Current through Register Vol. 24-06, March 15, 2024
(1)
Introduction. Chapter 82.60 RCW establishes a sales and use tax
deferral program. The purpose of the program is to promote economic
stimulation, create employment opportunities, and reduce poverty in certain
areas of the state. The legislature established this program to be effective
solely in those areas and for those circumstances where the deferral is for
investments that result in the creation of a specified minimum number of jobs
or investment for a qualifying project.
The program applies to sales and use taxes on materials and
labor and services rendered in the construction of qualified buildings or
acquisition of qualified machinery and equipment and requires the recipient of
the deferral to maintain the manufacturing or research and development activity
for an eight-year period. This rule does not address
RCW
82.08.02565 and
82.12.02565, which provide a
statewide sales and use tax exemption for machinery and equipment used directly
in a manufacturing operation. Refer to WAC
458-20-13601 for more information
regarding the statewide exemption.
(2)
Program background. This
program was enacted in 1985. The legislature made major revisions to program
criteria in 1993, 1994, 1995, 1996, 1999, 2004, 2009, and 2010, specifically to
the definitions of "eligible area," "eligible investment project," "qualified
building," and "qualifying county." Each revision created additional criteria
for prospective applicants. This rule is written in five parts and covers
applications made prior to July 1, 2010. Each part sets forth the requirements
on the basis of the period of time in which application is made. Refer to the
year during which application was made for information on an individual
application. For applications made after June 30, 2010, see WAC
458-20-24001.
The employment security department and the department of
community, trade, and economic development administer additional programs for
distressed areas and job training and should be contacted directly for
information concerning these programs.
PART I
Applications from March 31, 2004, to June 30,
2010
(101)
Who
is eligible for the sales and use tax deferral program? A person engaged
in manufacturing or research and development activity is eligible for this
deferral program for its eligible investment project.
(a)
What does the term "person" mean
for purposes of this rule? "Person" has the meaning given in
RCW
82.04.030. "Person" does not include the
state of Washington or its institutions. "Person" can be either a lessee or a
lessor, who can apply separately for individual investment projects at the same
site, if they comply with the other requirements of chapter 82.60 RCW.
(i) The lessor or owner of the qualified
building is not eligible for deferral unless:
(A) The underlying ownership of the
buildings, machinery, and equipment vests exclusively in the same person;
or
(B) All of the following
conditions are met:
(I) The lessor has by
written contract agreed to pass the economic benefit of the deferral to the
lessee;
(II) The lessee that
receives the economic benefit of the deferral agrees in writing with the
department to complete the annual survey required under
RCW
82.60.070;
(III) The economic benefit of the deferral
passed to the lessee is no less than the amount of tax deferred by the lessor;
and
(IV) Upon request, the lessor
must provide the department with written documentation to support the
eligibility of the deferral, including any type of payment, credit, or other
financial arrangement between the lessor or owner of the qualified building and
the lessee.
For example, economic benefit of the deferral is passed through
to the lessee when evidenced by written documentation that the amounts paid to
the lessor for construction of tenant improvements are reduced by the amount of
the sales tax deferred, or that the lessee receives more tenant improvements
through a credit for tenant improvements or other mechanism in the lease equal
to the amount of the sales tax deferred.
(ii) The lessor of the qualified building who
receives a letter of intent from a qualifying lessee may be eligible for
deferral, assuming that all other requirements of chapter 82.60 RCW are met. At
the time of application, the lessor must provide to the department a letter of
intent by the lessee to lease the qualified building and any other information
to prove that the lessee will engage in qualified research and development or
pilot scale manufacturing once the building construction is complete. After the
investment project is certified as operationally complete, the lessee must
actually occupy the building as a lessee and engage in qualified research and
development or pilot scale manufacturing. Otherwise, deferred taxes will be
immediately due to the lessor, and interest will be assessed retroactively from
the date of deferral.
(b)
What is "manufacturing" for purposes of this rule? "Manufacturing"
has the meaning given in
RCW
82.04.120. Manufacturing, in addition,
includes:
(i) Computer programming, the
production of computer software, and other computer-related services, but only
when the computer programming, production of computer software, or other
computer-related services are performed by a manufacturer as defined in
RCW
82.04.110 and contribute to the production of
a new, different, or useful substance or article or tangible personal property
for sale (chapter 16, Laws of 2010);
(ii) The activities performed by research and
development laboratories and commercial testing laboratories; and
(iii) Effective July 1, 2006, manufacturing
also includes the conditioning of vegetable seeds.
For purposes of this rule, both manufacturers and processors
for hire may qualify for the deferral program as being engaged in manufacturing
activities. Refer to WAC
458-20-136 (Manufacturing,
processing for hire, fabricating) for more information on processors for
hire.
For purposes of this rule, "computer-related services" means
activities such as programming for the manufactured product. It includes
creating operating systems, software, and other similar goods that will be
copied and sold as canned software. "Computer-related services" does not
include information services, such as data or information processing. The
activities performed by the manufacturer to test, correct, revise, or upgrade
software or hardware before they are approved for sale to the consumer are
considered computer-related services.
For purposes of this rule, "vegetable seeds" includes the seeds
of those crops that are grown in gardens and on truck farms and are generally
known and sold under the name of vegetable or herb seeds in this state.
"Vegetable seeds" includes, but is not limited to, cabbage seeds, carrot seeds,
onion seeds, tomato seeds, and spinach seeds. Vegetable seeds do not include
grain seeds, cereal seeds, fruit seeds, flower seeds, tree seeds, and other
similar properties.
(c)
What is "research and development"
for purposes of this rule? "Research and development" means the
development, refinement, testing, marketing, and commercialization of a
product, service, or process before commercial sales have begun, but only when
such activities are intended to ultimately result in the production of a new,
different, or useful substance or article of tangible personal property.
(Chapter 16, Laws of 2010.) For purposes of this rule, "commercial sales"
excludes sales of prototypes or sales for market testing if the total gross
receipts from such sales of the product, service, or process do not exceed
$1,000,000.
