Current through Register Vol. 24-06, March 15, 2024
(1)
Introduction. This rule explains the taxability of income from the
sale, lease, and operation of vending machines. It does not apply to vending
machines used in the conduct of a public utility business, such as public pay
telephones.
(2)
Other rules
that may apply. Readers may want to refer to other rules for additional
information, including those in the following list:
(a) WAC
458-20-102 Reseller
permits.
(b) WAC
458-20-108 Selling price-Credit
card service fees, foreign currency, discounts, patronage dividends.
(c) WAC
458-20-127 Newspapers, magazines,
and periodicals.
(d) WAC
458-20-131 Gambling
activities.
(e) WAC
458-20-15503 Digital
products.
(f) WAC
458-20-165 Laundry, dry cleaning,
linen and uniform supply, and self-service and coin-operated laundry
services.
(g) WAC
458-20-178 Use tax and the use of
tangible personal property.
(h) WAC
458-20-183 Amusement, recreation,
and physical fitness services.
(i)
WAC 458-20-185 Tax on tobacco
products.
(j) WAC
458-20-186 Tax on
cigarettes.
(k) WAC
458-20-243 Litter tax.
(l) WAC
458-20-244 Food and food
ingredients.
(3)
What are vending machines? Vending machines are machines that
through the insertion of coins or other forms of payment will provide one of
the following functions either directly or under the operation of the patron:
(a)
Vending machines that return
tangible personal property. Tangible personal property returned from
vending machines include, but is not limited to, photographs, toiletries,
cigarettes, beverages, food, candy, and tangible media such as a DVD or
CD.
(b)
Vending machines that
provide a service.(i) Vending machines
that provide a retail service include machines that install, repair, clean,
alter, imprint, improve tangible personal property, or provide any other
service listed as a retail sale under
RCW
82.04.050. Examples include, but are not
limited to, vending machines that provide bowling ball polishing, perform car
washes, allow the operation of vacuum equipment, and dispense air or water.
Also included are vending machines that provide locker rentals found in
amusement park, theme park, and water park facilities, as provided in
RCW
82.04.050, and vending machines that accept
self-payment for automobile parking.
(ii) Vending machines that provide a
nonretail service include, but are not limited to, weight scales, coin cashing
machines, and luggage locker rentals at any facility other than an amusement
park, theme park, or water park; and self-service and coin-operated laundry
services. For information about self-service and coin-operated laundry
services, see WAC
458-20-165.
(c)
Vending machines that offer a game
to be played.(i) Vending machines that
offer retail games to be played, such as those listed in
RCW
82.04.050, including air hockey, billiards,
pool, foosball, darts, shuffleboard, ping pong, and similar games.
(ii) Vending machines that offer nonretail
games to be played include, but are not limited to, pinball and arcade
games.
(4)
Taxability of income from vending machines.
(a)
Retailing and retail sales
tax. Persons operating vending machines listed in subsection (3)(a),
(b)(i), and (c)(i) of this rule are making a retail sale and must report and
pay tax under the retailing business and occupation (B&O) tax
classification on the gross receipts from those machines. In addition, the
retail sales tax applies to sales through vending machines listed in subsection
(3)(a), (b)(i), and (c)(i) of this rule and operators of such machines are
liable for the collection and payment of the tax.
(i)
Retail sales tax separately
stated. Retail sales tax does not need to be stated separately from the
selling price or collected separately from the buyer when sales are through
vending machines. See
RCW
82.08.050. The operator may deduct the tax
from the total amount received in the machine to arrive at the net amount that
becomes the measure of the retailing B&O and retail sales tax.
(ii)
Exemption for food and food
ingredients. Retail sales and use tax exemptions for food and food
ingredients do not apply to sales of food and food ingredients dispensed from
vending machines. For information on how to calculate tax on food and food
ingredient sales see WAC
458-20-244.
(b)
Service and other
activities. Persons operating vending machines listed in subsection
(3)(b)(ii) and (c)(ii) of this rule must report and pay tax under the service
and other activities B&O tax classification on the gross receipts from
those machines.
(c)
License
to use real property. When vending machines are placed at a location
owned or operated by a person other than the owner of the machines, under any
arrangement for compensation to the location operator, the location operator
has granted the owner of the machines a license to use real property. The
location operator is responsible for remitting tax on its gross receipts under
the service and other activities B&O tax classification.
(d)
Sales and leases of
machines. Sales or leases of vending machines to persons who will
operate them are sales at retail subject to the retailing B&O and retail
sales tax.
(e)
Use or
deferred sales tax. The use or deferred sales tax applies to all
tangible personal property used by persons making sales through vending
machines, if the retail sales tax has not been paid, except inventory items
resold through such machines.
Statutory Authority:
RCW
82.32.300. 86-18-022 (Order ET 86-15), §
458-20-187, filed 8/26/86. Statutory Authority:
RCW
82.01.060(2) and
82.32.300. 78-07-045 (Order ET
78-4), § 458-20-187, filed 6/27/78; Order ET 73-1, § 458-20-187,
filed 11/2/73; Order ET 71-1, § 458-20-187, filed 7/22/71; Order ET 70-3,
§ 458-20-187 (Rule 187), filed 5/29/70, effective
7/1/70.