WSR 00-05-015

EXPEDITED ADOPTION

DEPARTMENT OF REVENUE


[ Filed February 7, 2000, 2:03 p.m. ]

Title of Rule: WAC 458-20-239 Sales to nonresidents of farm machinery or implements.

Purpose: Rule 239 explains the retail sales tax exemption provided for sales of machinery and implements to nonresidents for use in farming activities outside the state of Washington.

Statutory Authority for Adoption: RCW 82.32.300.

Statute Being Implemented: RCW 82.08.0268.

Summary: Rule 239 describes the application of the exemption found in RCW 82.08.0268 for sales to nonresidents of farm machinery and implements. It explains the requirements that must be met and the documents that must be retained to substantiate a claim for exemption.

Reasons Supporting Proposal: To reflect the amendment to RCW 82.08.0268 by chapter 167, Laws of 1998, which expanded the retail sales tax exemption for farm machinery and implements purchased by nonresidents for use outside the state.

Name of Agency Personnel Responsible for Drafting: D. Douglas Titus, 711 Capitol Way South, #303, Olympia, WA, (360) 664-0687; Implementation: Claire Hesselholt, 711 Capitol Way South, #303, Olympia, WA, (360) 753-3446; and Enforcement: Russell W. Brubaker, 711 Capitol Way South, #303, Olympia, WA, (360) 586-0257.

Name of Proponent: Department of Revenue, governmental.

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

Explanation of Rule, its Purpose, and Anticipated Effects: Rule 239 explains the retail sales tax exemption provided by RCW 82.08.0268. This exemption applies to sales of machinery and implements to nonresidents for use in a farming activity outside the state of Washington. The rule explains the conditions that must be satisfied for the exemption to apply, and provides a sample exemption certificate to be used to substantiate the exempt nature of a sale.

The rule is being revised to incorporate chapter 167, Laws of 1998. This legislation expanded the retail sales tax exemption to include parts for machinery and implements for use in conducting a farming activity, and labor and services for the repair of the machinery, implements, and parts.

The rule is also being revised to recognize that the exempt nature of a sale can be documented using the department's "buyer's retail sales tax exemption certificate." The proposed rule explains how a copy of this exemption certificate can be obtained.

Proposal Changes the Following Existing Rules: This is an amendment of an existing rule, WAC 458-20-239 Sales to nonresidents of farm machinery and implements. This rule is being revised to reflect the expansion of the statutory exemption provided by RCW 82.08.0268 (chapter 167, Laws of 1998), as described above.

NOTICE

THIS RULE IS BEING PROPOSED TO BE ADOPTED USING 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 RULE BEING ADOPTED USING THE EXPEDITED RULE-MAKING PROCESS, YOU MUST EXPRESS YOUR OBJECTIONS IN WRITING AND THEY MUST BE SENT TO D. Douglas Titus, Department of Revenue, P.O. Box 47467, Olympia, WA 98504-7467, fax (360) 664-0693, e-mail dougt@dor.wa.gov , AND RECEIVED BY April 18, 2000.


April [February] 7, 2000

Claire Hesselholt

Rules Manager

Legislation and Policy Division

OTS-3787.2


AMENDATORY SECTION(Amending Order ET 83-1, filed 3/30/83)

WAC 458-20-239
Sales to nonresidents of farm machinery or implements, and related services.



((Business and Occupation Tax


In computing tax under the retailing classification, no exemption or deduction is allowed by reason of the fact that farm machinery or implements are sold to nonresidents for use outside this state when delivery is made in this state.

Retail Sales Tax


Under RCW 82.08.0268 an exemption from retail sales tax is allowed in respect to sales to nonresidents of this state of machinery and implements for use in conducting a farming activity outside this state, when such machinery and implements are transported outside the state immediately after sale. This exemption is allowed even though the goods sold are delivered to the purchaser in this state, but only where the seller receives from the buyer an exemption certificate as hereinafter provided and examines acceptable proof that the buyer is a resident of a state or country other than the state of Washington. The exemption certificate should be in substantially the following form and is to be retained by the seller as a part of his records. Each sale claimed exempt must be supported by a separately executed certificate. Certificates for other or prior transactions or "blanket" certificates are not acceptable.