(102)
What is eligible for the sales and use tax deferral program? This
deferral program applies to an eligible investment project for sales and use
taxes imposed on the construction, expansion, or renovation of qualified
buildings and acquisition of qualified machinery and equipment.
(a)
What is an "eligible investment
project" for purposes of this rule? "Eligible investment project" means
an investment project in an eligible area. Refer to (g) of this subsection for
more information on eligible area. "Eligible investment project" does not
include an investment project undertaken by a light and power business as
defined in
RCW
82.16.010, other than that portion of a
cogeneration project that is used to generate power for consumption within the
manufacturing site of which the cogeneration project is an integral part. It
also does not include an investment project that has already received a
deferral under chapter 82.60 RCW.
(b)
What is an "investment project" for
purposes of this rule? "Investment project" means an investment in
qualified buildings or qualified machinery and equipment, including labor and
services rendered in the planning, installation, and construction of the
project.
(c)
What is
"qualified buildings" for purposes of this rule? "Qualified buildings"
means construction of new structures, and expansion or renovation of existing
structures for the purpose of increasing floor space or production capacity,
used for manufacturing or research and development activities.
(i) "Qualified buildings" is limited to
structures used for manufacturing and research and development activities.
"Qualified buildings" includes plant offices and warehouses if such facilities
are essential to or an integral part of a factory, mill, plant, or laboratory
used for manufacturing or research and development.
(A) "Office" means space used by
professional, clerical, or administrative staff. For plant office space to be a
qualified building its use must be essential or integral to the manufacturing
or research and development operation. Office space that is used by supervisors
and their staff, by technicians, by payroll staff, by the safety officer, and
by the training staff are examples of qualifying office space. An office may be
located in a separate building from the building used for manufacturing or
research and development activities, but the office must be located at the same
site as the qualified building in order to qualify. Each individual office may
only qualify or disqualify in its entirety.
(B) "Warehouse" means buildings or facilities
used for the storage of raw materials or finished goods. A warehouse may be
located in a separate building from the building used for manufacturing or
research and development activities, but the warehouse must be located at the
same site as the qualified building in order to qualify. Warehouse space may be
apportioned based upon its qualifying use.
(C) A site is one or more immediately
adjacent parcels of real property. Adjacent parcels of real property separated
only by a public road comprise a single site.
(ii) "Qualified buildings" does not include
construction of landscaping or most other work outside the building itself,
even though the landscaping or other work outside the building may be required
by the city or county government in order for the city or county to issue a
permit for the construction of a building.
However, "qualified buildings" includes construction of
specialized sewerage pipes connected to a qualified building that are
specifically designed and used exclusively for manufacturing or research and
development.
Also, "qualified buildings" includes construction of parking
lots connected to or adjacent to the building if the parking lots are for the
use of workers performing manufacturing or research and development in the
building. Parking lots may be apportioned based upon its qualifying use.
(d)
When is
apportionment of qualified buildings appropriate? The deferral is
allowable only in respect to investment in the construction of a new building
or the expansion or renovation of an existing building used in manufacturing or
research and development. Where a building(s) is used partly for manufacturing
or research and development and partly for purposes that do not qualify for
deferral under this rule, apportionment is necessary.
(e)
What are the apportionment
methods? The deferral is determined by one of the following two
apportionment methods. The first method of apportionment is based on square
footage and does not require tracking the costs of materials for the
qualifying/nonqualifying areas of a building. The second method of
apportionment tracks the costs of materials used in the
qualifying/nonqualifying areas, and it is primarily used by those industries
with specialized building requirements.
(i)
First method. The applicable tax deferral can be determined by
apportionment according to the ratio of the square footage of that portion of
the building(s) directly used for manufacturing or research and development
purposes bears to the square footage of the total building(s).
Apportionment formula:
Click to view
image
Percent Eligible x Total Project Costs = Eligible Costs.
"Total Project Costs" means cost of multipurpose buildings and
other improvement costs associated with the deferral project. Machinery and
equipment are not included in this calculation. Common areas, such as hallways,
bathrooms, and conference rooms, are not included in the square feet figure for
either the numerator or the denominator. The cost of the common areas is
multiplied by the percent eligible to determine the portion of the common area
that is eligible for deferral.
Eligible Costs x Tax Rate = Eligible Tax
Deferred.
(ii)
Second
method. If the applicable tax deferral is not determined by the first
method, it will be determined by tracking the cost of construction of
qualifying/nonqualifying areas as follows:
(A)
Tax on the cost of construction of areas devoted solely to manufacturing or
research and development may be deferred.
(B) Tax on the cost of construction of areas
not used at all for manufacturing or research and development may not be
deferred.
(C) Tax on the cost of
construction of areas used in common for manufacturing or research and
development and for other purposes, such as hallways, bathrooms, and conference
rooms, may be deferred by apportioning the costs of construction on a square
footage basis. The apportioned costs of construction eligible for deferral are
established by using the ratio, expressed as a percentage, of the square feet
of the construction, expansion, or renovation devoted to manufacturing or
research and development, excluding areas used in common, to the total square
feet of the construction, expansion, or renovation, excluding areas used in
common. That percentage is applied to the cost of construction of the common
areas to determine the costs of construction eligible for tax deferral.
Expressed as a formula, apportionment of the cost of the common areas is
determined by:
Click to view
image
(f)
What is "qualified machinery and
equipment" for purposes of this rule? "Qualified machinery and
equipment" means all new industrial and research fixtures, equipment, and
support facilities that are an integral and necessary part of a manufacturing
or research and development operation. "Qualified machinery and equipment"
includes computers, desks, filing cabinets, photocopiers, printers, software,
data processing equipment, laboratory equipment; manufacturing components such
as belts, pulleys, shafts and moving parts; molds, tools and dies; operating
structures; and all equipment used to control or operate machinery. It also
includes machinery and equipment acquired under the terms of a lease by the
recipient. "New" as used in this subsection means either new to the taxing
jurisdiction of the state or new to the certificate holder.
For purposes of this rule, "industrial fixture" means an item
attached to a building or to land. Examples of "industrial fixtures" are fuel
oil lines, boilers, craneways, and improvements to land such as concrete
slabs.
