(1) Introduction. This rule explains the various commute trip reduction incentives ((that are available)). RCW 82.04.355 and 82.16.047 ((provide exemptions))exempt amounts received from providing ride sharing, or ride sharing for persons with special transportation needs, from business and occupation (B&O) tax and public utility tax (PUT) ((on amounts received from providing commuter ride sharing and ride sharing for persons with special transportation needs)). RCW 82.08.0287 and 82.12.0282 provide sales and use tax exemptions for sales or use of passenger motor vehicles as ((ride-sharing))ride sharing vehicles. Finally, chapter 82.70 RCW provides commute trip reduction incentives in the form of B&O tax or PUT credits in connection with ride sharing, public transportation, car sharing, and nonmotorized commuting.

(2) Definitions. For the purposes of this rule, the following definitions apply:

(3)B&O tax and PUT exemptions for providing ((commuter)) ride sharing or ride sharing for persons with special transportation needs. RCW 82.04.355 and 82.16.047 provide B&O tax and PUT exemptions for amounts received in the course of ((commuter)) ride sharing or ride sharing for persons with special transportation needs.

(((a) What is "commuter ride sharing"? "Commuter ride sharing" means a carpool or vanpool arrangement, whereby one or more fixed groups:

(3)))(4)Retail sales tax and use tax exemptions on sales or use of passenger motor vehicles as ((ride-sharing))ride sharing vehicles. RCW 82.08.0287 and 82.12.0282 provide retail sales tax and use tax exemptions for sales and use of passenger motor vehicles as ride-sharing vehicles. The following conditions apply to qualify for these exemptions:

(a) ((What are the requirements? To qualify for these exemptions,))Minimum duration of usage. The passenger motor vehicles must be used((:

(i)))primarily for ((commuter)) ride sharing or ride sharing for persons with special transportation needs((; and

(ii) As ride-sharing vehicles for thirty-six))for 36 consecutive months beginning from the date of purchase (retail sales tax exemption) and the date of first use (use tax exemption). If the vehicle is used as a ((ride-sharing))ride sharing vehicle for less than ((thirty-six))36 consecutive months, the registered owner must pay the retail sales tax or use tax.

(b) ((Additional requirements in certain cases.))Increased passenger requirements for vehicles not operated by a public transportation agency. If a vehicle is not operated by a public transportation agency, the minimum group size is increased from three persons each to five persons each including the driver. RCW 82.08.0287 (2)(b) and 82.12.0282 (2)(b).

(c) Qualifying jurisdictions. Vehicles ((used primarily for commuter ride sharing)) must be operated within:

(i) A county, or a city or town within that county, which has a commute trip reduction plan under chapter 70A.94 RCW ((in order to be exempt from retail sales tax or use tax. In addition, for the exemptions to apply, at least one of the following conditions must apply:

(i) The vehicle is)); or

(i) Operated by a public transportation agency for the benefit of the general public;

(ii) ((The vehicle is))Used by a major employer, as defined in RCW ((70A.94.524))70A.15.4010, as an element of its commute trip reduction program for their employees; or

(iii) ((The vehicle is))Owned and operated by individual employees and ((must be)) registered either with the employer as part of its commute trip reduction program or with a public transportation agency ((serving the area where the employees live or work.

Individual-employee)).

(i) Individual employee owned and operated motor vehicles require certification that the vehicle is registered with a major employer or a public transportation agency((.)); and

(ii) Major employers who own and operate motor vehicles for their employees must certify that the commute ((ride-sharing))ride sharing arrangement conforms to a carpool or vanpool element contained within their commute trip reduction program.

(((4)))(5)B&O tax or PUT credit for ride sharing, public transportation, car sharing, or nonmotorized commuting. RCW 82.70.020 provides a credit against B&O tax or PUT liability for amounts paid to or on behalf of employees for ride sharing ((in vehicles carrying two or more persons)), for using public transportation, for using car sharing, or for using nonmotorized commuting. The credit is equal to the amount paid to or on behalf of each employee multiplied by ((fifty))50 percent, but may not exceed ((sixty dollars))$60 per employee per fiscal year. No refunds will be granted for unused credits.

(a) Who is eligible for this credit?

(i) Employers in Washington are eligible for this credit, for amounts paid to or on behalf of their own or other employees, as financial incentives to such employees for ride sharing, for using public transportation, for using car sharing, or for using nonmotorized commuting.

(ii) Property managers who manage worksites in Washington are eligible for this credit, for amounts paid to or on behalf of persons employed at those worksites, as financial incentives to such persons for ride sharing, for using public transportation, for using car sharing, or for using nonmotorized commuting.

(b) ((What is "ride sharing"? "Ride sharing" means a carpool or vanpool arrangement, whereby a group of at least two but not exceeding fifteen persons, including the driver, is transported in a passenger motor vehicle with a gross vehicle weight not exceeding ten thousand pounds, excluding any special rider equipment. The transportation must be between their places of residence or near such places of residence, and their places of employment or educational or other institutions. The driver must also be on the way to or from his or her place of employment or educational or other institution. "Ride sharing" includes ride sharing on Washington state ferries. RCW 82.70.010.

