Current through Register Vol. 24-06, March 15, 2024
(1)
Introduction. This rule explains the business and occupation (B
& O) tax, sales tax, use tax, and public utility tax responsibilities of
those operating vessels upon waters in Washington.
(2)
Other rules that may apply.
Readers may want to refer to other rules for additional information, including
the following:
(a) WAC
458-20-119 Sales by caterers and
food service contractors;
(b) WAC
458-20-135 Extracting natural
products;
(c) WAC
458-20-145 Sourcing retail sales
for business and occupation tax and state and local retail sales tax-Sourcing
of use tax for purchasers;
(d) WAC
458-20-175 Persons engaged in the
business of operating as a private or common carrier by air, rail or water in
interstate or foreign commerce;
(e)
WAC 458-20-176 Commercial deep sea
fishing-Commercial passenger fishing-Diesel fuel;
(f) WAC
458-20-178 Use tax and the use of
tangible personal property;
(g) WAC
458-20-179 Public utility
tax;
(h) WAC
458-20-183 Recreational services
and activities;
(i) WAC
458-20-193 Interstate sales of
tangible personal property;
(j) WAC
458-20-238 Sales of watercraft to
nonresidents-Use of watercraft in Washington by nonresidents;
(k) WAC
458-20-244 Food and food
ingredients.
(3)
Definitions. The following terms apply to this rule.
(a) Lighter. A lighter is a large boat or
barge used in loading and unloading vessels to transfer goods and passengers to
and from moored vessels that cannot reach the place of shipment or
delivery.
(b) Dry-docking. The act
of placing a vessel on a dock that can be kept dry for use during the
construction or repairing of the vessel, or the act of bringing a vessel to dry
land so that the submerged portions of the hull can be cleaned or
inspected.
(c) Vessel haul-out. The
act of removing a vessel from the water. Vessel haul-out is generally
accomplished with a large mobile hoist or crane.
(d) Dry stack storage. Land-based vessel
storage in the form of stacking berths.
(4)
Business and occupation tax.
Retailing B & O tax applies to retail sales and is measured by the gross
proceeds of sale unless the sale is for resale, in which case the wholesaling B
& O tax applies.
RCW
82.04.050,
82.04.060,
82.04.070,
82.04.250 and
82.04.270. Warehousing B & O
tax applies to persons engaging in warehousing activities.
RCW
82.04.080 and
82.04.280. The gross income of the
business from activities that fall into no other B & O tax classification
are subject to the service and other activities B & O tax.
RCW
82.04.080 and
82.04.290. Subsection (4) of this
rule illustrates how the B & O tax applies in a number of common
situations.
(a) Retailing.
(i) Tangible personal property. Persons
engaged in the business of operating vessels and tugs are taxable under the
retailing B & O tax classification upon the gross sales to consumers of
tangible personal property that are retail sales, including meals (including
meals to employees).
(ii) Services.
Charges to consumers made by others for the repair of any boat or barge are
retail sales and subject to retailing B & O tax. Also, sales of sightseeing
or scenic cruises lasting fewer than 24 hours are retail sales and subject to
retailing B & O tax, including sales of sightseeing cruises that are
combined with other goods and services when sold for one nonitemized
price.
(iii) Dry-docking and
haul-out. Sales of dry-docking and vessel haul-out services are retail sales if
the services are performed with respect to the sale of retail services, such as
repair or maintenance of the vessel for consumers. The gross income from sales
of dry-docking and haul-out services in these instances is taxable under the
retailing B & O tax classification. The tax treatment described in this
subsection applies regardless of whether the charges are separately
itemized.
(b) Service
and other business activities.
(i) Operation
of lighters. The business of operating lighters is a service taxable under the
service and other business activities B & O tax classification upon the
gross income from such service.
(ii) Dry-docking and haul-out. Charges for
dry-docking and vessel haul-out services are taxable under the service and
other activities B & O tax classification if sold alone or performed only
in conjunction with other services taxable under the service and other
activities B & O tax classification.
RCW
82.04.290.
(c) Warehousing.
(i) Dry stack storage. Gross income from
operating a dry stack storage warehouse is taxable under the warehousing B
& O tax classification.
(ii)
Haul-out. Vessel haul-out services are taxable under the warehousing B & O
tax classification if performed with respect to the sale of dry stack or
warehouse storage of the vessel.
RCW
82.04.080 and
82.04.280.
(5)
Retail sales tax.
Retail sales tax is imposed on retail sales unless an exemption applies.
RCW
82.04.050 and
82.08.020. The retail sales tax is
imposed on the selling price of the product sold in the retail sale.
RCW
82.08.010. While not exhaustive, (a) through
(c) of this subsection list a number of common situations where retail sales
tax will or will not apply.
(a) Tangible
personal property.
(i) Sales of tangible
personal property to consumers, including prepared food, soft drinks, bottled
water, or dietary supplements by persons operating vessels and tugs are sales
at retail and retail sales tax must be collected.
RCW
82.04.050,
82.08.020, and
82.08.0293.
(ii) For applicability of retail sales tax
where prepared food, including meals, are furnished to members of the crew or
to other employees as a part of their compensation for services rendered, see
WAC 458-20-119.
(iii) Sales of tangible personal property,
including food products, to operators for resale aboard ship are not subject to
retail sales tax.
RCW
82.04.050,
82.04.190,
82.08.0293. Operators claiming a
resale exemption should obtain a reseller permit. For more information on
reseller permits see WAC
458-20-102.
(iv) Sales to all such operators of fuel,
lubricants, machinery, equipment, and supplies, which are not resold, are sales
at retail and retail sales tax must be paid.
(b) Services.
(i) Charges to consumers made by others for
the repair of any boat or barge are sales at retail and retail sales tax must
be paid upon the total charge made for both labor and materials.
(ii) Sales of sightseeing or scenic cruises
lasting fewer than 24 hours are subject to retail sales tax, including sales of
sightseeing cruises that are combined with other goods and services when sold
for one nonitemized price.
(c) Dry-docking and haul-out. Sales of
dry-docking and vessel haul-out services are retail sales, and subject to
retail sales tax, if the services are performed with respect to the sale of
retail services, such as repair or maintenance of the vessel for
consumers.
(6)
Use
tax. The use tax applies for the privilege of using within this state as
a consumer, among other things, any articles of tangible personal property or
services defined as a retail sale in
RCW
82.04.050 and identified in
RCW
82.12.020, upon which the retail sales tax
has not been paid, unless an exemption applies.
(7)
Public utility tax. Persons
operating vessels upon waters wholly within the state of Washington as common
carriers regulated by the utilities and transportation commission are taxable
under the public utility tax as follows:
(a)
Persons operating vessels under 65 feet in length, other than tugboats, are
subject to the public utility tax under the rate applicable to vessels under 65
feet in length on gross income.
(b)
Persons operating vessels 65 feet or more in length, are taxable under the
"other public service business" classification on gross income.
(c) The "other public service business"
classification of the public utility tax applies to the business of operating
tugs, barges, and log patrols.
(d)
Vessel haul-out services are subject to public utility tax under the motor
transportation or urban transportation classification if they are performed in
conjunction with hauling or transporting the vessel on public roads.
Statutory Authority:
RCW
82.32.300. 83-07-033 (Order ET 83-16), §
458-20-181, filed 3/15/83; Order ET 70-3, § 458-20-181 (Rule 181), filed
5/29/70, effective 7/1/70.