Current through Register Vol. 24-06, March 15, 2024
(1)
Introduction. This rule explains the retail sales and use taxes
for motor vehicle fuel, special fuel, and fuels commonly referred to as
liquefied natural gas, compressed natural gas, or propane. This rule 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 fuel, and how are they taxed? "Motor
vehicle fuel" as used in this rule 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 fuel" as used in this
rule 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.
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,
fuel taxes apply to sales of fuel for highway consumption and retail 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
fuel exemptions are available?
(a)
Passenger-only ferries.
RCW
82.08.0255 and
82.12.0256 provide retail sales
tax and use tax exemptions for motor vehicle fuel or special fuel for use in
passenger-only ferry vessels. These exemptions apply only to fuel purchased by
public transportation benefit areas created under chapter 36.57A RCW, county
owned ferries, or county ferry districts created under chapter 36.54
RCW.
(b)
Nonprofit
transportation providers.
RCW
82.08.0255 and
82.12.0256 provide retail sales
tax and use tax exemptions for motor vehicle fuel or special fuel purchased or
used by private, nonprofit transportation providers certified under chapter
81.66 RCW, if the purchaser is entitled to fuel tax refund or exemption under
chapter 82.36 or 82.38 RCW.
(c)
Public transportation.
RCW
82.08.0255 and
82.12.0256 provide retail sales
tax and use tax exemptions for motor vehicle fuel or special fuel purchased or
used for the purpose of public transportation, if the purchaser is entitled to
a refund or an exemption under
RCW
82.36.275 or
82.38.080.
(d)
Special fuel used in interstate
commerce.
RCW
82.08.0255 provides a retail sales tax credit
or refund for sales of special fuel that is delivered in this state but later
transported and used outside this state by persons engaged in interstate
commerce. The credit or refund also applies to persons hauling their own goods
in interstate commerce.
Certificate. Persons selling special fuel to
interstate carriers must obtain a completed "Certificate of Special Fuel Sales
to Interstate Carriers" from the purchaser to document entitlement to the
credit or refund. The certificate may 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
360-705-6705
The provisions of the 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 12
consecutive months.
(e)
Farm fuel users of diesel or aircraft fuels. For the purpose of
this rule, 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)
RCW
82.08.865 and
82.12.865 provided retail sales
tax and use tax exemptions to farm fuel users for diesel, biodiesel, and
aircraft fuel purchased for nonhighway use.
(ii) These exemptions also apply 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 may be
obtained from the department using the contact information described in (d) of
this subsection.
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)
Nonpolluting fuels.
Nonpolluting fuels are described as liquefied natural gas, compressed natural
gas, or liquefied petroleum gas, commonly called propane. Nonpolluting fuels
may be purchased for either highway or "off-highway" use. Nonpolluting fuels
purchased for highway use are normally subject to taxes under either chapter
82.36 or 82.38 RCW. Nonpolluting 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 encourages the use of nonpolluting
fuels by providing for payment of an annual fee by users of nonpolluting fuels,
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 nonpolluting fuels.
Fuel dealers should not collect retail sales or use tax on any
nonpolluting fuels 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.
Nonpolluting 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 nonpolluting fuels
into a bulk storage facility rather than into the fuel tanks of motor vehicles.
Persons selling nonpolluting fuels to such bulk purchasers must obtain from the
purchaser an exemption certificate to document entitlement to the exemption.
The "Certificate for Purchase of Nonpolluting Special Fuels" must certify the
amount of fuel that the purchaser will consume in using motor vehicles upon the
highways of this state. This procedure is limited 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 Nonpolluting Special Fuel" may be
obtained from the department using the contact information described in
subsection (3)(d) of this rule.
(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. If 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) Nonpolluting fuel not placed in motor
vehicle fuel tanks by the seller are subject to retail sales tax, unless a
"Certificate for Purchase of Nonpolluting Special Fuel" 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 its permanent records. When
nonpolluting 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, the
department will presume 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.
(i) Therefore, the fuel taxes of chapters
82.36 and 82.38 RCW generally apply to the out-of-state licensed vehicle
owner's purchases of nonpolluting fuel for highway use.
(ii) Retail sales tax applies to the
out-of-state licensed vehicle owner's purchases of nonpolluting fuel for
off-highway use.
(iii) If the fuel
taxes of chapters 82.36 and 82.38 RCW have not been paid, have been refunded,
or have not been applied, then retail sales tax is due on the out-of-state
licensed vehicle owner's purchases of nonpolluting fuel, for either highway or
off-highway use.
(e) Any
person selling or dispensing liquefied natural gas, compressed natural gas, or
propane into a tank of a motor vehicle powered by this fuel that does not
comply with the provisions in chapter 82.38 RCW described in this rule, is
subject to the penalty provisions in chapter 82.38 RCW.
(5)
Refunds are available for fuel
taxes paid when fuel is consumed off the highway. If a person purchases
motor vehicle fuel or special fuel 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,
82.01.060(2),
82.08.0255,
82.12.0256,
82.08.865, and
82.12.865. 10-01-051, §
458-20-126, filed 12/9/09, effective 1/9/10; 08-16-045, § 458-20-126,
filed 7/29/08, effective 8/29/08. 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.