Current through Register Vol. 24-06, March 15, 2024
(1)Introduction.
This rule applies to any sale of a vehicle to a consumer who is
not a resident of the state, including nonresident military personnel
temporarily stationed in Washington. The rule describes the different business
and occupation (B&O) and retail sales tax consequences that result from
vehicle sales to nonresidents, particularly the sales tax exemption provided by
RCW
82.08.0264. It also describes the
documentation a seller must retain to demonstrate that a sale is exempt.
(a) For information on use tax liability
associated with vehicles, see WAC
458-20-178
Use tax and the use of tangible personal property.
(b) For the collection of use tax by county
auditors and the department of licensing, see WAC
458-20-17802
Collection of use tax by county auditors and department of licensing-Measure of
tax.
(c) For sales of vehicles to
Indians or Indian tribes and required documentation, see WAC
458-20-192
Indians- Indian country.
(d)
Questions regarding vehicle licensing or registration requirements should be
directed to the department of licensing.
(2)
Definition of "vehicle." For
the purposes of this rule, a "vehicle" is any vehicle of a type that may be
lawfully licensed under chapter 46.16A RCW for operation on a public highway in
this state, except that the term does not include any machinery and implements
for use in conducting a farming activity subject to
RCW
82.08.0268. The term "vehicle" includes, but
is not limited to, a car, truck, camper, trailer, bus, motorhome, and
motorcycles equipped for road use. It does not include farm tractors, bicycles,
mopeds, motorized scooters, snowmobiles, or vehicles that are manufactured for
exclusively off-road use.
(3)
Tax consequences when a vehicle sold to a nonresident is delivered
in-state. A sale of a vehicle to a nonresident where the vehicle is
delivered instate is exempt from retail sales tax if the sale meets the
requirements of
RCW
82.08.0264. In all other cases where the
vehicle is delivered to the buyer in this state, the retail sales tax applies
and must be collected at the time of sale, unless otherwise exempt by law. The
mere fact that the buyer may be or claims to be a nonresident or that the buyer
intends to, and actually does, use the vehicle in some other state does not, by
itself, entitle the buyer to the exemption. In any case where the seller
licenses or registers the vehicle in Washington on the buyer's behalf, the
retail sales tax applies.
In computing the B&O tax liability of persons engaged in
the business of selling vehicles, no deduction is allowed for a sale made to a
nonresident for use outside this state if the nonresident buyer takes delivery
in Washington. This is true even if the buyer is entitled to an exemption from
the retail sales tax.
(a)
Exemption requirements. If a vehicle is delivered within this
state to a nonresident buyer, retail sales tax does not apply if the vehicle is
purchased for use outside this state and, immediately upon delivery, the
vehicle:
(i) Is removed from the state under
the authority of a trip permit issued by the department of licensing pursuant
to
RCW
46.16A.320 or any agency of another state
that has authority to issue similar permits; or
(ii) Is registered and licensed in the state
of the buyer's residence, will not be used in this state more than three
months, and will not be legally required to be registered and licensed in this
state.
If the vehicle bears Washington state license plates, the
seller must remove the Washington plates before delivering the vehicle and
retain evidence of that removal to avoid liability for collection and payment
of the retail sales tax.
(b)
Seller obligations; documentation
required from natural person buyers. The seller must retain the
following documents, which must be made available upon request by the
department of revenue (department):
(i) A copy
of the buyer's currently valid out-of-state driver's license or other official
picture identification issued by a jurisdiction other than Washington
state;
(ii) A copy of any one of
the following documents, on which there is an out-of-state address for the
buyer:
(A) A current residential rental
agreement;
(B) A property tax
statement from the current or previous year;
(C) A utility bill, dated within the previous
two months;
(D) A state income tax
return from the previous year;
(E)
A voter registration card;
(F) A
current credit report; or
(G) Any
other document determined by the department to be acceptable, with buyer's
street address, such as:
(I) A bank statement
issued within the previous two months;
(II) A government check issued within the
previous two months;
(III) A pay
check issued within the previous two months;
(IV) Mortgage documents of current personal
residence;
(V) Current vehicle
insurance card;
(VI) Letter or
other documentation issued by the postmaster within the previous two months;
or
(VII) Other government document
issued within the previous two months;
(iii) A completed witnessed declaration in
the form designated by the department, signed by the buyer, and stating that
the buyer's purchase meets the requirements of this section (buyer's
affidavit); and
(iv) A seller's
certification, in the form designated by the department, that either a vehicle
trip permit was issued or the vehicle was immediately registered and licensed
in another state as required by
RCW
82.08.0264.
