WSR 01-03-083

PROPOSED RULES

DEPARTMENT OF LICENSING


[ Filed January 16, 2001, 1:12 p.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 00-17-122.

Title of Rule: Chapter 308-78 WAC, Aircraft fuel tax.

Purpose: 1. To meet the criteria set forth in Governor Locke's Executive Order 97-02.

2. To clarify rules and help make them more comprehensible.

Statutory Authority for Adoption: RCW 82.42.100.

Summary: Amending WAC 308-78-010 Definitions, 308-78-020 Bond requirements and collection, 308-78-030 Required reports, 308-78-040 Tax exempt sales by licensed distributors, 308-78-045 Tax exempt use and circumstances, 308-78-070 Records, 308-78-080 Refunds and 308-78-090 Mitigation of penalties and/or interest; new sections WAC 308-78-035 Minimum tax payment/refund, 308-78-046 Tax exempt losses and 308-78-075 Invoices issued by licensees; and repealing WAC 308-78-060 Tax exempt losses.

Reasons Supporting Proposal: Meet criteria supporting Governor Locke's Executive Order 97-02.

Name of Agency Personnel Responsible for Drafting: Art Farley, 2424 Bristol Court S.W., Olympia, 664-1820; Implementation and Enforcement: Jeff Beach, 2424 Bristol Court S.W., Olympia, 664-1844.

Name of Proponent:

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: The anticipated effects will be a clarification of current aircraft fuel tax rules and a new format to enhance readability and understanding.

Proposal Changes the Following Existing Rules: Rules were clarified, changed to question and answer format and consolidated for ease in understanding and centralization of subject matter.

No small business economic impact statement has been prepared under chapter 19.85 RCW. A small business economic impact statement is not required pursuant to RCW 19.85.030 (1)(a). The proposed rule making does not impose more than a minor cost on businesses in an industry.

RCW 34.05.328 does not apply to this rule adoption. The contents of the proposed rules are explicitly and specifically dictated by statute.

Hearing Location: 2424 Bristol Court S.W., 3rd Floor Conference Room, Olympia, WA 98507, on February 27, 2001, at 2:00 p.m.

Assistance for Persons with Disabilities: Contact Art Farley by February 1, 2001, TTY (360) 664-8885, or (360) 664-1820.

Submit Written Comments to: Art Farley, Prorate and Fuel Tax Services, P.O. Box 9036, Olympia, WA 98507-9036, e-mail afarley@dol.wa.gov, fax (360) 586-5905.

Date of Intended Adoption: March 28, 2001.

January 8, 2001

Thao Pham Manikhoth, Administrator

Prorate and Fuel Tax Services

OTS-4505.2


AMENDATORY SECTION(Amending Order PFT 90-05, filed 6/14/90, effective 7/15/90)

WAC 308-78-010   Definitions.   (1) "Aircraft fuel" includes any combustible gas or liquid, which is normally defined as motor vehicle fuel under chapter 82.36 RCW and chapter 308-72 WAC or a special fuel under chapter 82.38 RCW((,)) and chapter 308-78 WAC when ((it is)) used to propel an aircraft.

(2) "User" means any person other than a distributor who is ((licensed)) certified to acquire aircraft fuel without payment of the aircraft fuel tax at time of acquisition.

(3) "Local service commuter" means an air taxi operator who operates at least five round trips per week between two or more points; publishes flight schedules which specify the times, days of the week, and points between which it operates; and whose aircraft has a maximum capacity of sixty passengers or eighteen thousand pounds of useful load.

(4) (("Operation for testing and experimental purposes" shall include only those flights conducted under either an experimental, research and development, or special air-worthiness certificate issued by the FAA or other documented experimental or testing flights including the flight of other aircraft used in the test or experimental flight.

(5))) "Private, nonstate funded airfield" means an airport not eligible to receive state funding under chapter 47.68 RCW.

(5) "Department" means the department of licensing.

[Statutory Authority: RCW 82.42.040. 90-13-039 (Order PFT 90-05), 308-78-010, filed 6/14/90, effective 7/15/90. Statutory Authority: RCW 82.42.030. 86-02-057 (Order TL-RG-23), 308-78-010, filed 12/31/85. Statutory Authority: RCW 82.42.040. 85-04-027 (Order PFT 85-001), 308-78-010, filed 1/31/85; 82-20-093 (Order MV 696), 308-78-010, filed 10/6/82; Order 69-10-2, 308-78-010, filed 10/29/69; Rules (part), filed 9/12/67; Emergency Rules (part), filed 7/21/67.]


