EXPEDITED RULES
Title of Rule and Other Identifying Information: WAC 458-20-126 Sales of motor vehicle fuel, special fuels, and
nonpollutant fuel, provides tax reporting information to
persons selling motor vehicle fuel, special fuel (diesel), and
nonpollutant fuel (propane).
THIS RULE IS BEING PROPOSED UNDER AN EXPEDITED RULE-MAKING PROCESS THAT WILL ELIMINATE THE NEED FOR THE AGENCY TO HOLD PUBLIC HEARINGS, PREPARE A SMALL BUSINESS ECONOMIC IMPACT STATEMENT, OR PROVIDE RESPONSES TO THE CRITERIA FOR A SIGNIFICANT LEGISLATIVE RULE. IF YOU OBJECT TO THIS USE OF THE EXPEDITED RULE-MAKING PROCESS, YOU MUST EXPRESS YOUR OBJECTIONS IN WRITING AND THEY MUST BE SENT TO Gayle Carlson, Department of Revenue, P.O. Box 47453, Olympia, WA 98504-7453, fax (360) 586-0127, e-mail GayleC@dor.wa.gov , AND RECEIVED BY July 7, 2008.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: This proposed rule has been reorganized and subsection titles have been added. The following explains where issues addressed in subsections in the proposed rule can be found in the current rule. Also noted are subsections that have been added to recognize legislative changes.
| • | The introduction (subsection (1)) has been added to provide an overview of what topics are covered. |
| • | Information found in subsection (2), What are motor vehicle fuel and special fuels, and how are they taxed?, can be found in subsections (1) and (1)(b) of the existing rule. |
| • | Subsection (3), What motor vehicle fuel and special fuels exemptions are available?, incorporates legislation granting exemptions (RCW 82.08.0255 and 82.12.0256) to subsection (a) county owned ferries, county ferry districts, and subsection (d) public transportation benefit areas. The exemptions in subsection (b) nonprofit transportation providers, subsection (c) public transportation, and subsection (e) special fuels used in interstate commerce are in subsections (1)(c), (d), and (e) of the existing rule. The exemption certificate for special fuel sales to interstate carriers is now available on the department's internet site, and the address has been provided. The requirement to renew the certificate at least every four years has been replaced with a provision for the certificate to apply for all sales transactions as long as the seller has a "recurring business relationship" with the buyer per RCW 82.04.470 and 82.08.050. |
| • | Subsection (3)(f) has been incorporated due to SSB 5009, chapter 443, Laws of 2007, that exempts farm fuel users from retail sales and use taxes for diesel and aircraft fuel purchased for nonhighway use (RCW 82.08.865 and 82.12.865). The department's internet site address has been provided for obtaining a copy of the "farmers' retail sales tax exemption certificate" which should be used for this exemption. |
| • | Subsection (4), Nonpollutant fuels, incorporates existing subsections (2), (2)(a), (b), (c), (d), (e), (f), and information from RCW 82.38.075. The department's internet site address is included for obtaining the "certificate for purchase of nonpollutant special fuels." |
| • | The contents of subsection (5), Refunds are available for fuel taxes paid when fuel is consumed off the highway, can be found in subsection (1)(f) of the existing rule. |
Reasons Supporting Proposal: To incorporate provisions of SSB 5009 (chapter 443, Laws of 2007) and E2SSB 5862 (chapter 223, Laws of 2007), and to reorganize the information in an easier to read manner.
Statutory Authority for Adoption: RCW 82.32.300 and 82.01.060(2).
Statute Being Implemented: RCW 82.08.0255, 82.12.0256, 82.08.865, and 82.12.865.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Department of revenue, governmental.
Name of Agency Personnel Responsible for Drafting: Gayle Carlson, 1025 Union Avenue S.E., Suite #544, Olympia, WA, (360) 570-6126; Implementation: Alan R. Lynn, 1025 Union Avenue S.E., Suite #544, Olympia, WA, (360) 570-6125; and Enforcement: Janis P. Bianchi, 1025 Union Avenue S.E., Suite #544, Olympia, WA, (360) 570-6147.
May 6, 2008
Alan R. Lynn
Rules Coordinator
OTS-1480.1
AMENDATORY SECTION(Amending WSR 91-15-022, filed 7/11/91,
effective 8/11/91)
WAC 458-20-126
Sales of motor vehicle fuel, special
fuels, and nonpollutant fuel.
