WSR 07-02-073



[ Filed December 29, 2006, 10:53 a.m. ]


The department of revenue has cancelled the following excise tax advisories (ETAs).

ETA 21.12.134 Value of materials used by producer in performance of public road contract. This document addresses a situation where a taxpayer produces and sells asphalt mix to a county and also uses asphalt mix as a consumer in performing public road contracts. It explains that the measure of tax for the mix used by the taxpayer as a consumer is not necessarily the price at which the taxpayer sells mix to the county. Where there is no evidence to show an established retail selling price for a purchaser like the taxpayer, the value of the mix produced by the taxpayer may be determined on a cost basis. The issues in this ETA are adequately addressed in WAC 458-20-112.

ETA 27.04.194 Testing and Engineering services by out-of-state corporation. This document addresses a situation where a business located outside Washington has employees permanently assigned to a Washington location and also has teams of employees come into the state to perform engineering and testing services. It explains that amounts received for services rendered in this state are subject to B&O tax, notwithstanding that no profit is realized. There is no longer any need for this document. The ETA doesn't address separate accounting or cost apportionment under WAC 458-20-194. Further, the use of the term "reimbursement" implies the application of WAC 458-20-111, which does not apply to the situation described.

ETA 58.04.214 Marketing association: Seller or agent. This document addresses the B&O tax classification of an in-state marketing association for association members. The document states that based on the association's activities and circumstances, and its bylaws, the association was operating as an agent of its members. The result being that the association was subject to service B&O tax on the gross receipts from services rendered and not the gross receipts from the sale of fresh fruit. This document is not needed as the issues are adequately addressed in WAC 458-20-214, 458-20-159, and Det. 87-355, 4 WTD 383.

ETA 98.12.134 Overhead costs in computing value on a cost basis. This document addresses the measure of use tax for catalogs manufactured by a department store and sent to its customers. It explains that where a retail selling price of similar products is not available, the use tax is due on a cost basis, including direct and indirect overhead costs. This issue is adequately addressed in WAC 458-20-112, 458-20-134, and other documents (e.g., WTDs) issued by the department.

ETA 208.04.173 Sale of abrasives and masking tape for use in the performance of an automobile painting contract. This document explains that an automobile paint shop must pay retail sales tax on the purchase of abrasives and masking tape it consumed in performing painting services. The fact that the paint shop separately listed these supplies on bid documents or sales invoices did not change the retail nature of the purchase. This issue is adequately addressed in other documents issued by the department, including WAC 458-20-173 and Det. 91-128, 11 WTD 327.

ETA 210.08.187 Coin operated ski waxing and bowling ball polishing machines. This document explains that charges for the use of coin-operated machines that wax skis or polish bowling balls are subject to retail sales tax because these activities clean or improve tangible personal property. There is no need for this document. WAC 458-20-187 explains that persons operating "vending machines" are engaged in a retail activity, and "vending machines" as defined in that rule include ["]coin-operated machines that provide facilities or improving" tangible personal property.

ETA 213.04.173 Distinction between "manufacturing" and "altering" activities. This document explains that the cutting of an epitaph is the "altering" of tangible personal property, not a manufacturing activity, because it results in merely extending a utility that already existed in the epitaph. The document also explains that producing a key from a blank was manufacturing because the activity resulted in a "new, different, or useful article." WAC 458-20-136 provides more detailed information about distinguishing between repairing/refurbishing and manufacturing.

ETA Buildings sold exclusive of the land upon which they are situated. This document explains that the sale of a building exclusive of the land upon which it is situated with a requirement that it be removed to another location is a sale of tangible personal property (and not a sale of real estate). The substance of the ETA has been incorporated into WAC 458-61A-106 Sales of improvements to land, leases, and leases with option.

ETA 286.04.193 Freight forwarders. This document explains that income derived from freight forwarding activities is subject to B&O tax, even if associated with interstate or foreign commerce. This document is not needed as this issue is adequately addressed in WAC 458-20-193D.

ETA 318.04.106/211 Sales and/or trade-ins of tangible personal property from rental inventory. This document explains that when trading-in rental property towards the purchase of new property, the lessor is making a taxable wholesale sale of the trade-in property to the dealer. This document is no longer needed because this issue is adequately addressed in WAC 458-20-247.

ETA 415.12.178 Use tax on private automobiles acquired while a nonresident. This ETA explains what "private automobiles" means for purposes of the use tax exemption provided by RCW 82.12.0251 (cited in the ETA as RCW 82.12.030(1)). This information is out of date as the term "private automobiles" was removed when the statute was subsequently revised.

ETA 489.04.170 Lessee as speculative builder. This document quotes language from the statutory definitions of "consumer" (RCW 82.04.190) and "retail sale" (RCW 82.04.050) as the basis for determining that a lessee who constructs a building on property to which the lessee holds a thirty year lease is a speculative builder. It is not needed. More detailed information for determining whether a person is a speculative contractor is available in WAC 458-20-170, which explains the attributes of ownership of real estate for distinguishing between a speculative and prime contractor, as well as other documents issued by the department (e.g., Det. 94-154, 15 WTD 046).

ETA 569.61.411/412 REET - Documentation of transfers by inheritance - Documentation of transfers to and from trusts. This document explains documentation requirements to claim a REET exemption when real property is transferred by inheritance, or, by or to trusts other than revocable trusts. It is no longer needed because the documentation requirements of these transfers are addressed in WAC 458-61A-202 and 458-61A-210.

ETA 570.61.080 REET - Dual signature - utility rights-of-way or easements - counties. This document explains the REET affidavit signature requirements when a municipality or city, county, state or instrumentality of the state, or other public entity purchases a utility right-of-way or easement. It is no longer needed because the documentation requirements of these transfers are addressed in WAC 458-61A-303.

Copies of the cancelled documents are available via the internet at, or a request for copies may be directed to Roseanna Hodson, Interpretations and Technical Advice Unit, P.O. Box 47453, Olympia, WA 98504-7453, phone (360) 570-6119, fax (360) 586-5543.

Alan R. Lynn

Rules Coordinator

Washington State Code Reviser's Office