AMENDATORY SECTION(Amending WSR 99-19-097, filed 9/20/99, effective 10/21/99)

WAC 308-78-020   Bond requirements and collection.   (1) ((As an aircraft fuel tax distributor must I be bonded in order to receive a license?)) Are bonds required for aircraft fuel distributors? Yes, every aircraft fuel ((tax)) distributor must be ((licensed and)) bonded as ((is)) provided in chapter 82.36 RCW and/or chapter 82.42 RCW.

(2) Can the department collect on bonds for unpaid aircraft fuel taxes? Yes, the department may execute bonds on file under the provisions of chapters 82.36 and 82.42 RCW for unpaid aircraft fuel taxes ((owing under chapter 82.42 RCW)).

[Statutory Authority: RCW 88.42.040. 99-19-097, 308-78-020, filed 9/20/99, effective 10/21/99; 82-20-093 (Order MV 696), 308-78-020, filed 10/6/82; Order 69-10-2, 308-78-020, filed 10/29/69; Rule A, filed 9/12/67; Emergency Rule A, filed 7/21/67.]


AMENDATORY SECTION(Amending WSR 99-19-097, filed 9/20/99, effective 10/21/99)

WAC 308-78-030   Required reports.   (1) What reports are required by the department for aircraft fuel tax and when are they due? Every licensed distributor of aircraft fuel shall submit signed tax returns and schedules to the department ((of licensing)), on or before the 25th day of each month, or as required by the department. Forms shall be furnished or approved by the department.

(2) What if the payment due date falls on a Saturday, Sunday or state legal holiday? Payment is due by the state business day immediately preceding the due date. (For example, if the payment due date falls on Saturday, you must transfer the funds by Friday.)

(3) Is a report due if I have no activity for the month? Yes, a report shall be filed with the department for each calendar month even when no aircraft fuel was sold or used.

(((3))) (4) Can tax return information be made available to other government agencies? Yes, the department routinely furnishes copies of schedules to government agencies or foreign jurisdictions.

[Statutory Authority: RCW 88.42.040. 99-19-097, 308-78-030, filed 9/20/99, effective 10/21/99; 90-13-039 (Order PFT 90-05), 308-78-030, filed 6/14/90, effective 7/15/90; 82-20-093 (Order MV 696), 308-78-030, filed 10/6/82; Order 69-10-2, 308-78-030, filed 10/29/69; Rule B, filed 9/12/67; Emergency Rule B, filed 7/21/67.]


NEW SECTION
WAC 308-78-035   Minimum tax payment/refund.   What is the minimum tax payment or refund? Each tax return that declares a tax liability of ten dollars or less need not make remittance; conversely, a refund of ten dollars or less will not be allowed. A computation error on the tax return which results in an additional tax liability in the amount of ten dollars or less will be accepted without further collection action.

[]


AMENDATORY SECTION(Amending WSR 99-19-097, filed 9/20/99, effective 10/21/99)

WAC 308-78-040   Tax exempt ((transactions and invoice requirements)) sales by licensed distributors.   (((1))) When may a licensed distributor sell aircraft fuel without collecting the aircraft fuel tax? A licensed distributor may sell aircraft fuel without collecting the aircraft fuel tax, when delivery is made by the distributor to ((one)) any of the following:

(((a))) (1) A destination outside the state;

(((b))) (2) United States or foreign government agencies;

(((c))) (3) Directly into the aircraft fuel tanks of equipment operated by air carriers, supplemental air carriers, and foreign flag carriers operating under part 121 of the Federal Aviation Regulations, and local service commuters;

(((d))) (4) Another licensed distributor; ((or

(e))) (5) To a purchaser who delivers the fuel for export ((purposes (fuel must be unloaded at a location outside the state))) under RCW 82.42.030 ((in the state into:

(i) Purchaser's transportation equipment; and/or

(ii) A common/contract carrier employed by the purchaser at a location outside the state.

(2) What invoices are required and how are they distributed? An original invoice must be furnished to the purchaser; the selling distributor as required by RCW 82.42.040 and WAC 308-78-070 must keep a copy of the invoice.