To comply with these requirements, the seller must retain a
properly completed buyer's affidavit and seller's certificate (in-state
delivery). See the department's web site dor.wa.gov for affidavit and
certificate forms.
(c)
Seller obligations; documentation
required from corporate buyers. Sales tax does not apply to sales of
vehicles to nonresident corporations for use outside of this state. The sale
must meet the requirements stated in (b) of this subsection pertaining to
qualified nonresident natural persons. Some documents listed in (b)(ii) of this
subsection, such as residential rental agreement, voter registration card, or
mortgage documents for a personal residence, do not pertain to corporate
purchases. In addition to the applicable requirements in (b) of this
subsection, the seller must establish that the corporation is the purchaser
(i.e., paid for by corporate check and registered in the corporation's name). A
distinction exists between the corporation and its employees or officers. The
exemption still applies, for example, when an officer or employee, purchasing
on behalf of the corporation, is a Washington resident when all other
requirements are met.
A corporation with places of business in one or more other
states outside Washington may qualify as a "nonresident" for purposes of
RCW
82.08.0264. A Washington corporation
purchasing a vehicle for out-of-state use by a nonresident salesperson or
out-of-state office qualifies for this exemption if the vehicle leaves the
state with a valid one-transit permit or with foreign state license plates
attached at the time of delivery, and nonresident affidavits are completed. If
the vehicle is subsequently used in Washington, use tax is due on the value of
the vehicle at the time of its first use in Washington. See the department's
web site dor.wa.gov for affidavit and certificate forms.
(d)
Consequences for
noncompliance.
(i) Any seller that
makes sales without collecting the tax from a person who does not provide the
documents required under (b) of this subsection, and any seller who fails to
retain the documents required under (b) of this subsection for the period
prescribed by
RCW
82.32.070 is personally liable for the amount
of tax due.
(ii) Any seller that
makes sales without collecting the retail sales tax pursuant to
RCW
82.08.0264 and who has actual knowledge that
the buyer's documentation required by (b) of this subsection is fraudulent is
guilty of a misdemeanor and, in addition, is liable for the tax and subject to
a penalty equal to the greater of one thousand dollars or the tax due on such
sales. In addition, both the buyer and the seller are liable for any penalties
and interest assessable under chapter 82.32 RCW.
(4)
Tax consequences of a
vehicle sold to a nonresident and delivered out-of-state. A sale of a
vehicle to a nonresident where the seller delivers the vehicle out-of-state is
exempt from retail sales tax. If the vehicle is delivered to the buyer outside
the state, the seller may also deduct the sale amount from the gross proceeds
of sales for B&O tax purposes. The deductible amount must be included in
the gross income reported on the excise tax return and then deducted on the
return to determine the amount of taxable income. The deduction must be
identified on the deduction detail page of the return as an "interstate and
foreign sales" deduction.
(a)
Requirements. If a vehicle is delivered outside the state to a
nonresident buyer, retail sales tax does not apply if:
(i) The seller, as required by the contract
of sale, delivers possession of the vehicle to the buyer at a point outside
Washington; and
(ii) The vehicle is
not licensed or registered in this state. If the vehicle bears Washington state
license plates, the seller must remove the Washington plates before delivery
and retain evidence of that removal to avoid liability for collection and
payment of the retail sales tax.
(b)
Seller obligations;
documentation. The seller must properly document the following facts:
(i) The buyer's out-of-state
address;
(ii) The vehicle is not
licensed or registered in this state or the Washington state license plates
have been removed from the vehicle before delivery;
(iii) Under the terms of the sales agreement,
the seller is required to deliver the vehicle to the buyer at a point outside
this state; and
(iv) The
out-of-state delivery was actually made by the seller or by a common carrier
acting as the seller's agent.
