WSR 05-21-081

PREPROPOSAL STATEMENT OF INQUIRY

DEPARTMENT OF REVENUE


[ Filed October 17, 2005, 3:39 p.m. ]

Subject of Possible Rule Making: WAC 458-20-257 Warranties and maintenance agreements.

Statutes Authorizing the Agency to Adopt Rules on this Subject: RCW 82.32.300 and 82.01.060(2).

Reasons Why Rules on this Subject may be Needed and What They Might Accomplish: WAC 458-20-257 (Rule 257) explains the business and occupation (B&O), retail sales, and use tax reporting responsibilities of persons selling warranties or maintenance agreements. Sections 101 through 112, chapter 514, Laws of 2005, changed, effective July 1, 2005, the definition of a retail sale to include sales of extended warranties. The result is that retail sales tax applies when an extended warranty is sold to a consumer. The income received from these sales was previously subject to the service and other activities B&O tax.

The department previously amended Rule 257 on an emergency basis to recognize these provisions of chapter 514. The department is engaging in this rule making to amend the current permanent rule to reflect this law change. The department also anticipates revising and reorganizing the rule to provide the information in a more useful manner.

Other Federal and State Agencies that Regulate this Subject and the Process Coordinating the Rule with These Agencies: None.

Process for Developing New Rule: Parties interested in this rule making may contact the individual listed below. The public may also participate by providing written comments throughout this rule making or giving oral testimony at the public meeting or public hearing.

Interested parties can participate in the decision to adopt the new rule and formulation of the proposed rule before publication. Written comments may be submitted by mail, fax, or at the public meeting. Oral comments will be accepted at the public meeting. A preliminary draft of possible rule changes is available for viewing and printing on the department's web site at http://dor.wa.gov/content/laws/RuleMaking/default.aspx. Written comments may be directed to Chris Coffman, Interpretations and Technical Advice Unit, P.O. Box 47453, Olympia, WA 98504-7453, e-mail ChrisC@dor.wa.gov, phone (360) 570-6150, fax (360) 586-5543.

Public Meeting Location: Capital Plaza Building, L&P Large Conference Room, 4th Floor, 1025 Union Avenue S.E., Olympia, WA, on November 29, 2005, at 1:00 p.m.

October 17, 2005

Alan R. Lynn

Rules Coordinator

Washington State Code Reviser's Office