(i)
Are qualified
machinery and equipment subject to apportionment? Qualified machinery
and equipment are not subject to apportionment.
(ii)
To what extent is leased equipment
eligible for the deferral? The amount of tax deferral allowable for
leased equipment is the amount of the consideration paid by the recipient to
the lessor over the initial term of the lease, excluding any period of
extension or option to renew, up to the last date for repayment of the deferred
taxes. After that date, the recipient must pay the appropriate sales taxes to
the lessor for the remaining term of the lease.
(g)
What is an "eligible area" for
purposes of this rule? "Eligible area" means:
(i)
Rural county. A rural county
is a county with fewer than 100 persons per square mile or a county smaller
than 225 square miles as determined annually by the office of financial
management and published by the department of revenue effective for the period
July 1st through June 30th; or
(ii)
Community empowerment zone (CEZ). A "community empowerment zone"
means an area meeting the requirements of
RCW
43.31C.020 and officially designated as a CEZ
by the director of the department of commerce, or a county containing a
CEZ.
(h)
What if an
investment project is located in an area that qualifies both as a rural county
and as a CEZ? If an investment project is located in an area that
qualifies under more than one type of eligible area, the department will
automatically assign the project to the eligible area that imposes the least
burden on the taxpayer and with the greatest benefit to the taxpayer. If the
applicant elects to be bound by the requirements of the other potential
eligible area, the applicant must make a written statement to that effect. For
example, on October 1, 2004, the city of Yakima qualifies as a CEZ, and the
entire county of Yakima has fewer than 100 persons per square mile. The CEZ
requirements are more restrictive than counties containing fewer than 100
persons per square mile. The department will assign the project to the "fewer
than 100 persons per square mile designation" unless the applicant elects to be
bound by the CEZ requirements. Refer to subsection (104) of this rule for more
information on the application process.
(i)
Are there any hiring requirements
for an investment project? There may or may not be a hiring requirement,
depending on the location of the project.
(i)
Rural county. There are no hiring requirements for qualifying
projects located in rural counties.
(ii)
Community empowerment zone
(CEZ). There are hiring requirements for qualifying projects located in
CEZs or in counties containing CEZs. The applicant applies for a deferral of
investment that correlates to the estimated number of persons to be hired based
on the following formula:
Click to view
image
Applicants must make good faith estimates of anticipated
hiring. Refer to subsection (104) of this rule for more information on the
application process. The recipient must fill the positions by persons who at
the time of hire are residents of the CEZ. The department has instituted a
geographic information system (GIS) to assist taxpayers in determining taxing
jurisdiction boundaries, local tax rates, and a mapping and address lookup
system to determine whether a specific address is within a CEZ. The system is
available on the department's website at dor.wa.gov. A recipient must fill the
qualified employment positions by the end of the calendar year following the
year in which the project is certified as operationally complete and retain the
position during the entire tax year. Refer to subsection (107) of this rule for
more information on certification of an investment project as operationally
complete. If the recipient does not fill the qualified employment positions by
the end of the second calendar year following the year in which the project is
certified as operationally complete, all deferred taxes are immediately
due.
(A)
What is a "qualified
employment position" for purposes of this rule? "Qualified employment
position" means a permanent full-time employee employed in the eligible
investment project during the entire tax year. The "entire tax year" means the
full-time position is filled for a period of 12 consecutive months. "Full-time"
means at least 35 hours a week, 455 hours a quarter, or 1,820 hours a
year.
(B)
Who are residents
of the CEZ? "Resident" means the person who fills the qualified
employment position makes his or her home in the CEZ. A mailing address alone
is insufficient to establish that a person is a resident.
(103)
What are the
application and review processes? An application for sales and use tax
deferral under this program must be made prior to the initiation of
construction, prior to the acquisition of machinery and equipment, and prior to
the filling of qualified employment positions. Persons who apply after
construction is initiated or finished or after acquisition of machinery and
equipment are not eligible for the program. When an application for sales and
use tax deferral is timely submitted, costs incurred before the application
date are allowable, if they otherwise qualify. Applications for persons subject
to hiring requirements must include information regarding the estimated total
project cost and the qualified employment positions.
(a)
What is "initiation of
construction" for purposes of this rule? "Initiation of construction,"
in regards to the construction, expansion, or renovation of buildings, means
the commencement of on-site construction work. Neither planning nor land
clearing prior to excavation of the building site constitutes the commencement
of on-site construction work.
(b)
What is "acquisition of machinery and equipment" for purposes of this
rule? "Acquisition of machinery and equipment" means the machinery and
equipment is under the dominion and control of the recipient or its
agent.
(c)
How may a taxpayer
obtain an application form? Application forms may be obtained from the
department's website at dor.wa.gov, or by contacting the department at
360-705-6705. Applications received by the department under chapter 82.60 RCW
are not confidential and are subject to disclosure.
RCW
82.60.100.
For purposes of this rule, "applicant" means a person applying
for a tax deferral under chapter 82.60 RCW, and "department" means the
department of revenue.
(d)
Will the department approve the deferral application? In
considering whether to approve or deny an application for a deferral, the
department will not approve an application for a project involving construction
unless:
(i) The construction will begin
within one year from the date of the application; or
(ii) The applicant shows proof that, if the
construction will not begin within one year of construction, there is a
specific and active program to begin construction of the project within two
years from the date of application. Proof may include, but is not limited to:
(A) Affirmative action by the board of
directors, governing body, or other responsible authority of the applicant
toward an active program of construction;
(B) Itemized reasons for the proposed
construction;
(C) Clearly
established plans for financing the construction; or
(D) Building permits.
Similarly, after an application has been granted, a deferral
certificate is no longer valid and should not be used if construction has not
begun within one year from the date of application or there is not a specific
and active program to begin construction within two years from the date of
application. However, the department will grant requests to extend the period
for which the certificate is valid if the holder of the certificate can
demonstrate that the delay in starting construction is due to circumstances
beyond the certificate holder's control such as the acquisition of building
permit(s). Refer to subsection (106) of this rule for more information on the
use of tax deferral certificate.