(3) What information must an invoice include? The selling distributor must issue to the purchaser an invoice, which shall contain at least the following:

(a) Name and address of seller;

(b) Name and address of purchaser;

(c) The date of delivery (month, day, and year);

(d) The location of the point of shipment, in words;

(e) The place of delivery, in words, if different from shipping point;

(f) Purchaser's method of transporting fuel (either customer equipment, common carrier, or pipeline, if by common carrier, common carrier's name);

(g) State or foreign jurisdiction of destination;

(h) Name of product sold;

(i) The quantity, in gallons, of product sold;

(j) The price per gallon and total amount charged; and

(k) The statement: "Ex Washington State Fuel Tax.")) or 82.42.070; or

(6) Into the bulk storage tank of a certified user.

[Statutory Authority: RCW 88.42.040. 99-19-097, 308-78-040, filed 9/20/99, effective 10/21/99; 90-13-039 (Order PFT 90-05), 308-78-040, filed 6/14/90, effective 7/15/90; 85-04-027 (Order PFT 85-001), 308-78-040, filed 1/31/85; 82-20-093 (Order MV 696), 308-78-040, filed 10/6/82; Order 69-10-2, 308-78-040, filed 10/29/69; Rule C, filed 9/12/67; Emergency Rule C, filed 7/21/67.]


AMENDATORY SECTION(Amending WSR 99-19-097, filed 9/20/99, effective 10/21/99)

WAC 308-78-045   Tax exempt use and circumstances.   ((What are the conditions under which I can claim an exemption of aircraft fuel tax? Exemption from the aircraft fuel tax may be claimed for the uses specified in RCW 82.42.020 and 82.42.030 subject to the following conditions:

(1) Operation of aircraft by air carriers, supplemental air carriers, and foreign flag carriers, operating under part 121 of the Federal Aviation Regulations, and local service commuters.

(2) For testing and experimental purposes in the manufacture or remanufacture of aircraft and for flight operations of experimental testing following manufacture, repair prior to delivery to a customer or experimental testing of another aircraft.

(3) For aircraft crew training in Washington state for certified air carriers.

(4) When applying pesticides, herbicides or other agricultural chemicals and for flight operations as defined in RCW 82.42.020.)) What are the conditions under which a refund of aircraft fuel tax can be claimed? Refund of the aircraft fuel tax paid may be claimed for the following uses or circumstances:

(1) Operation of aircraft by air carriers, supplemental air carriers, and foreign flag carriers, operating under part 121 of the Federal Aviation Administration Regulations, and local service commuters.

(2) Testing and experimental purposes in the manufacture or remanufacture of aircraft and for flight operations or experimental testing following manufacture, repair prior to delivery to a customer, or experimental testing of another aircraft.

(3) Aircraft crew training in Washington state for certified air carriers.

(4) When applying pesticides, herbicides, or other agricultural chemicals under conditions defined in RCW 82.42.020.

(5) Exportation of fuel from this state for use outside this state under the same conditions as provided for the refund of motor vehicle fuel in chapter 82.36 RCW and special fuel in chapter 82.38 RCW.

(6) Use of fuel in nonhighway equipment, other than aircraft, as provided for the refund of motor vehicle fuel in chapter 82.36 RCW and special fuel in chapter 82.38 RCW.

(7) Sales to the United States or foreign government agencies by a distributor who has paid the aircraft fuel tax. The distributor shall file an exemption certificate provided by the department. This certificate shall contain an assignment to the distributor of the purchaser's right to a refund.

[Statutory Authority: RCW 88.42.040. 99-19-097, 308-78-045, filed 9/20/99, effective 10/21/99; 85-04-027 (Order PFT 85-001), 308-78-045, filed 1/31/85; 82-20-093 (Order MV 696), 308-78-045, filed 10/6/82.]


NEW SECTION
WAC 308-78-046   Tax exempt losses.   (1) What is considered a tax exempt loss? You may claim an exemption if fuel is destroyed through fire, lightning, flood, wind storm, explosion, accident, or other casualty.

(2) May I claim an exemption for losses due to leakage? Yes, if the verified leakage is five hundred gallons or more.

(3) May I claim an exemption for losses of aircraft fuel due to evaporation, shrinkage, or unknown causes? No, aircraft fuel losses due to evaporation, shrinkage, or unknown causes are not permitted.

(4) What is acceptable proof of loss? Acceptable proof of loss will consist of the following:

(a) An affidavit by a person having direct knowledge of the circumstances of the loss, explaining the circumstances surrounding the loss, quantity of fuel lost, fuel salvaged, disposition of salvaged fuel, and procedures used in determining the quantity of fuel lost;

(b) A signed statement by a federal or jurisdictional official who has authority to investigate fuel losses, or a witness to the loss;

(c) A bill of lading or shipping document;

(d) A statement by the licensee establishing ownership of the fuel at the time of loss.