To comply with these requirements, the seller must retain a
properly completed buyer's certificate and seller's certificate (out-of-state
delivery). The seller's certificate must be signed by the person who actually
delivers the vehicle to the buyer at the out-of-state location and may be
completed only after delivery occurs.
(5)
Forms required to document an
exempt sale. Where the vehicle is delivered determines which two
properly completed documents: "Buyer's Affidavit" and "Seller's Certificate
In-State Delivery," or "Buyer's Certificate Out-of-State Delivery" and
"Seller's Certificate Out-of-State Delivery" are necessary to substantiate
exempt sales to nonresidents. Do not send the documents to the department; keep
them as part of the seller's permanent records for five years. Without this
documentation, claims that a transaction was exempt from tax will be
disallowed.
Copies of the forms can be obtained:
* From the department's web site at dor.wa.gov or
* By writing to:
Taxpayer Services
Washington State Department of Revenue
P.O. Box 47478
Olympia, Washington 98504-7478
Documents in substantially the same form as the department's
forms will be accepted in lieu of the department's documents.
(a)
In-state delivery. A sale
with in-state delivery requires a completed buyer's affidavit and seller's
certificate-in-state delivery.
(b)
Delivery out-of-state by seller. A sale with out-of-state delivery
by a seller requires a completed buyer's certificate and seller's
certificate-out-of-state.
(c)
Delivery out-of-state by common carrier. When a vehicle is
delivered outside the state by common carrier acting as the seller's agent, the
seller must retain:
(i) Evidence that the
vehicle's license plates (if licensed in Washington) were removed;
and
(ii) A signed copy of the bill
of lading issued by the carrier. The bill of lading must show the seller as the
consignor and indicate that the carrier agrees to transport the vehicle to a
point outside the state; or
(iii) A
seller's certificate out-of-state delivery signed by the person who delivers
the vehicle and provides the name of the hauling company.
(6)
Seller's obligations to
verify a buyer's statements on nonresidency.
(a) The seller must exercise a reasonable
degree of care in accepting statements regarding a buyer's nonresidence. If
delivery occurs in-state, the seller must examine and retain a copy of at least
one form of documentary evidence showing the buyer's out-of-state residence.
Lack of good faith on the part of the seller or lack of the exercise of the
degree of care required is indicated, for example, in the following
circumstances:
(i) If the seller knows that
the buyer is living in Washington;
(ii) If the buyer gives a Washington address
for the purpose of financing the purchase of the vehicle;
(iii) If, at the time of sale, arrangements
are made for future servicing of the vehicle in the seller's shop and a
Washington address or telephone number is shown for the shop customer;
or
(iv) If the seller has ready
access to any other information that discloses that the buyer is a resident of
Washington.
(b)
Questions about the authenticity of the information provided by the
buyer. If the department has information indicating the buyer is a
Washington resident, or if the addresses for the buyer shown on the
documentation provided under subsection (3)(b) or (c) of this rule are not the
same, the department may contact the buyer to verify the buyer's eligibility
for the exemption provided by
RCW
82.08.0264. If the department subsequently
determines the buyer was not eligible for an exemption, the department will
pursue collection of the retail sales tax from the buyer. The seller will not
be liable for the retail sales tax except as provided in subsection (3)(d) of
this rule.
(7)
Military personnel qualifications for the nonresident exemptions.
A member of the armed services who is temporarily stationed in Washington is
presumed to be a nonresident, unless that person was a resident of this state
when enlisted or inducted. This presumption does not apply to a civilian
employee of the armed services. A sale to a nonresident member of the armed
forces must meet all of the statutory requirements for a retail sales tax
exemption or B&O tax deduction. If a vehicle sold to a member of the armed
forces will remain in Washington for more than three months, retail sales tax
is due on the sale, even if the vehicle is registered in the home state of the
armed forces member.
(a)
Military
temporary license. In addition to the exemptions provided under
RCW
82.08.0264, a member of the armed forces may
alternatively qualify for the retail sales tax and use tax exemptions provided
by
RCW
46.16A.340 if the member obtains a forty-five
day nonresident military temporary permit from the department of licensing and
satisfies the requirements of
RCW
46.16A.340.