(e)
What is the date of
application? "Date of application" means the date of the U.S. Post
Office postmark, fax, or electronic trans-mittal, or when the application is
hand delivered to the department. The statute in effect on the "date of
application" will determine the program criteria the applicant must
satisfy.
(f)
When will the
department notify approval or disapproval of the deferral application?
The department will verify the information contained in the application and
approve or disapprove the application within 60 days. If approved, the
department will issue a tax deferral certificate. If disapproved, the
department will notify the applicant as to the reason(s) for
disapproval.
(g)
May an
applicant request a review of department disapproval of the deferral
application? The applicant may seek administrative review of the
department's disapproval of an application within 30 days from the date of
notice of the disallowance pursuant to the provisions of WAC
458-20-10001 (Adjudicative
proceedings-Brief adjudicative proceedings-Certificate of registration (tax
registration endorsement) revocation). The filing of a petition for review with
the department starts a review of departmental action.
(104)
What happens after the department
approves the deferral application? The department will issue a sales and
use tax deferral certificate for state and local sales and use taxes due under
chapters 82.08, 82.12, and 82.14 RCW for an eligible investment project. The
department will state on the certificate the amount of tax deferral for which
the recipient is eligible. Recipients must keep track of how much tax is
deferred.
For purposes of this rule, "recipient" means a person receiving
a tax deferral under this program.
(105)
How should a tax deferral
certificate be used? A tax deferral certificate issued under this
program is for the use of the recipient for deferral of sales and use taxes due
on each eligible investment project. Deferral is limited only to investment in
qualified buildings or qualified machinery and equipment as defined in this
rule. Thus, sales and use taxes cannot be deferred on items that do not become
part of the qualified buildings, machinery, or equipment. In addition, the
deferral is not to be used to defer the taxes of the persons with whom the
recipient does business, persons the recipient hires, or employees of the
recipient.
The certificate holder must provide a copy of the tax deferral
certificate to the seller at the time goods or services are purchased. The
seller will be relieved of the responsibility for collection of the sales or
use tax upon presentation of the certificate. The seller must retain a copy of
the certificate as part of its permanent records for a period of at least five
years. A blanket certificate may be provided by the certificate holder and
accepted by the seller covering all such purchases relative to the eligible
project. The seller is liable for business and occupation tax on all tax
deferral sales.
For purposes of this rule, "certificate holder" means an
applicant to whom a tax deferral certificate has been issued.
(106)
What are the processes of an
investment project that is certified by the department as operationally
complete? An applicant must provide the department with the estimated
cost of the investment project at the time the application is made. Following
approval of the application and issuance of a tax deferral certificate, a
certificate holder must notify the department, in writing, when the value of
the investment project reaches the estimated cost as stated on the tax deferral
certificate.
For purposes of this rule, "operationally complete" means the
project is capable of being used for its intended purpose as described in the
application.
(a)
What should a
certificate holder do if its investment project reaches the estimated costs but
the project is not yet operationally complete? If a certificate holder
has an investment project that has reached its level of estimated costs and the
project is not operationally complete, the certificate holder may request an
amended certificate stating a revised amount upon which the deferral taxes are
requested. Requests must be mailed or faxed to the department.
(b)
What should a certificate holder do
when its investment project is operationally complete? The certificate
holder must notify the department in writing when the construction project is
operationally complete. The department will certify the date on which the
project is operationally complete. The certificate holder of the deferral must
maintain the manufacturing or research and development activity for eight years
from this date.
(107)
Is a recipient of tax deferral required to submit annual surveys?
Each recipient of a tax deferral granted under chapter 82.60 RCW after June 30,
1994, must complete an annual survey. If the economic benefits of the deferral
are passed to a lessee as provided in
RCW
82.60.020(4), the lessee
must agree to complete the annual survey and the applicant is not required to
complete the annual survey. Refer to WAC
458-20-268 (Annual surveys for
certain tax adjustments) for more information on the requirements to file
annual surveys.
(108)
Is a
recipient of tax deferral required to repay deferred taxes? Repayment of
tax deferred under chapter 82.60 RCW is excused, except as otherwise provided
in RCW
82.60.070 and this subsection.
(a)
Is repayment required for machinery
and equipment exempt under
RCW
82.08.02565 or
82.12.02565 ? Repayment of
tax deferred under chapter 82.60 RCW is not required, and interest and
penalties under
RCW
82.60.070 will not be imposed, on machinery
and equipment that qualifies for exemption under
RCW
82.08.02565 or
82.12.02565.
(b)
When is repayment required?
The following subsections describe the various circumstances under which
repayment of the deferral may occur. Outstanding taxes are determined by
reference to the following table. The table presumes the taxpayer maintained
eligibility for the entire year.
Repayment Year
|
|
Percentage of Deferred Tax Waived
|
1
|
(Year operationally complete)
|
0%
|
2
|
|
0%
|
3
|
|
0%
|
4
|
|
10%
|
5
|
|
15%
|
6
|
|
20%
|
7
|
|
25%
|
8
|
|
30%
|
Any action taken by the department to disqualify a recipient
for tax deferral or assess interest will be subject to administrative review
pursuant to the provisions of WAC
458-20-10001 (Adjudicative
proceedings-Brief adjudicative proceedings-Certificate of registration (tax
registration endorsement) revocation). The filing of a petition for review with
the department starts a review of departmental action.
(i)
Failure of investment project to
satisfy general conditions. If, on the basis of the recipient's annual
survey or other information, including that submitted by the employment
security department, the department of revenue finds that an investment project
is not eligible for tax deferral for reasons other than failure to create the
required number of qualified employment positions, the department will declare
the amount of deferred taxes outstanding to be immediately due. An example of a
disqualification under this rule is a facility not being used for a
manufacturing or research and development operation. No penalties or interest
will be assessed on the deferred sales/use tax; however, all other penalties
and interest applicable to excise tax assessments may be assessed and
imposed.
(ii)
Failure of
investment project to satisfy required employment positions conditions.
