Areas 6 and 7
	Pole Class1															Piling Class2
Length	H6	H5	H4	H3	H2	H1	1	2	3	4	5	6	7	9	10	A	B
20							70	60	50	50	30	30	20	20	20	90	70
25							80	70	50	50	40	40	30	30	20	100	80
30							110	90	60	60	50	50	50	40		130	110
35					190	160	140	100	100	70	60	60	50			140	100
40				240	240	200	170	120	110	100	70	70				140	100
45	390	330	330	270	270	220	180	150	110	110	80	70				150	110
50	460	390	390	340	340	280	240	190	150	150	120					190	150
55	510	430	430	370	360	300	250	190	150	150						190	150
60	610	530	530	440	440	380	310	240	200	200						240	200
65	650	570	570	490	480	410	350	280	220	220						240	200
70	750	650	650	550	470	470	410	320	260	260						260	210
75	810	700	700	600	600	500	440	340	270							270	220
80	960	830	830	710	710	610	510	420	340							220	220
85	1020	870	870	760	760	640	550	450	360							300	240
90	1110	970	970	840	840	720	620	500	420							280	280
95	1160	1010	1010	870	870	740	640	510								360	280
100	1380	1210	1210	1060	1060	910	780	650								360	280
105	1430	1250	1250	1100	1100	940	820	690								400	300
110	1580	1390	1390	1220	1220	1070	920	770								460	340
115	1660	1470	1470	1280	1280	970	810	680								470	360
120	1880	1680	1680	1480	1480	1290	1130	950								560	450
125	1910	1690	1690	1490	1490	1140	970	810
130	2170	1920	1920	1710	1710	1510	1320	1140

1	Pole class definitions taken from American National Standard specifications and dimensions for wood poles as approved August 7, 1976, under American National Standard Institute, Inc. codified ANSI 05.1-1972.

2	Piling class definitions as per American Society for Testing and Materials for "round timber piles." As the designation: D 25-58 (reapproved 1964).

[Statutory Authority: RCW 82.32.330, 84.33.096 and 84.33.120.      96-02-056, § 458-40-680, filed 12/29/95, effective 1/29/96.      Statutory Authority: RCW 82.32.300 and 84.33.096.      95-14-084, § 458-40-680, filed 6/30/95, effective 7/31/95.      Statutory Authority: Chapter 84.33 RCW.      87-02-023 (Order 86-4), § 458-40-680, filed 12/31/86.]

OTS-4439.1

AMENDATORY SECTION(Amending WSR 97-02-069, filed 12/31/96, effective 1/1/97)

WAC 458-40-690   Timber excise tax -- Credit for property tax.   (1) Introduction. In accordance with RCW 84.33.077 and 84.36.473, ((persons engaged in business as)) harvesters of timber from public land ((shall be allowed)) are entitled to a tax credit against the timber excise tax imposed under chapter 84.33 RCW ((for any)). This credit is limited to personal property taxes paid to a county ((on such public timber sales.      The credit shall be allowed only for property taxes paid)) on public timber purchased on or after August 1, 1982.      The credit ((shall be taken only on)) may be applied only against excise taxes due on timber harvested from public land.      No ((excise)) property tax credits ((shall be)) are allowed against excise taxes due on timber harvested from private land.

     (((1))) (2) Amount of credit.      The total dollar amount of all excise tax credits claimed on one or more sales ((shall)) may not exceed the total amount of all personal property taxes levied and paid on such timber.      No ((excise tax)) credit ((shall be)) is allowed for property tax penalties or interest charges imposed on delinquent property taxes.      No ((excise tax credits shall be allowed)) credit is available prior to payment of personal property taxes, and the amount of credit allowed ((shall)) may not exceed the amount of property tax actually paid as certified by the county treasurer.

     (((2))) (3) Excess credits and refunds.      If the amount of the credit exceeds the amount of timber excise tax due for the calendar quarter in which the credit is claimed, the excess credit may be carried forward to the new quarterly reporting period and applied against the amount of timber excise tax due, if any, on public timber or may be refunded to the taxpayer in accordance with RCW 82.32.060 and WAC 458-20-229 (Refunds).     

     (((3))) (4) Credit application procedures.      Taxpayers who wish to claim ((such timber excise tax credits)) this credit must apply on forms prepared by the department of revenue.      The application must be certified by the county assessor and treasurer of the county in which the property taxes were paid.      Application forms ((shall be made)) are available in the offices of county assessors, county treasurers, and the department of revenue.      The applications must be submitted with timber excise tax returns for taxes due on public timber.

[Statutory Authority: RCW 82.32.330, 84.33.096 and 84.33.091.      97-02-069, § 458-40-690, filed 12/31/96, effective 1/1/97.      Statutory Authority: Chapter 84.33 RCW.      87-02-023 (Order 86-4), § 458-40-690, filed 12/31/86.]

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