(1) ((Motor vehicle fuel and
special fuels. "Motor vehicle fuel" as used in this section
means gasoline or any other inflammable gas or liquid the
chief use of which is as fuel for the propulsion of motor
vehicles. (See RCW 82.36.010.) "Special fuels" as used in
this section means all combustible gases and liquids suitable
for the generation of power for propulsion of motor vehicles,
except that it does not include motor vehicle fuel as defined
above. (See RCW 82.38.020.) Diesel fuel is an example of a
special fuel.
(a) The retail sales tax does not apply to the following:
(i) Sales of motor vehicle fuel on which the tax of chapter 82.36 RCW is paid.
(ii) Sales of special fuel when sold for use as fuel in propelling motor vehicles upon the public highways in this state and on which the special fuel tax of chapter 82.38 RCW is paid. Payment of the annual fee in lieu of the special fuel tax on natural gas and propane, RCW 82.38.075, constitutes payment of the special fuel tax imposed by chapter 82.38 RCW.
(b) The retail sales tax or use tax applies to sales and uses of motor vehicle fuel or special fuel when the taxes of chapter 82.36 or 82.38 RCW have not been paid or have been refunded.
(c) By reason of special exemptions contained in RCW 82.08.0255 the retail sales tax does not apply to sales of special fuel delivered in this state which is later transported and used outside this state by persons engaged in interstate commerce. This exemption also applies to persons hauling their own goods in interstate commerce.
Exemption certificate. Persons selling special fuel to
interstate carriers which comes within the foregoing exemption
may obtain an exemption certificate from the purchaser in
substantially the following form in order to document the
entitlement to the exemption.
to Interstate Carriers
The above certificate must be renewed at intervals not to
exceed four years.
(d) Neither the retail sales tax nor use tax applies to sales or uses of motor vehicle fuel or special fuel purchased by private, nonprofit transportation providers certified under chapter 81.66 RCW, who are entitled to fuel tax refund or exemption under chapter 82.36 or 82.38 RCW.
(e) Persons selling special fuels on which the tax of chapter 82.38 RCW is not collected, except special fuel sold for use outside this state by persons engaged in interstate commerce, or fuel sold to exempt certified transportation providers, are required to collect the retail sales tax on retail sales thereof.
It is the intent of the law that all vehicle fuels, except special fuel purchased in this state for use outside this state by interstate commerce carriers, or fuels sold to exempt certified transportation providers will be subject to either the vehicle fuel taxes (chapter 82.36 or 82.38 RCW) or else the sales or use taxes of the Revenue Act (chapter 82.08 or 82.12 RCW). The fuel taxes apply to sales of fuel for on-highway consumption. The sales or use tax applies to fuel sold for consumption off the highways (e.g., boat fuel, or fuel for farm machinery, construction equipment, etc.).
(f) When persons purchase motor vehicle fuel or special fuel upon which either the fuel taxes of chapter 82.36 or 82.38 RCW have been paid, but the fuel is consumed off the highways, such persons are entitled to a refund of these taxes under the procedures of chapter 82.36 or 82.38 RCW. However, persons receiving refund of vehicle fuel taxes because of their off-highway consumption of the fuel in this state are subject to payment of the use tax of chapter 82.12 RCW on the value of the fuel. The director of the department of licensing administers the fuel tax refund provisions and will deduct from the amount of any such refunds the amount of use tax due.
(2) Nonpollutant fuel. RCW 82.38.075 provides for payment of an annual fee by users of nonpollutant fuel (natural gas and liquified petroleum gas, commonly called propane) in lieu of motor vehicle fuel tax which would otherwise be due. This fee is paid at the time of original and annual renewals of vehicle license registrations. Sales or use tax applies to sales of nonpollutant fuel and any other motor fuel only if the taxes of chapter 82.36 or 82.38 RCW are not paid. The "in lieu of" tax is merely an alternative method of paying tax due under chapter 82.38 RCW. Thus, when it is paid by a user, the user has no liability for sales or use tax on purchases of nonpollutant fuel for use in the motor vehicle.
(a) Fuel dealers should not collect sales or use tax on any nonpollutant fuel sold to Washington licensed vehicle owners for "on-highway" use when the vehicle displays a currently valid decal or other identifying device issued by the department of licensing.