If, on the basis of the recipient's annual survey or other information, the
department finds that an investment project has been operationally complete and
has failed to create the required number of qualified employment positions
under subsection (102)(i) of this rule, the amount of taxes deferred will be
immediately due. There is no proration of the amount owed under this
subsection. No penalties or interest will be assessed on the deferred sales/use
tax; however, all other penalties and interest applicable to excise tax
assessments may be assessed and imposed.
(109)
When will the tax deferral
program expire? No applications for deferral of taxes will be accepted
after June 30, 2010.
(110)
Is
debt extinguishable because of insolvency or sale? Insolvency or other
failure of the recipient does not extinguish the debt for deferred taxes nor
will the sale, exchange, or other disposition of the recipient's business
extinguish the debt for the deferred taxes.
(111)
Does transfer of ownership
terminate tax deferral? Transfer of ownership does not terminate the
deferral. The deferral is transferred, subject to the successor meeting the
eligibility requirements of chapter 82.60 RCW, for the remaining periods of the
deferral. Any person who becomes a successor (see WAC
458-20-216) to such investment
project is liable for the full amount of any unpaid, deferred taxes under the
same terms and conditions as the original recipient of the deferral.
PART II
Applications from August 1, 1999, to March 31,
2004
(201)
Definitions. The following definitions apply to applications made
on and after August 1, 1999, and before April 1, 2004:
(a) "Acquisition of equipment or machinery"
means the equipment and machinery is under the dominion and control of the
recipient.
(b) "Applicant" means a
person applying for a tax deferral under chapter 82.60 RCW.
(c) "Certificate holder" means an applicant
to whom a tax deferral certificate has been issued.
(d) "Computer-related services" means
activities such as programming for the manufactured product. It includes
creating operating systems, software, and other similar goods that will be
copied and sold as canned software. "Computer-related services" does not
include information services, such as data or information processing. The
activities performed by the manufacturer to test, correct, revise, or upgrade
software or hardware before they are approved for sale to the consumer are
considered computer-related services.
(e) "Date of application" means the date of
the U.S. Post Office postmark, fax, or electronic transmittal, or when the
application is hand delivered to the department. The statute in effect on the
"date of application" will determine the program criteria the applicant must
satisfy.
(f) "Department" means the
department of revenue.
(g)
"Eligible area" means:
(i) Rural county. A
rural county is a county with fewer than 100 persons per square mile as
determined annually by the office of financial management and published by the
department of revenue effective for the period July 1st through June 30th;
or
(ii) Community empowerment zone
(CEZ). A "community empowerment zone" means an area meeting the requirements of
RCW
43.31C.020 and officially designated as a CEZ
by the director of the department of community, trade, and economic development
or a county containing a CEZ.
(h) "Eligible investment project" means an
investment project in an eligible area. "Eligible investment project" does not
include an investment project undertaken by a light and power business as
defined in
RCW
82.16.010, other than that portion of a
cogeneration project that is used to generate power for consumption within the
manufacturing site of which the cogeneration project is an integral part. It
also does not include an investment project that has already received a
deferral under chapter 82.60 RCW.
(i) "Industrial fixture" means an item
attached to a building or to land. Examples of "industrial fixtures" are fuel
oil lines, boilers, craneways, and improvements to land such as concrete
slabs.
(j) "Initiation of
construction," in regards to the construction, expansion, or renovation of
buildings, means the commencement of on-site construction work. Neither
planning nor land clearing prior to excavation of the building site constitutes
the commencement of on-site construction work.
(k) "Investment project" means an investment
in qualified buildings or qualified machinery and equipment, including labor
and services rendered in the planning, installation, and construction of the
project. When an application for sales and use tax deferral is timely
submitted, costs incurred before the application date are allowable, if they
otherwise qualify.
(l)
"Manufacturing" has the meaning given in
RCW
82.04.120. Manufacturing also includes
computer programming, the production of computer software, and other
computer-related services, but only when the computer programming, production
of computer software, or other computer-related services are performed by a
manufacturer as defined in
RCW
82.04.110 and contribute to the production of
a new, different, or useful substance or article of tangible personal property
for sale; and the activities performed by research and development laboratories
and commercial testing laboratories. (Chapter 16, Laws of 2010.)
(m) "Operationally complete" means the
project is capable of being used for its intended purpose as described in the
application.
(n) "Person" has the
meaning given in
RCW
82.04.030. "Person" does not include the
state of Washington or its institutions. "Person" can be either a lessee or a
lessor, who can apply separately for individual investment projects at the same
site, if they comply with the other requirements of chapter 82.60 RCW. The
lessor/owner of the structure is not eligible for deferral unless the
underlying ownership of the buildings, machinery, or equipment vests in the
lessor/owner, or unless the lessor has by written contract agreed to pass the
economic benefit of the deferral to the lessee in the form of reduced rent
payments.
(o) "Qualified buildings"
means construction of new structures and expansion or renovation of existing
structures for the purpose of increasing floor space or production capacity,
used for manufacturing and research and development activities.
"Qualified buildings" are limited to structures used for
manufacturing and research and development activities. "Qualified buildings"
include plant offices and warehouses if such facilities are essential to or an
integral part of a factory, mill, plant, or laboratory. "Office" means space
used by professional, clerical, or administrative staff. For plant office space
to be a qualified building its use must be essential or integral to the
manufacturing or research and development operation. Office space that is used
by supervisors and their staff, by technicians, by payroll staff, by the safety
officer, and by the training staff are examples of qualifying office space.
"Warehouse" means buildings or facilities used for the storage of raw materials
or finished goods.
(p)
"Qualified employment position" means a permanent full-time employee employed
in the eligible investment project during the entire tax year. The "entire tax
year" means the full-time position is filled for a period of 12 consecutive
months. Full-time means at least 35 hours a week, 455 hours a quarter, or 1,820
hours a year.
