Current through Register Vol. 24-06, March 15, 2024
(1)
Introduction. This rule
explains the business and occupation (B&O) tax, sales tax and use tax
responsibilities of those engaged in commercial deep sea fishing, and suppliers
selling to those persons.
Other rules that may apply. Readers may want to
refer to other rules for additional information, including those in the
following list:
(a) WAC
458-20-119 Sales by caterers and
food service contractors;
(b) WAC
458-20-135 Extracting natural
products;
(c) WAC
458-20-178 Use tax and the use of
tangible personal property;
(d) WAC
458-20-193 Interstate sales of
tangible personal property;
(e) WAC
458-20-244 Food and food
ingredients.
(2)
Definitions. The following definitions apply to this rule.
(a)
Commercial deep sea fishing.
"Commercial deep sea fishing" means fishing done for profit outside the
territorial waters of the state of Washington. It does not include sport
fishing or the operation of charter boats for sport fishing. Nor does the
phrase include the operation or purchase of watercraft for kelping, purse
seining, or gill netting, because such fishing methods can be legally performed
in Washington only within the territorial waters of the state (the three-mile
limit). Therefore, watercraft rigged for fishing by any of these methods will
be deemed for use in other than commercial deep sea fishing unless proof,
including documentation to be retained by sellers, is furnished that said
watercraft will be used for these purposes exclusively outside the Washington
territorial limit.
(b)
Commercial passenger fishing. "Commercial passenger fishing" means
that done from charter boats for sport outside the territorial waters of the
state of Washington.
(c)
Component part. "Component part" includes all tangible personal
property that is attached to and a part of a watercraft. It includes dories,
gurdies and accessories, bait tanks, baiting tables and turntables. It also
includes spare parts that are designed for ultimate attachment to a watercraft.
The term "component part" does not include equipment or furnishings of any kind
that are not attached to a watercraft, nor does it include consumable supplies.
Thus, it does not include, among other things, bedding, table and kitchen
wares, fishing nets, hooks, lines, floats, hand tools, ice, fuel or
lubricants.
(d)
Watercraft. "Watercraft" means every type of floating equipment
that is designed for carrying fishing gear, fish catch or fishing crews, and
used primarily in commercial deep sea fishing operations.
(3)
Business and occupation tax.
(a) Persons engaged in commercial deep sea
fishing are not taxable under the extracting classification with respect to
catches obtained outside the territorial waters of this state.
(b) Such persons are taxable under either the
retailing or the wholesaling classification with respect to sales made within
this state, unless entitled to exemption by reason of the commerce clauses of
the federal constitution.
(c) Such
persons may qualify for a B&O tax exemption under
RCW
82.04.4269. This exemption pertains to the
value of products or the gross proceeds of sales derived from:
(i) Manufacturing seafood products that
remain in a raw, raw frozen, or raw salted state at the completion of the
manufacturing by that person; or
(ii) In the ordinary course of business,
manufactured seafood products that remain in a raw, raw frozen or raw salted
state to buyers that transport the goods out of the state of Washington. A
person taking an exemption must keep and preserve records for the period
required by
RCW
82.32.070 establishing that the goods were
transported by the buyer in the ordinary course of business out of the state of
Washington.
(d) Persons
claiming the exemption in (c) of this subsection must file a completed annual
tax performance report with the department under
RCW
82.32.534. In addition, persons claiming this
tax preference must report the amount of the exemption on their monthly or
quarterly excise tax return. For more information on reporting requirements for
this tax preference see
RCW
82.32.808.
(e) The exemption provided by
RCW
82.04.4269 is scheduled to expire on July 1,
2035.
(4)
Retail
sales tax.
(a) Under
RCW
82.08.0262, the retail sales tax does not
apply to sales of watercraft (including component parts thereof) which are
primarily for use in conducting commercial deep sea fishing operations, nor
does retail sales tax apply to sales of or charges made for labor and services
rendered in respect to the constructing, repairing, cleaning, altering or
improving of such property.