Exemption Certificate

I, (printed or typed name of purchaser) hereby certify: That I am a bona fide resident of the state of . . . . . . and my address is (street and number or box and route) , (city, town or post office) , (state) . That on (date) I purchased from (seller) the following machinery or implements:
(name or description) (brand) (model) That the machinery or implements named above are purchased for my use in conducting a farming activity at (address) , and the date of transporting the same outside the state of Washington is (month, day and year)
((. . . . . . . . . . . . . . . .

(date)

. . . . . . . . . . . . . . . . . . . . . . . .

(signature of purchaser)))

Certification of Dealer

I hereby certify that I personally examined the following items of documentary evidence submitted by the above purchaser which show his residence to be the state of. . . . . :
. . . Payroll or W-2 Forms
. . . Driver's License
. . . Fishing or Hunting License
. . . Voter's Registration Card
. . . Copies of Conditional Sales Contracts
. . . Copies of Income Tax Returns
. . . . . . . . . . . . . . . . . . . . . . . .

(signature of

dealer or

representative)

. . . . . . . . . . . . . . . . . . . . . . . .

(Dealer's

registration

number with

Department

of Revenue)

. . . . . . . . . . . . . . . . . . . . . . . .

title-officer

or agent))

(1) Introduction. This rule explains the retail sales tax exemption provided by RCW 82.08.0268 for sales to nonresidents of farming machinery and implements, parts for farming machinery and implements, and related labor and services. The rule also explains the documents that must be preserved to substantiate a claim of exemption. Sellers should refer to WAC 458-20-193 if they deliver farm machinery or implements to the purchaser at an out-of-state location.

(2) Tax-reporting requirements. Retailing B&O and retail sales taxes generally apply to all sales of tangible personal property, parts, and repair labor in Washington.

(a) RCW 82.08.0268 provides an exemption from retail sales tax for sales to nonresidents of the following when used in conducting a farm activity outside the state of Washington:

(i) Machinery and implements;

(ii) Parts for machinery and implements; and

(iii) Labor and services for repair of machinery, implements, and parts.

(b) To qualify for the exemption, the machinery, implements, or parts must be transported outside the state immediately after sale or completion of the repair or service. Prior to June 11, 1998, the exemption applied only to farm machinery and implements, and repair parts and components if attached to the machinery or implements. The exemption did not apply to labor and services.

(c) This exemption is allowed even though the property sold or serviced is delivered to the purchaser in this state, but only when the seller receives from the buyer an exemption certificate, and examines acceptable proof that the buyer is a resident of a state or country other than the state of Washington.

(d) The exempt nature of the transaction must be documented by using the department's "buyer's retail sales tax exemption certificate," or another certificate with substantially the same information as it relates to the exemption provided by RCW 82.08.0268. The certificate must be completed in its entirety, and retained by the seller.

A blank certificate can be obtained via the Internet at http://dor.wa.gov, by facsimile by calling Fast Fax at (360) 786-6116 or (800) 647-7706 (using menu options), or by writing to Taxpayer Services, Washington State Department of Revenue, Post Office Box 47478, Olympia, Washington 98504-7478. If, prior to completion of the sale, the seller becomes aware of any information inconsistent with the purchaser's claim of residency, such as a Washington address on a credit application, the seller should not accept an exemption certificate.

[Statutory Authority: RCW 82.32.300. 83-08-026 (Order ET 83-1), 458-20-239, filed 3/30/83; Order ET 70-3, 458-20-239 (Rule 239), filed 5/29/70, effective 7/1/70.]

Washington State Code Reviser's Office