(q) "Qualified
machinery and equipment" means all new industrial and research fixtures,
equipment, and support facilities that are an integral and necessary part of a
manufacturing or research and development operation. "Qualified machinery and
equipment" includes computers, desks, filing cabinets, photocopiers, printers,
software, data processing equipment, laboratory equipment; manufacturing
components such as belts, pulleys, shafts and moving parts; molds, tools and
dies; operating structures; and all equipment used to control or operate
machinery. It also includes machinery and equipment acquired under the terms of
a lease by the recipient. "New" as used in this subsection means either new to
the taxing jurisdiction of the state or new to the certificate
holder.
(r) "Recipient" means a
person receiving a tax deferral under this program.
(s) "Research and development" means the
development, refinement, testing, marketing, and commercialization of a
product, service, or process before commercial sales have begun. As used in
this subsection, "commercial sales" excludes sales of prototypes or sales for
market testing if the total gross receipts from such sales of the product,
service, or process do not exceed $1,000,000.
(t) "Resident" means the person who fills the
qualified employment position makes his or her home in the CEZ. A mailing
address alone is insufficient to establish that a person is a
resident.
(202)
Issuance of deferral certificate. The department will issue a
sales and use tax deferral certificate for state and local sales and use taxes
due under chapters 82.08, 82.12, and 82.14 RCW for an eligible investment
project. The department will state on the certificate the amount of tax
deferral for which the recipient is eligible. Recipients must keep track of how
much tax is deferred.
(203)
Eligible investment amount. There may or may not be a hiring
requirement, depending on the location of the project.
(a)
No hiring requirements.
There are no hiring requirements for qualifying projects located in counties
with fewer than 100 persons per square mile. Monitoring and reporting
procedures are explained in subsection (210) of this rule. Buildings that will
be used partly for manufacturing or research and development and partly for
other purposes are eligible for a deferral on a proportionate basis. Subsection
(204) of this rule explains the procedure for apportionment.
(b)
Hiring requirements. There
are hiring requirements for qualifying projects located in CEZs or in counties
containing CEZs. The applicant applies for a deferral of investment that
correlates to the estimated number of persons to be hired based on the
following formula:
Click to view
image
Applicants must make good faith estimates of anticipated
hiring. The recipient must fill the positions by persons who at the time of
hire are residents of the CEZ. The department has instituted a geographic
information system (GIS) to assist taxpayers in determining taxing jurisdiction
boundaries, local tax rates, and a mapping and address lookup system to
determine whether a specific address is within a CEZ. The system is available
on the department's internet website at http://www.dor.wa.gov. A recipient must
fill the qualified employment positions by the end of the calendar year
following the year in which the project is certified as operationally complete
and retain the position during the entire tax year. If the recipient does not
fill the qualified employment positions by the end of the second calendar year
following the year in which the project is certified as operationally complete,
all deferred taxes are immediately due.
(204)
Apportionment of costs between
qualifying and nonqualifying investments. The deferral is allowable only
in respect to investment in the construction of a new building or the expansion
or renovation of existing buildings used in manufacturing, research and
development, or commercial testing laboratories.
(a) Where a building(s) is used partly for
manufacturing or research and development and partly for purposes that do not
qualify for deferral under this rule, the deferral will be determined by one of
the following apportionment methods. The first method of apportionment is based
on square footage and does not require tracking the costs of materials for the
qualifying/nonqualifying areas of a building. The second method of
apportionment tracks the costs of materials used in the
qualifying/nonqualifying areas and is primarily used by those industries with
specialized building requirements.
(i) The
applicable tax deferral will be determined by apportionment according to the
ratio of the square footage of that portion of the building(s) directly used
for manufacturing or research and development purposes bears to the square
footage of the total building(s).
Apportionment formula:
Click to view
image
Percent Eligible x Total Project Costs = Eligible Costs.
"Total Project Costs" means cost of multipurpose buildings and
other improvement costs associated with the deferral project. Machinery and
equipment are not included in this calculation. Common areas, such as hallways
and bathrooms, are not included in the square feet figure for either the
numerator or the denominator. The cost of the common areas is multiplied by the
percent eligible to determine the portion of the common area that is eligible
for deferral.
Eligible Tax Deferred = Eligible Cost x Tax
Rate.
(ii) If a building is
used partly for manufacturing, research and development, or commercial testing
and partly for other purposes, the applicable tax deferral shall be determined
as follows:
(A) Tax on the cost of
construction of areas devoted solely to manufacturing, research and
development, or commercial testing may be deferred.
(B) Tax on the cost of construction of areas
not used at all for manufacturing, research and development, or commercial
testing may not be deferred.
(C)
Tax on the cost of construction of areas used in common for manufacturing,
research and development, or commercial testing and for other purposes, such as
hallways, bathrooms, and conference rooms, may be deferred by apportioning the
costs of construction on a square footage basis. The apportioned costs of
construction eligible for deferral are established by using the ratio,
expressed as a percentage, of the square feet of the construction, expansion,
or renovation devoted to manufacturing, research and development, or commercial
testing, excluding areas used in common to the total square feet of the
construction, expansion, or renovation, excluding areas used in common. That
percentage is applied to the cost of construction of the common areas to
determine the costs of construction eligible for tax deferral. Expressed as a
formula, apportionment of the cost of the common areas is determined by:
Click to view
image
(b) Qualified machinery and equipment is not
subject to apportionment.
(205)
Leased equipment. The
amount of tax deferral allowable for leased equipment is the amount of the
consideration paid by the recipient to the lessor over the initial term of the
lease, excluding any period of extension or option to renew, up to the last
date for repayment of the deferred taxes. After that date the recipient must
pay the appropriate sales taxes to the lessor for the remaining term of the
lease.
(206)
Application
procedure and review process. An application for sales and use tax
deferral under this program must be made prior to the initiation of
construction, prior to the acquisition of machinery and equipment, and prior to
the filling of qualified employment positions. Persons who apply after
construction is initiated or finished or after acquisition of machinery and
equipment are not eligible for the program. Applications for persons subject to
hiring requirements must include information regarding the estimated total
project cost and the qualified employment positions.
(a) Application forms may be obtained from
the department's website at dor.wa.gov, or by contacting the department at
360-705-6705.