(b) Nonpollutant fuels purchased for "off-highway" use, however, are not subject to the taxes of chapter 82.36 or 82.38 RCW and therefore the sales tax applies to dealer sales of fuel for "off-highway" use. If the nonpollutant fuel is pumped into the vehicle fuel tank, then the special fuel tax applies. However, this tax should have already been paid by Washington state licensed vehicle owners directly under the "in lieu of" provisions of RCW 82.38.075.
(c) The department recognizes that certain licensed special fuel users may find it more practical to accept deliveries of nonpollutant fuels into a bulk storage facility rather than into the fuel tanks of motor vehicles. Persons selling nonpollutant fuels to such bulk purchasers may obtain from the purchaser an exemption certificate in order to document entitlement to the exemption. The certificate will certify the amount of fuel which will be consumed by the buyer in propelling motor vehicles upon the highways of this state. This procedure is limited, however, to persons duly registered with the department. The registration number given on the certificate ordinarily will be sufficient evidence that the purchaser is properly registered. The certificate shall be in substantially the following form:
The undersigned hereby certifies that on this date he
purchased (gallons/cubic feet) of nonpollutant fuel from the
above named seller, and that delivery of the products so
purchased was not made into the fuel tanks of a motor vehicle.
The undersigned further certifies that of the purchase herein
described:
(d) Where it is not possible for a special fuel user
licensee to determine at the time of purchase the exact
proportion of the products purchased which will be consumed in
propelling motor vehicles upon the highways of this state, the
amount of such off-highway use special fuel may be estimated. In the event such an estimate is used, the purchaser must make
an adjustment on a following excise tax return and pay use tax
upon any portion of the fuel used for off-highway purposes
upon which the retail sales tax was not paid.
(e) Certificates should be retained by the seller, as a part of his permanent records, and will be acceptable evidence of sales tax exemption upon sales of nonpollutant special fuel delivered in the manner described. When nonpollutant fuel is delivered by the seller into the bulk storage facilities of a special fuel user licensee or is otherwise sold to such buyers under conditions whereby it is not delivered into the fuel tanks of motor vehicles, it will be presumed that the entire amount of the products so sold will be subject to the retail sales tax unless the seller has obtained the certificate.
(f) Owners of out-of-state licensed vehicles who purchase propane and other nonpollutant fuel normally will not have paid the motor vehicle fuel tax or the special fuel tax. Thus, where the taxes of chapters 82.36 and 82.38 RCW have not been paid they owe sales tax on their purchases of this fuel for both on-highway or off-highway use.
(g) Accordingly, the following guidelines will prevail:
(i) All sales of nonpollutant fuel not placed in vehicle fuel tanks by the seller are subject to sales tax which the seller must collect and remit unless a certificate as described above is obtained from the purchaser.
(ii) All sales of motor vehicle fuel, special fuel, or nonpollutant fuel of any kind for "on-highway" use are subject to the fuel taxes of chapter 82.36 or 82.38 RCW.
(iii) The tax due on nonpollutant fuel for "on-highway" use (including propane) under chapter 82.38 RCW will already have been paid by Washington licensed vehicle owners so the seller need not collect additional state tax of any kind.
(iv) Non-Washington licensed vehicle owners who have not paid tax under either chapter 82.36 or 82.38 RCW must pay sales tax on all purchases of nonpollutant fuel (including propane) whether for on-highway or off-highway use.)) Introduction. This section explains the retail sales and use taxes for motor vehicle fuel, special fuels, and fuels commonly referred to as natural gas and propane. This section also provides documentation requirements to buyers and sellers of fuel for both on and off highway use.
(2) What are motor vehicle fuel and special fuels, and how are they taxed? "Motor vehicle fuel" as used in this section means gasoline or any other inflammable gas or liquid the chief use of which is as fuel for the propulsion of motor vehicles. (See RCW 82.36.010.) "Special fuels" as used in this section mean all combustible gases and liquids suitable for the generation of power for propulsion of motor vehicles, except that it does not include motor vehicle fuel as defined above. (See RCW 82.38.020.) Diesel fuel is an example of a special fuel.
