Current through Register Vol. 24-06, March 15, 2024
(1)
Gross proceeds of sales and gross income shall be included in the excise tax
return for the period in which the value proceeds or accrues to the taxpayer.
For the purpose of determining tax liability of persons making sales of
tangible personal property, a sale takes place when the goods sold are
delivered to the buyer in this state. With respect to leases or rentals of
tangible personal property, liability for retail sales tax arises as of the
time the rental payments fall due (see WAC
458-20-211 ).
(2)
Accrual basis.
(a) When excise tax returns are made upon the
accrual basis, value accrues to a taxpayer at the time:
(i) The taxpayer becomes legally entitled to
receive the consideration, or,
(ii)
In accord with the system of accounting regularly employed, enters as a charge
against the purchaser, customer, or client the amount of the consideration
agreed upon, whether payable immediately or at a definitely determined future
time.
(b) Amounts
actually received do not constitute value accruing to the taxpayer in the
period in which received if the value accrues to the taxpayer during another
period. It is immaterial if the act or service for which the consideration
accrues is performed or rendered, in whole or in part, during a period other
than the one for which excise tax return is made. The controlling factor is the
time when the taxpayer is entitled to receive, or takes credit for, the
consideration.
(3)
Cash receipts basis.
(a) When
returns are made upon cash receipts and disbursements basis, value proceeds to
a taxpayer at the time the taxpayer receives the payment, either actually or
constructively. It is immaterial that the contract is performed, in whole or in
part, during a period other than the one in which payment is
received.
(b) See: WAC
458-20-199 for limitation as to
persons who may report on the cash receipts basis.
(4)
Special application,
contractors.
Value accrues for a building or construction contractor who
maintains his accounting records on the accrual basis, as of the time the
contractor becomes entitled to compensation under the contract.
(a) If by the terms of the contract the
taxpayer becomes entitled to compensation upon estimates as the work
progresses, value, to the extent of such estimates, accrues as of the time that
each estimate is made and the balance at the time of the completion of the work
or of the final estimate.
(b) If by
the terms of the contract the taxpayer becomes entitled to compensation only
upon the completion of the work, value accrues as of the earlier of the
completion of the work, or, any use of the facilities being constructed, or, 60
days after the facility is substantially complete.
(i) Example: A contractor agrees to build two
buildings for a buyer. Under the terms of the contract, payment is to be made
only upon completion of both buildings. One building is substantially completed
and occupied on April 15, 1991, the other building is substantially completed
on May 15, 1991 and occupied on July 1, 1991. The work on both buildings is
completed under the contract on June 15, 1991. Value accrues for the first
building on April 15, 1991, the date it was used. Value accrues for the
remainder of the contract on June 15, 1991, the date the work was
completed.
(ii) Example: A
contractor agrees to build a building for a buyer. Under the terms of the
contract, the buyer is to make payment for the building only upon completion of
the building. The building is completed, except for minor alterations, and
available for planned occupancy on August 15, 1990. However, because of a
contract dispute between the buyer and his tenant for the building, the buyer
is unable to pay the contractor until February 25, 1991 when the building is
finally occupied. The building is completed under the contract on November 15,
1990. Value accrues on the building for sales tax and B&O tax purposes on
October 14, 1990, 60 days after August 15, 1990, the date the building was
substantially complete.
(5)
Warehouse operators. In the
case of warehouse operators value proceeds or accrues to the taxpayer as
follows:
(a) When the taxpayer is reporting
upon the accrual basis, value accrues at the time the charge is entered against
the owner of the goods stored in accordance with the terms of the contract
between the parties and the regular system of accounting employed by the
taxpayer.
(i) Value accrues when the charge is
entered whether the consideration for storage is at a fixed rate per unit per
month or other period, or, at a flat charge regardless of the length of time,
or, whether payable periodically or at the time of withdrawal.
(ii) Thus, where a warehouse operator,
keeping books on accrual basis, customarily enters as a charge to the owner of
the goods and a credit to storage income the full amount of a flat storage
charge as of the time the goods are received, even though the time for payment
is deferred until withdrawal of the goods, value accrues as of the time the
goods are received. However, if the warehouse operator customarily does not
enter such charge until the time of withdrawal, value accrues as of such later
date.
(b) When the
taxpayer is reporting upon a cash receipts basis, value proceeds at the time
the payment for storage is received.
(c)
Exception for grain warehouse
operators. Persons operating grain warehouses, licensed under
chapter
22.09 RCW, may report the
value proceeding or accruing from their grain warehouse operations on either a
cash receipts or accrual basis.
RCW
82.04.090.
For effect of rate changes, see WAC
458-20-235 (Effect of rate
changes on prior contracts and sales agreements).
Statutory Authority:
RCW
82.32.300 and
82.01.060(2).
07-17-111, § 458-20-197, filed 8/17/07, effective 9/17/07. Statutory
Authority:
RCW
82.32.300. 90-10-082, § 458-20-197,
filed 5/2/90, effective 6/2/90; Order ET 70-3, § 458-20-197 (Rule 197),
filed 5/29/70, effective 7/1/70.