Current through Register Vol. 24-06, March 15, 2024
(1)
Definitions.
(a) The term
"commercial or industrial use" means the following uses of products, including
by-products, by the same person that extracted or manufactured them:
(i) Any use as a consumer; and
(ii) Manufacturing of articles, substances,
or commodities. (RCW
82.04.130.)
(b) The term "biomass fuel" means wood waste
and other wood residuals, including forest derived biomass, but does not
include firewood or wood pellets. "Biomass fuel" also includes partially
organic by-products of pulp, paper, and wood manufacturing processes.
(2)
Examples of commercial
or industrial use. The following are examples of commercial or
industrial use:
(a) The use of lumber by the
manufacturer of that lumber to build a shed for its own use.
(b) The use of a motor truck by the
manufacturer of that truck as a service truck for itself.
(c) The use by a boat manufacturer of
patterns, jigs, and dies that it has manufactured.
(d) The use by a contractor building or
improving a publicly owned road of crushed rock or pit run gravel that it has
extracted.
(3)
Business and occupation tax. Persons manufacturing or extracting
tangible personal property for commercial or industrial use are subject to tax
under the manufacturing or extracting B&O tax classifications, as the case
may be. The tax is measured by the value of the product manufactured or
extracted and used. See WAC
458-20-112 Value of products, for
additional information.
(4)
Use tax. Persons manufacturing or extracting tangible personal
property for commercial or industrial use are subject to use tax on the value
of the article used, unless a specific exemption is provided. See WAC
458-20-178 Use tax and the use of
tangible personal property, for further explanation of use tax and the
definition of "value of the article used."
(5)
Exemptions. The following
uses of articles produced for commercial or industrial use are expressly exempt
from use tax.
(a)
RCW
82.12.0263 exempts from the use tax the use
of biomass fuel by the same person that extracted or manufactured that biomass
fuel when it is used directly in the operation of the particular extractive
operation or manufacturing plant that produced or manufactured the same biomass
fuel.
(b) Property produced for use
in manufacturing ferrosilicon, which is subsequently used to make magnesium for
sale, is exempt from use tax if the primary purpose is to create a chemical
reaction directly through contact with an ingredient of ferrosilicon.
RCW
82.04.190(1).
(c) Hog fuel used to produce electricity,
steam, heat, or biofuel is exempt from use tax.
RCW
82.12.956. For the purposes of this
exemption, "hog fuel" means wood waste and other wood residuals including
forest derived biomass, but not including firewood or wood pellets. "Biofuel"
means a liquid or gaseous fuel derived from organic matter intended for use as
a transportation fuel including, but not limited to, biodiesel, renewable
diesel, ethanol, renewable natural gas, and renewable
propane.
(6)
Special provisions regarding value of article used.
RCW
82.12.010 provides the following special
valuation provisions to persons manufacturing products for commercial or
industrial use:
(a) In the case of articles
manufactured or produced by the user and used in the manufacture or production
of products sold or to be sold to the United States Department of Defense, the
value of the articles used is determined according to the value of the
ingredients of those articles.
(b)
In the case of an article manufactured or produced for purposes of serving as a
prototype for the development of a new or improved product, the value of the
article used is determined by:
(i) The retail
selling price of such new or improved product when first offered for sale;
or
(ii) The value of materials
incorporated into the prototype in cases in which the new or improved product
is not offered for sale.
(c) In the case of a person manufacturing or
extracting asphalt or aggregates used in providing services taxable under
RCW
82.04.280 (1)(b), the value
of the asphalt or aggregates used is based on cost. Specifically, the value of
the asphalt or aggregates equals the sum of all direct and indirect costs
attributable to the asphalt or aggregates used, plus a public road construction
market adjustment of five percent of those costs.
Statutory Authority:
RCW
82.32.300 and
82.01.060(2).
10-10-031, § 458-20-134, filed 4/26/10, effective 5/27/10. Statutory
Authority:
RCW
82.32.300. 86-20-027 (Order 86-17), §
458-20-134, filed 9/23/86; 83-07-032 (Order ET 83-15), § 458-20-134, filed
3/15/83; Order ET 70-3, § 458-20-134 (Rule 134), filed 5/29/70, effective
7/1/70.