The retail sales tax or use tax applies to sales and uses of motor vehicle fuel or special fuel, unless an exemption applies, when the taxes of chapter 82.36 or 82.38 RCW have not been paid or have been refunded. Generally the fuel taxes apply to sales of fuel for highway consumption and the sales or use tax applies to fuel sold for consumption off the highways (e.g., boat fuel, or fuel for farm machinery or construction equipment, etc.).
(3) What motor vehicle fuel and special fuels exemptions are available?
(a) County owned ferries. RCW 82.08.0255 and 82.12.0256 provide exemptions from the retail sales tax and use tax for motor vehicle fuel or special fuels, purchased on or after April 27, 2007. This exemption applies only to county owned ferries or county ferry districts created under chapter 36.54 RCW for use in passenger only ferries.
(b) Nonprofit transportation providers. RCW 82.08.0255 and 82.12.0256 provide retail sales tax and use tax exemptions for sales of or uses of motor vehicle fuel or special fuels purchased by private, nonprofit transportation providers certified under chapter 81.66 RCW, who are entitled to fuel tax refund or exemption under chapter 82.36 or 82.38 RCW.
(c) Public transportation. RCW 82.08.0255 and 82.12.0265 provide exemptions for the retail sales tax and use tax when motor vehicle fuel or special fuels are purchased or used for the purpose of public transportation, and the purchaser is entitled to a refund or an exemption under RCW 82.36.275 or 82.38.080(3).
(d) Public transportation benefit areas (PTBA). For purchases on or after April 27, 2007, RCW 82.08.0255 and 82.12.0256 provide retail sales tax and use tax exemptions for motor vehicle fuel and special fuels purchased by a PTBA created under chapter 36.57A RCW.
(e) Special fuels used in interstate commerce. The retail sales tax does not apply to sales of special fuels delivered in this state which are later transported and used outside this state by persons engaged in interstate commerce. (RCW 82.08.0255(2).) This exemption also applies to persons hauling their own goods in interstate commerce.
Exemption certificate. Persons selling special fuels to interstate carriers must obtain a completed exemption certificate "Certificate of Special Fuel Sales to Interstate Carriers" from the purchaser in order to document the entitlement to the exemption. The exemption certificate can be obtained from the department of revenue (department) on the internet at http://www.dor.wa.gov/, or by contacting the department's taxpayer services division at:
Taxpayer Services
Department of Revenue
P.O. Box 47478
Olympia, WA 98504-7478
1-800-647-7706
The provisions of the exemption certificate may be
limited to a single sales transaction, or may apply to all
sales transactions as long as the seller has a recurring
business relationship with the buyer. A "recurring business
relationship" means at least one sale transaction within a
period of twelve consecutive months.
(f) Farm fuel users of diesel or aircraft fuels. For the purpose of this section, a "farm fuel user" means either a farmer or a person who provides horticultural services for farmers, such as soil preparation, crop cultivation, or crop harvesting services.
(i) Effective March 6, 2006, RCW 82.08.865 and 82.12.865 exempt farm fuel users from retail sales and use taxes for diesel and aircraft fuel purchased for nonhighway use.
(ii) Substitute Senate Bill (SSB) 5009, chapter 443, Laws of 2007, added biodiesel fuel as exempt from retail sales and use taxes when purchased or used by farm fuel users for nonhighway use. This exemption, effective May 11, 2007, also applies to a fuel blend if all the component fuels of the blend would otherwise be exempt under RCW 82.08.865 and 82.12.865 if the component fuels were sold as separate products. The exemptions do not apply to fuel used for residential heating purposes.
(iii) When purchasing an eligible fuel, a farm fuel user must provide the seller with a completed "Farmers' Retail Sales Tax Exemption Certificate," which can be obtained from the department on the internet at http://www.dor.wa.gov/, or by contacting the department's taxpayer services division at:
Taxpayer Services
Department of Revenue
P.O. Box 47478
Olympia, WA 98504-7478
1-800-647-7706
Sellers of eligible fuels to farm fuel users must
document the tax exempt sales of red-dyed diesel, biodiesel,
or aircraft fuel by accepting the certificate mentioned above
and retaining it in their records for five years.