Applications and reports received by the department under
chapter 82.60 RCW are not confidential and are subject to disclosure.
(RCW
82.60.100.)
(b) In considering whether to approve or deny
an application for a deferral, the department will not approve an application
for a project involving construction unless:
(i) The construction will begin within one
year from the date of the application; or
(ii) If the construction will not begin
within one year of application, the applicant shows proof that there is a
specific and active program to begin construction of the project within two
years from the date of application. Proof may include, but is not limited to:
(A) Affirmative action by the board of
directors, governing body, or other responsible authority of the applicant
toward an active program of construction;
(B) Itemized reasons for the proposed
construction;
(C) Clearly
established plans for financing the construction; or
(D) Building permits.
Similarly, after an application has been granted, a deferral
certificate is no longer valid and should not be used if construction has not
begun within one year from the date of application or there is not a specific
and active program to begin construction within two years from the date of
application. However, the department will grant requests to extend the period
for which the certificate is valid if the holder of the certificate can
demonstrate that the delay in starting construction is due to circumstances
beyond the certificate holder's control such as the acquisition of building
permit(s).
(c) The department will verify the
information contained in the application and approve or disapprove the
application within 60 days. If approved, the department will issue a tax
deferral certificate. If disapproved, the department will notify the applicant
as to the reason(s) for disapproval.
(d) The applicant may seek administrative
review of the department's disapproval of an application within 30 days from
the date of notice of the disallowance pursuant to the provisions of WAC
458-20-100 (Informal
administrative reviews). The filing of a petition for review with the
department starts a review of departmental action.
(207)
Eligible area criteria.
The office of financial management will determine annually the counties with
fewer than 100 persons per square mile. The department will update and
distribute the list each year. The list will be effective on July 1 of each
year.
If an investment project is located in an area that qualifies
under more than one type of eligible area, the department will automatically
assign the project to the eligible area that imposes the least burden on the
taxpayer and with the greatest benefit to the taxpayer. If the applicant elects
to be bound by the requirements of the other potential eligible area, the
applicant must make a written statement to that effect. For example, on October
1, 1999, the city of Yakima qualifies as a CEZ, and the entire county of Yakima
has fewer than 100 persons per square mile. The CEZ requirements are more
restrictive than counties containing fewer than 100 persons per square mile.
The department will assign the project to the "fewer than 100 persons per
square mile designation" unless the applicant elects to be bound by the CEZ
requirements.
(208)
Use of the certificate. A tax deferral certificate issued under
this program is for the use of the recipient for deferral of sales and use
taxes due on each eligible investment project. Deferral is limited only to
investment in qualified building or qualified machinery and equipment as
defined in Part I. Thus, sales and use taxes cannot be deferred on items that
do not become part of the qualified buildings, machinery, or equipment. In
addition, the deferral is not to be used to defer the taxes of the persons with
whom the recipient does business, persons the recipient hires, or employees of
the recipient.
The tax deferral certificate is to be used in a manner similar
to that of a resale certificate as set forth in WAC
458-20-102, Resale certificates.
The certificate holder must provide a copy of the tax deferral certificate to
the seller at the time goods or services are purchased. The seller will be
relieved of the responsibility for collection of the sales or use tax upon
presentation of the certificate. The seller must retain a copy of the
certificate as part of its permanent records for a period of at least five
years. A blanket certificate may be provided by the certificate holder and
accepted by the seller covering all such purchases relative to the eligible
project. The seller is liable for business and occupation tax on all tax
deferral sales.
(209)
Project operationally complete. An applicant must provide the
department with the estimated cost of the investment project at the time the
application is made. Following approval of the application and issuance of a
tax deferral certificate, a certificate holder must notify the department, in
writing, when the value of the investment project reaches the estimated cost as
stated on the tax deferral certificate.
(a) If
a certificate holder has reached its level of estimated costs and the project
is not operationally complete, the certificate holder may request an amended
certificate stating a revised amount upon which the deferral taxes are
requested. Requests must be mailed or faxed to the department.
(b) The certificate holder must notify the
department in writing when the construction project is operationally complete.
The department will certify the date on which the project is operationally
complete. The recipient of the deferral must maintain the manufacturing or
research and development activity for eight years from this date.
(210)
Reporting and
monitoring procedure.
(a)
Requirement to submit annual reports. Each recipient of a tax
deferral under chapter 82.60 RCW must submit a report on December 31st of the
year in which the investment project is certified by the department as having
been operationally completed and on December 31st of each of the seven
succeeding calendar years. The report must be made to the department in a form
and manner prescribed by the department. If the recipient fails to submit a
report or submits an inadequate or falsified report, the department may declare
the amount of deferred taxes outstanding to be immediately due and payable. An
inadequate or falsified report is one that contains material omissions or
contains knowingly false statements and information.
(b)
Requirement to submit annual
surveys. Effective April 1, 2004, each recipient of a tax deferral
granted under chapter 82.60 RCW after June 30, 1994, must complete an annual
survey instead of an annual report. If the economic benefits of
the deferral are passed to a lessee as provided in
RCW
82.60.020(4), the lessee
must agree to complete the annual survey and the applicant is not required to
complete the annual survey. Refer to WAC
458-20-268 (Annual surveys for
certain tax adjustments) for more information on the requirements to file
annual surveys.
(211)
Repayment of deferred taxes. Repayment of tax deferred under
chapter 82.60 RCW is excused, except as otherwise provided in
RCW
82.60.070 and this subsection.
(a) Repayment of tax deferred under chapter
82.60 RCW is not required, and interest and penalties under
RCW
82.60.070 will not be imposed, on machinery
and equipment that qualifies for exemption under
RCW
82.08.02565 or
82.12.02565.
(b) The following subsections describe the
various circumstances under which repayment of the deferral may occur.
Outstanding taxes are determined by reference to the following table. The table
presumes the taxpayer maintained eligibility for the entire year.