(f)))What is the credit amount? The amount of the credit is equal to the amount paid to or on behalf of each employee multiplied by ((fifty))50 percent, but may not exceed ((sixty dollars))$60 per employee per fiscal year. RCW 82.70.020.

(((g)))(c)What is a "fiscal year"? A "fiscal year" begins ((at))on July 1st of one year and ends on June 30th of the following year.

(((h)))(d)When will the credit expire? The credit program is scheduled to expire July 1, 2024. No credit may be claimed after June 30, 2024.

(((i)))(e)What are the limitations of the credit?

(i) The credit may not exceed the amount of B&O tax or PUT that would otherwise be due for the same fiscal year.

(ii) A person may not receive credit for amounts paid to or on behalf of the same employee under both B&O tax and PUT.

(iii) A person may not take a credit for amounts claimed for credit by other persons.

(iv) The total credit granted to a person under both B&O tax and PUT may not exceed ((one hundred thousand dollars))$100,000 for a fiscal year.

(v) The total credit granted to all persons under both B&O tax and PUT may not exceed ((two million seven hundred fifty thousand dollars))$2,750,000 in any fiscal year.

(vi) No credit or portion of a credit denied, because of exceeding the limitations in (i), (iv), or (v) of this subsection, may be used against tax liability for other fiscal years.

(vii) No person is eligible for tax credits under RCW 82.70.020 if the additional revenues for the multimodal transportation account (RCW 47.66.070) created by chapter 361, Laws of 2003 are terminated.

(((j)))(f)What are the credit procedures?

(i) Persons applying for the credit must complete the commute trip reduction credit annual application. The application must be electronically filed and received by the department between January 1st and January 31st, following the calendar year in which the applicant made incentive payments. The commute trip reduction credit annual application is available through the business's "My DOR" account on the department's website at dor.wa.gov.

(ii) The department must ((make a determination on an))approve or deny a completed application within ((sixty))60 days of the January 31st deadline. The department must ((disapprove))deny an application not received by the January 31st deadline, except ((that)) the department may accept applications received up to ((fifteen))15 calendar days after the deadline if the application was not received because of circumstances beyond the control of the taxpayer. For what is considered circumstances beyond the control of a taxpayer, see WAC 458-20-228 Returns, payments, penalties, extensions, interest, stays of collection. Once the application is approved and the tax credit is granted, the department is not allowed to increase the credit.

(iii) If the total amount of credit applied for by all approved applicants in a fiscal year exceeds the limitation as provided in (i)(v) of this subsection, the amount of credit allowed for all applicants must be proportionally reduced so as not to exceed the limit. The amount reduced may not be carried forward and claimed in subsequent fiscal years.

(iv) To claim a commute trip reduction tax credit, a person must file all returns, forms, and other information the department requires in an electronic format as provided or approved by the department. Any return, form, or information required to be filed in an electronic format is not filed until received by the department in an electronic format. ((For the purpose of this subsection,)) "Returns" has the same meaning as "return" in RCW 82.32.050.

(((k)))(g)Examples. The following examples identify ((a number of)) facts and then state a conclusion. These examples should be used only as a general guide. The tax results of other situations must be determined after a review of all the facts and circumstances.

(i) Example 1. An employer pays ((one hundred eighty dollars))$180 for a yearly bus pass for one employee. For another employee, the employer buys a bicycle helmet and bicycle lock for a total of ((fifty dollars))$50. ((These are))The sum of these two amounts, $230, is the total expenditure((s)) during a fiscal year of amounts paid to, or on behalf of, employees in support of ride sharing, using public transportation, using car sharing, and using nonmotorized commuting. The employer may claim a credit of ((sixty dollars))$60 for the amount spent for the employee using the bus pass. Fifty percent of ((one hundred eighty dollars is ninety dollars))$180 is $90, but the credit is limited to ((sixty dollars))$60 per employee. The employer may claim a credit of ((twenty-five dollars (fifty percent of fifty dollars)))$25 (50 percent of $50) for the amount spent for the employee who bicycles to work. Even though ((fifty))50 percent of ((two hundred thirty dollars,))$230 (the total amount spent on both employees), works out to be less than ((sixty dollars))$60 per employee, the credit is computed by looking at actual spending for each employee and not by averaging the spending for both employees.

(ii) Example 2. An employer provides parking spaces for the exclusive use of ((ride-sharing))ride sharing vehicles. Amounts spent for signs, painting, or other costs related to the parking spaces do not qualify for the credit. This is because the credit is for financial incentives paid to or on behalf of employees. While the parking spaces support the use of ((ride-sharing))ride sharing vehicles, they are not financial incentives and do not involve amounts paid to or on behalf of employees.

(iii) ((Example 3. As part of its commute trip reduction program, an employer pays the cab fare for an employee who has an emergency and must leave the workplace but has no vehicle available because he or she commutes by ride-sharing vehicle. The cab fare qualifies for the credit but is subject to the maximum credit limit of sixty dollars per employee.

(iv)))Example ((4))3. An employer pays the property manager for a yearly bus pass for one employee who works at the worksite managed by the property manager. The property manager in turn pays the amount received from the employer to a public transportation agency to purchase the bus pass. Either the employer or the property manager, but not both, may take the credit for this expenditure.