Current through Register Vol. 24-06, March 15, 2024
(1)
Introduction.RCW
82.12.022 and
82.14.230 impose state and local
use taxes on the use of natural gas or manufactured gas by a consumer,
including compressed natural gas and liquefied natural gas, if the person who
sold the gas to the consumer has not paid public utility tax on that sale. This
use tax is imposed only for natural gas delivered to a consumer through a
pipeline. The use tax is applied at the same rate as the state and city public
utility taxes. This rule explains how this use tax applies and how it is
reported to the department.
(2)
Definitions. For the purpose of this rule:
(a) "Brokered natural gas" means natural gas
purchased by a consumer from a source out of the state and delivered to the
consumer in this state.
(b) "Value
of gas consumed or used" means the purchasing price of the gas to the consumer
and generally must include all or part of the transportation charges as
explained later.
(3)
Applicability of use tax. The distribution and sale of natural gas
in this state is generally taxed under the state and city public utility taxes.
With changing conditions and federal regulations, it is now possible to have
natural gas brokered from out of the state and sold directly to the consumer.
If this occurs and the public utility taxes have not been paid,
RCW
82.12.022 (state) and
RCW
82.14.230 (city) impose a use tax on the
brokered natural gas at the same rate as the state and city public utility
taxes.
(4)
State tax.
When the use tax applies, the rate of tax imposed is equal to the public
utility tax on gas distribution business under
RCW
82.16.020. The rate of tax applies to the
value of the gas consumed or used and is imposed upon the consumer.
(5)
City tax. Cities are given
the authority to impose a use tax on brokered natural gas. When imposed and
applicable, the rate of tax is equal to the tax on natural gas business under
RCW
35.21.870 on the value of gas consumed or
used and is imposed on the consumer.
(6)
Transportation charges.
(a) If all or part of the transportation
charges for the delivery of the brokered natural gas are separately subject to
the state's and cities' public utility taxes (RCW 82.16.020(1)
(c) and
RCW
35.21.870 ), those transportation charges are
excluded from measure of the use tax. The transportation charges not subject to
the public utility taxes are included in the value of the gas consumed or
used.
(b)
Examples.
The following examples identify a number of facts and then state a conclusion.
These examples should be used only as a general guide. In actual practice, the
tax status of a situation must be determined after a review of all of the facts
and circumstances.
(i) Public university
purchases natural gas from an out of the state source through a broker. The
natural gas is delivered by interstate pipeline to the local gas distribution
system who delivers it to the university. The university pays the supplier for
the gas, the pipeline for the interstate transportation charge, and the gas
distribution system for its local transportation charge. The transportation
charge by the pipeline is not subject to public utility tax because it is an
interstate transportation charge. The transportation charge paid to the local
gas distribution system is subject to the public utility taxes as an intrastate
delivery. The value of the gas consumed or used is the purchase price paid to
the supplier plus the transportation charge paid to pipeline company.
(ii) The above factual situation applies
except that the natural gas is delivered directly by the interstate pipeline to
the university. The university pays the supplier for the gas and the pipeline
for the transportation charge. As the transportation charge is not subject to
the public utility tax, it will be included in the measure of the tax. The
value of the gas consumed or used is the purchase price plus the transportation
charge paid to the pipeline.
(7)
Credits against the taxes.
(a) A credit is allowed against the use taxes
described in this rule for any use tax paid by the consumer to another state
which is similar to this use tax and is applicable to the gas subject to this
tax. Any other state's use tax allowed as a credit will be prorated to the
state's and cities' portion of the tax based on the relative rates of the two
taxes.
(b) A credit is also allowed
against the use tax imposed by the state for any gross receipts tax similar
that imposed pursuant to
RCW
82.16.020(1) (c) by another
state on the seller of the gas with respect to the gas consumed or
used.
(c) A credit is allowed
against the use tax imposed by the cities for any gross receipts tax similar to
that imposed pursuant to
RCW
35.21.870 by another state or political
subdivision of the state on the seller of the gas with respect to the gas
consumed or used.
(8)
Compressed natural gas and liquefied natural gas sold or used as
transportation fuel.
(a) For the
purposes of this subsection, "transportation fuel" means fuel for the
generation of power to propel a motor vehicle as defined in
RCW
46.04.320, a vessel as defined in
RCW
88.02.310, or a locomotive or railroad
car.
(b) Effective July 1, 2015,
RCW
82.12.022 and
82.14.230 exempt from state and
local use taxes:
(i) Compressed natural gas
or liquefied natural gas to be sold or used as transportation fuel;
or
(ii) Natural gas used to
manufacture compressed natural gas or liquefied natural gas to be sold or used
as transportation fuel.
(c) The buyer must provide and the seller
must retain an exemption certificate. See the department's web site dor.wa.gov
for the appropriate form. Although the sale and use of natural gas, compressed
natural gas, and liquefied natural gas may be exempt from PUT under
RCW
82.16.310 and state and local use taxes under
RCW
82.12.022 and
82.14.230, other taxes may
apply.
(9)
Reporting requirements. The person who delivers the gas to the
consumer must make and submit a report to the local sales and use tax unit of
the department's taxpayer account administration division by the fifteenth day
of the month following a calendar quarter. The report must contain the
following information:
(a) The name and
address of the consumer to whom gas was delivered;
(b) The volume of gas delivered to each
consumer during the calendar quarter; and
(c) Service address of consumer if different
from mailing address.
(10)
Collection and
administration. Use tax on brokered natural gas must be filed and paid
electronically either monthly or quarterly by consumers to the department. The
department's authority to collect this tax is found in
RCW
82.12.020 and
82.14.050.
Statutory Authority:
RCW
82.32.300,
82.01.060(2),
82.12.022 and
82.14.230. 07-24-055, §
458-20-17902, filed 12/3/07, effective 1/3/08. Statutory Authority:
RCW
82.32.300. 90-17-068, § 458-20-17902,
filed 8/16/90, effective 9/16/90.