(5) How long must I retain my evidence substantiating the loss? Documentary evidence substantiating losses shall be retained by the licencee for five years.

(6) Am I liable for fuel taxes if one of my employees or agents causes a loss of fuel? Yes, charges for losses made by employees or agents who fail to satisfactorily account for fuel shall be invoiced inclusive of the fuel tax. Other losses shall be substantiated by proof acceptable to the department.

[]


AMENDATORY SECTION(Amending WSR 99-19-097, filed 9/20/99, effective 10/21/99)

WAC 308-78-070   Records.   (1) What records must a distributor, certified user, or consumer of aircraft fuel maintain? The following records must be maintained:

(a) Physical inventories of bulk storage facilities and mobile storage facilities taken at the close of each calendar month;

(b) A record of fuel receipts together with invoices, bills of lading, transfer documents, and other documents relative to the acquisition of fuel;

(c) A record of fuel disbursements supported by sales invoices and other documents relative to the disbursements of fuel;

(d) ((An original invoice shall be issued at the time of each sale, or delivery, and shall show:

(i) The name of the distributor;

(ii) The date of delivery;

(iii) The name and address of the purchaser (address not required on credit card deliveries);

(iv) The location of the storage facility from which the fuel was withdrawn;

(v) The type or grade of fuel;

(vi) The number of gallons sold or delivered;

(vii) The price per gallon and the total amount charged;

(viii) The statement: "Ex Washington Aircraft Fuel Tax" for tax exempt sales. The distributor or user license number must be shown for all deliveries other than those made directly into the aircraft fuel tanks of unlicensed exempt carriers;

(e))) A withdrawal record covering their own total usage during the month. The withdrawal record shall contain the date of withdrawal, the location of the storage facility from which the fuel was withdrawn, the type or grade of fuel, and the number of gallons withdrawn;

(((f))) (e) Each person claiming an exemption from the aircraft fuel tax shall keep records of each flight or series of flights for which tax exempt use is claimed. Such records shall include:

(i) Flight or block time of each flight or series of flights;

(ii) Type of aircraft;

(iii) Purpose of each flight or series of flights;

(iv) Dates;

(v) Gallons consumed for each flight or series of flights.

(2) How long must I retain my records? Records shall be maintained and kept for a period of not less than five years in their original form. The department may make such examinations of the records, facilities, equipment, and aircraft of distributors, certified users and consumers of aircraft fuel as necessary in carrying out the provisions of this chapter.

[Statutory Authority: RCW 88.42.040. 99-19-097, 308-78-070, filed 9/20/99, effective 10/21/99; 90-13-039 (Order PFT 90-05), 308-78-070, filed 6/14/90, effective 7/15/90; 85-04-027 (Order PFT 85-001), 308-78-070, filed 1/31/85; 82-20-093 (Order MV 696), 308-78-070, filed 10/6/82; Order 69-10-2, 308-78-070, filed 10/29/69; Rule F, filed 9/12/67; Emergency Rule F, filed 7/21/67.]


NEW SECTION
WAC 308-78-075   Invoices issued by licensees.   (1) When is an invoice issued? Every licensee shall issue an invoice at the time of sale, distribution or use. If an electronic invoice is issued, a paper copy of the invoice must be produced if required by the department or to support a refund claim.

(2) What information must appear on each invoice? Each invoice must include the following information:

(a) The name and address of the seller;

(b) The name, address and aircraft fuel tax number, if applicable, of the purchaser for all deliveries other than those made directly into the aircraft fuel tanks of unlicensed exempt carriers;

(c) The date of delivery (month, day and year);

(d) The location of the point of shipment. Alphanumeric codes are not allowed;

(e) The physical address of delivery, if different than the purchaser address, including the name of the state, Canadian Province, or foreign country. Alphanumeric codes are not allowed;

(f) Name of carrier transporting fuel;

(g) Name of product sold;

(h) The gross number of U.S. gallons of product sold;

(i) The price per gallon and the total amount charged;

(j) A statement on the invoice indicating whether the fuel has been sold with or without the Washington state fuel tax;

(k) In the case of a delivery onto a federally recognized Indian reservation or onto Indian country, the invoice must identify the state within the contiguous United States, Hawaii, Alaska, District of Columbia, U.S. possession, or Canadian Province in which the delivery took place.