(b)
Additional documentation
required. In addition to the documentation otherwise required by this
rule, for a sale to a member of the armed forces a seller must retain a copy of
military orders showing that the buyer:
(i)
Is temporarily stationed in Washington and will leave within three months of
the date of purchase; or
(ii) Is
permanently reassigned to a new duty station outside Washington and will leave
within three months of the date of purchase.
(c)
Military personnel of NATO-member
nations. Pursuant to treaty, a member of the armed forces of any
NATO-member nation who is stationed in Washington is considered to be a
nonresident for purposes of the
RCW
82.08.0264 retail sales tax exemption. The
buyer must meet all otherwise applicable requirements for exemption. In
addition, the seller must retain proof of the buyer's military assignment in
Washington as a member of a NATO-member nation's armed forces.
(8)
Sales to residents of
noncontiguous states are exempt from Washington retail sales tax.
RCW
82.08.0269 exempts purchases of tangible
personal property from the retail sales tax if the property is purchased for
use in states, territories, and possessions of the United States that are not
contiguous with any other state. However, the exemption only applies if, as a
necessary incident to the contract of sale, the seller delivers the property to
the purchaser or the purchaser's designated agent at the usual receiving
terminal of the carrier selected to transport the goods, under such
circumstances that it is reasonably certain that the goods will be transported
directly to a destination in a noncontiguous state, territory, or possession.
RCW
82.08.0269 applies to the sale of motor
vehicles when the requirements stated above are met. Therefore, in addition to
being exempt from retail sales tax under
RCW
82.08.0264 (discussed above), a sale of a
motor vehicle to a resident of a noncontiguous state, territory, or possession
may qualify for exemption under
RCW
82.08.0269. If so, the sale is exempt from
retail sales tax but does not qualify for a B&O tax deduction. For more
information on the requirements of the
RCW
82.08.0269 exemption, including the
documentation requirements, see WAC
458-20-193,
Inbound and outbound interstate sales of tangible personal property.
(9)
Washington retail sales
tax exemption for qualified nonresidents.
RCW
82.08.0273 provides an exemption, in the form
of a remittance from the department, of the state portion of the retail sales
tax on purchases of tangible personal property , digital goods, and digital
codes, if the purchaser is a resident of another state or possession or a
province of Canada that does not impose a retail sales tax or use tax of three
percent or more. That statute does not apply to purchases of vehicles. Because
RCW
82.08.0264 more specifically applies to the
sale of vehicles, it takes precedence over RCW 82.08. 0273. A nonresident of
this state may purchase and take delivery of a vehicle in Washington free of
retail sales tax only if the person meets the requirements of
RCW
82.08.0264. For sales to residents of
noncontiguous states, territories, and possessions see
RCW
82.08.0269.
(10)
Examples. The following
examples identify a number of facts and then state a conclusion. These examples
should be used only as a general guide. The tax results of other situations
must be determined after a review of all facts and circumstances. In each
example concluding that the sale qualifies for a retail sales tax and/or
B&O tax exemption, the Dealer must retain the documents required in
subsection (3)(b) or (c) of this rule.
(a)
Buyer purchases a vehicle from Dealer. Buyer provides identification indicating
that Buyer is a resident of California and provides California license plates
for the vehicle. However, Buyer also states that he intends to use the vehicle
in the state of Washington for four months before returning to California.
Buyer does not qualify for a sales tax exemption because Buyer will use the
vehicle for more than three months in the state.
(b) Buyer provides proof of residency in
Idaho; there are no contrary facts regarding Buyer's residency. Buyer completes
the buyer's affidavit, stating that the vehicle is for use out-of-state. Buyer
obtains and uses a trip permit issued under authority of
RCW
46.16A.320 to remove the vehicle from
Washington. The Dealer completes a seller's certificate and certifies that the
Dealer removed the Washington license plates before delivering the vehicle to
Buyer. This sale qualifies for the retail sales tax exemption but not the
B&O tax deduction.
(c) Buyer is
a Washington resident, employed by out-of-state Corporation X. On behalf of
Corporation X, Buyer purchases and accepts in-state delivery of a vehicle from
Dealer. The vehicle will be used as a company car out-of-state and will not be
used or garaged in Washington. Payment is made by corporate check. Buyer
provides a trip permit for transport of the vehicle out of Washington. This
sale qualifies for the retail sales tax exemption (but not for the B&O tax
deduction) notwithstanding the Washington residency of its employee.