(4) Nonpollutant fuels. Nonpollutant fuels are described as natural gas and liquefied petroleum gas, commonly called propane. Nonpollutant fuels can be purchased for either highway or "off-highway" use. Sales of nonpollutant fuels for highway use are normally subject to taxes under either chapter 82.36 or 82.38 RCW. Nonpollutant fuels purchased for "off-highway" use are subject to retail sales tax or use tax
(a) Highway fuel used by Washington licensed vehicle owners. RCW 82.38.075 provides for payment of an annual fee by users of nonpollutant fuel in lieu of the motor vehicle fuel tax. This fee is paid at the time of original and annual renewals of vehicle license registrations. A decal or other identifying device must be displayed as prescribed by the department of licensing as authority to purchase these nonpollutant fuels.
Fuel dealers should not collect sales or use tax on any nonpollutant fuel sold to Washington licensed vehicle owners for highway use when the vehicle displays a valid decal or other identifying device issued by the department of licensing.
(b) "Off-highway" fuel use. Nonpollutant fuels purchased for "off-highway" use are not subject to the taxes of chapter 82.36 or 82.38 RCW, and therefore the retail sales tax applies.
(c) Bulk purchases of fuel. The department recognizes that certain licensed special fuel users may find it more practical to accept deliveries of nonpollutant fuels into a bulk storage facility rather than into the fuel tanks of motor vehicles. Persons selling nonpollutant fuels to such bulk purchasers must obtain from the purchaser an exemption certificate in order to document entitlement to the exemption. The "Certificate for Purchase of Nonpollutant Special Fuels" must certify the amount of fuel which will be consumed by the purchaser in using motor vehicles upon the highways of this state. This procedure is limited, however, to persons duly registered with the department. The registration number given on the certificate ordinarily will be sufficient evidence that the purchaser is properly registered. The "Certificate for Purchase of Nonpollutant Special Fuels" can be obtained from the department on the internet at http://www.dor.wa.gov/, or by contacting the department's taxpayer services division at:
Taxpayer Services
Department of Revenue
P.O. Box 47478
Olympia, WA 98504-7478
1-800-647-7706
(i) When fuel is purchased for both on and off highway
use, and it is not possible for a special fuel user licensee
to determine the exact proportion purchased for highway use in
this state, the amount of the off-highway use special fuel may
be estimated. In the event such an estimate is used and
retail sales tax is not paid, the purchaser must make an
adjustment on the next excise tax return and remit use tax on
the portion of the fuel used for off-highway purposes.
(ii) Nonpollutant fuel not placed in vehicle fuel tanks by the seller are subject to retail sales tax, unless a "Certificate for Purchase of Nonpollutant Special Fuels" is obtained from the purchaser. The seller must collect and remit the retail sales tax to the department, or retain the certificate as part of his permanent records. When nonpollutant fuel is delivered by the seller into the bulk storage facilities of a special fuel user licensee or is otherwise sold to such buyers under conditions where it is not delivered into the fuel tanks of motor vehicles, it will be presumed that the entire amount of fuel sold is subject to retail sales tax unless the seller has obtained a completed certificate.
(d) Vehicles licensed outside the state of Washington. Owners of out-of-state licensed vehicles are exempt from the requirement to purchase an annual license as provided in RCW 82.38.075. In lieu of taxes of chapters 82.36 and 82.38 RCW, retail sales tax is due on their purchases of nonpollutant fuel, for either highway or off-highway use.
(5) Refunds are available for fuel taxes paid when fuel is consumed off the highway. If a person purchases motor vehicle fuel or special fuels and pays the fuel taxes of chapter 82.36 or 82.38 RCW, and then consumes the fuel off the highway, the person is entitled to a refund of these taxes under the procedures of chapter 82.36 or 82.38 RCW. However, a person receiving a refund of vehicle fuel taxes because of the off-highway consumption of the fuel in this state is subject to use tax on the value of the fuel. The department of licensing administers the fuel tax refund provisions and will deduct from the amount of a refund the amount of use tax due.
[Statutory Authority: RCW 82.32.300. 91-15-022, § 458-20-126, filed 7/11/91, effective 8/11/91; 83-17-099 (Order ET 83-6), § 458-20-126, filed 8/23/83; 83-07-034 (Order ET 83-17), § 458-20-126, filed 3/15/83; Order ET 73-1, § 458-20-126, filed 11/2/73; Order ET 70-3, § 458-20-126 (Rule 126), filed 5/29/70, effective 7/1/70.]