(3) What happens if an invoice is lost or destroyed? If an invoice is lost or destroyed, the seller shall issue a duplicate or copy containing all information that appeared on the original invoice. The copies shall be plainly marked "copy" or "duplicate."

(4) What happens if an incorrect invoice is issued to the purchaser? The seller must retrieve the incorrect invoice and issue a corrected invoice to the purchaser.

[]


AMENDATORY SECTION(Amending WSR 99-19-097, filed 9/20/99, effective 10/21/99)

WAC 308-78-080   Refunds.   (1) What do I have to do to claim a refund for aircraft fuel? In order to claim a refund for aircraft fuel tax, you shall file a claim upon forms provided by the department in the same manner and under the same conditions as provided for refund of motor vehicle fuel in RCW 82.36.310.

(2) ((What is considered a tax exempt refund? A refund of aircraft fuel tax, which has been collected, may be claimed on aircraft fuel that has been:

(a) Used for purposes exempted under RCW 82.42.020, or 82.42.030 and WAC 308-78-040, 308-78-045 and 308-78-060;

(b) Exported from this state for use outside this state under the same conditions as provided for refund of motor vehicle fuel in RCW 82.36.300. Any aircraft fuel carried from this state in the fuel tank of an aircraft shall not be considered as exported from this state;

(c) Used in nonhighway equipment, other than aircraft, as provided for refund of motor vehicle fuel in RCW 82.36.280;

(d) Sold to United States or foreign government agencies by a dealer who has paid the aircraft fuel tax. The dealer shall file an exemption certificate provided by the department. This certificate shall contain an assignment to the dealer of the purchaser's right to a refund. Each invoice covering such sale shall clearly state the fuel has been sold without the aircraft fuel tax.

(3))) Is there a time limit to claim an aircraft fuel tax refund? Yes, claims for refund may not be filed later than thirteen months from the date of purchase of such aircraft fuel under the same conditions as provided for motor vehicle fuel in RCW 82.36.330.

(((4))) (3) Can the department verify the validity of refund claims? Yes, the department may examine the books and records of the claimant in order to establish the validity of any claim for refund under the same conditions as provided for motor vehicle fuel in RCW 82.36.340.

[Statutory Authority: RCW 88.42.040. 99-19-097, 308-78-080, filed 9/20/99, effective 10/21/99; 85-04-027 (Order PFT 85-001), 308-78-080, filed 1/31/85; 82-20-093 (Order MV 696), 308-78-080, filed 10/6/82; Order 69-10-2, 308-78-080, filed 10/29/69; Rule G, filed 9/12/67; Emergency Rule G, filed 7/21/67.]


AMENDATORY SECTION(Amending WSR 99-19-097, filed 9/20/99, effective 10/21/99)

WAC 308-78-090   Mitigation of penalties and/or interest.   (1) Under what circumstances may fee, a penalty and/or interest be ((waived)) mitigated? The department((, in its discretion,)) may mitigate, extinguish and/or adjust fees, penalties, and/or interest arising from late or missing fuel tax returns, unpaid or underpaid taxes, lack of complete records ((to support reported fuel usage, or)), license revocation penalties((, when reasonable cause is shown by the taxpayer or as indicated from the records on file with the department that failure to comply with the requirements of this chapter was not intentional or unreasonable)) and assessments.

(2) How will the department determine whether fees, penalties and/or interest will be mitigated? The department((, in its discretion, and after review of records furnished and/or tax returns available, may take into consideration a taxpayer's history of underpayments and overpayments, late payment(s), late filing of tax returns, or incomplete records in arriving at its decision to mitigate)) will review records, account history or other information in arriving at its decision.

(3) What happens if I do not pay my tax assessment on time? You will be assessed additional penalties and/or interest.

(((4) Under what circumstances may assessed late payment penalties and/or interest be mitigated? The department, in its discretion, may mitigate late payment penalties and/or interest if the taxpayer provides reasonable cause for failure to make payment within a thirty-day period after service of an assessment.))

[Statutory Authority: RCW 88.42.040. 99-19-097, 308-78-090, filed 9/20/99, effective 10/21/99. Statutory Authority: RCW 82.42.040 and 82.42.100. 92-01-015, 308-78-090, filed 12/6/91, effective 1/6/92.]


REPEALER

     The following section of the Washington Administrative Code is repealed:
WAC 308-78-060 Tax exempt losses.

Washington State Code Reviser's Office