(d) Buyer is a resident of Alaska and
purchases a vehicle from Dealer in Washington. The sales contract requires
Dealer to deliver the vehicle to Buyer in Anchorage, Alaska. Before shipping
the vehicle, Dealer removes the vehicle's Washington state license plates and
retains a photocopy of the plates as evidence of the removal. Seller ships the
vehicle to Alaska by common carrier. Seller retains a signed copy of the bill
of lading, indicating the Seller as consignor and the Buyer as consignee. This
sale qualifies for the retail sales tax exemption and a B&O tax
deduction.
(e) Buyer is a resident
of Alaska and purchases a vehicle from Dealer in Washington. Dealer delivers
the vehicle to the Buyer at dockside in Seattle to be shipped to Anchorage,
Alaska by common carrier. Before shipping the vehicle, Dealer removes the
vehicle's Washington state license plates and retains a photocopy of the plates
as evidence of the removal. Dealer retains the exemption certificate and
documentation required by WAC
458-20-193.
This sale qualifies for the retail sales tax exemption provided by RCW 82.08.
0269 but not for a B&O tax deduction.
(f) Buyer is a member of the armed forces and
provides a copy of her orders showing that she is temporarily stationed in
Washington. Before entering military service, buyer resided in another state.
Buyer purchases a vehicle from Dealer and licenses it in her home state, but
intends to keep the vehicle in this state for over three months. This sale does
not qualify for any exemption or deduction. If the vehicle were to be removed
from the state within three months, the sale would qualify for the
RCW
82.08.0264 retail sales tax exemption but not
for a B&O tax deduction.
(g)
Buyer owns homes in Washington and Arizona, spending summers in Washington and
winters in Arizona. In October, Buyer purchases a vehicle from Dealer,
asserting that he will immediately drive the vehicle to Arizona and license it
in that state. Buyer presents an Arizona driver's license for identification
and provides a trip permit to remove the vehicle from Washington. Dealer is
aware that Buyer lives in Washington for a significant portion of each year. In
such a case, the sale would not qualify for the retail sales tax exemption.
Under these facts, Buyer is not a nonresident of Washington for tax purposes
because the buyer has dual residency in Washington and Arizona.
(h) Buyer purchases a motorcycle from Dealer
in Vancouver, Washington. The motorcycle is equipped for use on public
highways. Buyer provides an Oregon driver's license and asserts that the
motorcycle will be licensed in Oregon. Buyer also states that the motorcycle
will only be used outside of Washington. Buyer places the motorcycle in the
back of a truck for transport to Oregon. This sale does not qualify for any
exemption or deduction. To qualify for the sales tax exemption,
RCW
82.08.0264 requires the Buyer to obtain a
trip permit or provide license plates from another state before removing the
vehicle from Washington.
(11)
Buyer obligations when claiming
exemption. It is the buyer's responsibility to provide the seller with
valid identification that entitles the buyer to purchase a motor vehicle,
trailer, or camper exempt from retail sales tax as provided by
RCW
82.08.0264.
(a) A buyer making fraudulent statements,
which includes the offer of fraudulent identification or fraudulently procured
identification to a seller, to purchase without paying retail sales tax a motor
vehicle, trailer, or camper is guilty of perjury under chapter 9A.72
RCW.
(b) Any buyer making tax
exempt purchases under
RCW
82.08.0264 by displaying proof of
identification not the buyer's own, or counterfeit identification, with intent
to violate the provisions of
RCW
82.08.0264 is guilty of a misdemeanor and, in
addition, is liable for the tax and subject to a penalty equal to the greater
of one hundred dollars or the tax due on such purchases.
Statutory Authority:
RCW
82.32.300,
82.01.060(2), and
82.08.0264. 08-16-041, §
458-20-177, filed 7/29/08, effective 8/29/08. Statutory Authority:
RCW
82.32.300 and
82.01.060(2).
05-14-086, § 458-20-177, filed 6/30/05, effective 7/31/05. Statutory
Authority:
RCW
82.32.300. 83-08-026 (Order ET 83-1), §
458-20-177, filed 3/30/83; Order ET 70-3, § 458-20-177 (Rule 177), filed
5/29/70, effective 7/1/70.