(b) The
retail sales tax applies to sales made to persons engaged in commercial deep
sea fishing of every type of tangible personal property (except only sales of
watercraft and component parts thereof) and to sales of or charges made for
labor and services rendered in respect to the construction, repairing,
cleaning, altering or improving of such types of property. Thus, the retail
sales tax applies to sales to such persons of such things as fishing nets,
hooks, lines, floats and bait; table and kitchen wares; hand tools, ice, fuel
except diesel fuel as noted in subsection (7) of this rule, and lubricants for
use or consumption. For sales of food and food ingredients see WAC
458-20-119 and
458-20-244.
(5)
Exemption certificates
required.
(a) Persons selling
watercraft or component parts thereof to persons engaged in commercial deep sea
fishing or performing services with respect to such craft or parts, are
required to obtain from the buyer a certificate evidencing the exempt nature of
the transaction.
(b) Buyers
claiming the exemption may use the department's Buyers' Retail Sales Tax
Exemption Certificate. The certificate can be found on the department's website
at dor.wa.gov. Sellers must retain certificates in its records as evidence of
the exempt nature of the sales to eligible buyers.
(c) Fishing boats used primarily in
commercial deep sea fishing operations that are incidentally used within the
waters of this state are still eligible for the exemption from retail sales
tax.
(d) Sales of fishing boats,
that are the types used in the waters of Puget Sound or the Columbia River and
the tributaries thereof, and are not practical for use in deep sea fishing, are
subject to the retail sales tax including sales of component parts thereof and
on charges made for the repair of the same.
(e) It is a gross misdemeanor for a buyer to
make a false certificate of exemption for the purpose of avoiding the
tax.
(6)
Use
tax.
(a) The use tax does not apply to
the use of watercraft or component parts thereof.
RCW
82.12.0254.
(b) The use tax applies to the actual use
within this state of all other types of tangible personal property purchased at
retail where the sales tax has not been paid and no exemption exists.
(7)
Diesel fuel.
(a)
RCW
82.08.0298 and
82.12.0298 provide sales and use
tax exemptions on diesel fuel for both commercial passenger fishing (charter
boats for sport fishing) and commercial deep sea fishing operations.
(b) Neither retail sales nor use tax applies
with respect to sales or use of diesel fuel in the operation of watercraft in
commercial deep sea fishing operations or commercial passenger fishing
operations by persons who are regularly engaged in the business of such
operations outside the territorial waters (three-mile limit) of this state. For
purposes of this exemption, a person is not regularly engaged in either
business if the person has gross receipts from the extra territorial operations
of less than five thousand dollars a year. For persons involved in both
commercial deep sea fishing operations and commercial passenger fishing
operations, the receipts from both will be added together to determine
eligibility for this exemption.
(c)
If a person qualifies for the exemptions by virtue of operating a deep sea
fishing vessel, and has the requisite amount of gross receipts from that
activity, all diesel fuel purchases and uses by such person for such vessel are
tax exempt. It is not required that all the diesel fuel purchased be used
outside the territorial waters of this state.
(d)
Diesel fuel exemption certificates
required. Persons selling diesel fuel to such persons are required to
obtain from the buyer a certificate evidencing the exempt nature of the
transaction. This certificate must identify the buyer by name and address, and
by the registered name and number of the watercraft with respect to which the
purchase is made. Blanket certificates covering all diesel fuel purchases for
specified watercraft may be used, where appropriate. A seller of diesel fuel
who accepts such a certificate is not liable for sales tax on the diesel fuel
sold. Certificates must be retained by the sellers in their permanent records
as evidence of the exempt nature of diesel sales to eligible buyers. It is a
gross misdemeanor for a buyer to make a false certificate of exemption for the
purpose of avoiding the tax. Buyers may use the Buyers' Retail Sales Tax
Exemption Certificate found on the department's website at
dor.wa.gov.
Statutory Authority:
RCW
82.32.300. 88-03-055 (Order 88-1), §
458-20-176, filed 1/19/88; 83-07-033 (Order ET 83-16), § 458-20-176, filed
3/15/83. Statutory Authority:
RCW
82.01.060(2) and
82.32.300. 78-07-045 (Order ET
78-4), § 458-20-176, filed 6/27/78; Order ET 70-3, § 458-20-176 (Rule
176), filed 5/29/70, effective 7/1/70.