Repayment Year
|
|
Percentage of Deferred Tax Waived
|
1
|
(Year operationally complete)
|
0%
|
2
|
|
0%
|
3
|
|
0%
|
4
|
|
10%
|
5
|
|
15%
|
6
|
|
20%
|
7
|
|
25%
|
8
|
|
30%
|
Any action taken by the department to disqualify a recipient
for tax deferral or assess interest will be subject to administrative review
pursuant to the provisions of WAC
458-20-100 (Informal
administrative reviews). The filing of a petition for review with the
department starts a review of departmental action.
(c)
Failure of investment project to
satisfy general conditions. If, on the basis of the recipient's annual
report or other information, including that submitted by the employment
security department, the department of revenue finds that an investment project
is not eligible for tax deferral for reasons other than failure to create the
required number of qualified employment positions, the department will declare
the amount of deferred taxes outstanding to be immediately due. An example of a
disqualification under this rule is a facility not being used for a
manufacturing or research and development operation.
(d)
Failure of investment project to
satisfy required employment positions conditions. If, on the basis of
the recipient's annual report or other information, the department finds that
an investment project has been operationally complete and has failed to create
the required number of qualified employment positions, the amount of taxes
deferred will be immediately due. There is no proration of the amount owed
under this subsection. No penalties or interest will be assessed on the
deferred sales/use tax; however, all other penalties and interest applicable to
excise tax assessments may be assessed and imposed.
(212)
Debt not extinguished because of
insolvency or sale. Insolvency or other failure of the recipient does
not extinguish the debt for deferred taxes nor will the sale, exchange, or
other disposition of the recipient's business extinguish the debt for the
deferred taxes. Transfer of ownership does not terminate the deferral. The
deferral is transferred, subject to the successor meeting the eligibility
requirements of chapter 82.60 RCW, for the remaining periods of the deferral.
Any person who becomes a successor (see WAC
458-20-216) to such investment
project is liable for the full amount of any unpaid, deferred taxes under the
same terms and conditions as the original recipient of the deferral.
(213)
Disclosure of information.
Applications and reports received by the department under chapter 82.60 RCW are
not confidential and are subject to disclosure. (RCW
82.60.100.) Effective April 1, 2004, all
information collected in annual surveys, except the amount of tax deferral
taken, is confidential and not subject to disclosure. Information on the amount
of tax deferral taken in annual surveys is not confidential and may be
disclosed to the public upon request.
PART III
Applications from July 1, 1995, to July 31,
1999
(301)
Definitions. For the purposes of this part, the following
definitions apply for applications made on and after July 1, 1995, and before
August 1, 1999:
(a) "Acquisition of equipment
or machinery" means the equipment and machinery is under the dominion and
control of the recipient.
(b)
"Applicant" means a person applying for a tax deferral under chapter 82.60
RCW.
(c) "Certificate holder" means
an applicant to whom a tax deferral certificate has been issued.
(d) "Computer-related services" means
services that are connected or interact directly in the manufacture of computer
hardware or software or the programming of the manufactured hardware. This
includes the manufacture of hardware such as chips, keyboards, monitors, any
other hardware, and the components of these items. It includes creating
operating systems and software that will be copied and sold as canned software.
"Computer-related services" does not include information services. The
activities performed by the manufacturer to test, correct, revise, or upgrade
software or hardware before they are approved for sale to the consumer are
considered computer-related services.
(e) "Department" means the department of
revenue.
(f) "Eligible area" means
one of the areas designated according to the following classifications:
(i) Unemployment county. A county in which
the average level of unemployment for the three calendar years preceding the
year in which an application is filed exceeds the average state unemployment
for those years by 20 percent. In making this calculation, the department will
compare the county's average unemployment rate in the prior three years to 120
percent of the state's average unemployment rate based on official unemployment
figures published by the department of employment security;
(ii) Median income county. On and after June
6, 1996, a county that has a median household income that is less than 75
percent of the state median income for the previous three years;
(iii) MSA. A metropolitan statistical area,
as defined by the Office of Federal Statistical Policy and Standards, United
States Department of Commerce, in which the average level of unemployment for
the calendar year immediately preceding the year in which an application is
filed under chapter 82.60 RCW exceeds the average state unemployment for such
calendar year by 20 percent;
(iv)
CEZ and county containing a CEZ. A designated community empowerment zone (CEZ)
approved under
RCW
43.63A.700 or a county containing such a
community empowerment zone;
(v)
Timber impact area towns. A town with a population of less than 1,200 persons
that is located in a county that is a timber impact area, as defined in
RCW
43.31.601, but that is not an unemployment
county as defined in Part I;
(vi)
Governor's designation county. A county designated by the governor as an
eligible area under
RCW
82.60.047; or
(vii) Contiguous county. A county that is
contiguous to an unemployment county or a governor's designation
county.
(g)
(i) "Eligible investment project" means:
(A) An investment project in an unemployment
county, a median income county, an MSA, a timber impact area town, or a
governor's designation county; or
(B) That portion of an investment project in
a CEZ, a county containing a CEZ, or a contiguous county, that is directly
utilized to create at least one new full-time qualified employment position for
each $750,000 of investment.
(ii) "Eligible investment project" does not
include an investment project undertaken by a light and power business as
defined in
RCW
82.16.010, other than that portion of a
cogeneration project that is used to generate power for consumption within the
manufacturing site of which the cogeneration project is an integral part. It
also does not include an investment project that has already received a
deferral under chapter 82.60 RCW.
(h) "Industrial fixture" means an item
attached to a building or to land. Fixtures become part of the real estate to
which they are attached and upon attachment are classified as real property,
not personal property. Examples of "industrial fixtures" are fuel oil lines,
boilers, craneways, and certain concrete slabs.
(i) "Initiation of construction," in regards
to the construction, expansion, or renovation of buildings, means the
commencement of on-site construction work. Land clearing prior to excavation of
the building site does not commence construction nor does planning commence
construction.
(j) "Investment
project" means an investment in qualified buildings or qualified machinery and
equipment, including labor and services rendered in the planning, installation,
and construction of the project. When an application for sales and use tax
deferral is timely submitted, costs incurred before the application date are
allowable, if they otherwise qualify.
(k) "Manufacturing" has the meaning given in
RCW
82.04.120. Manufacturing, for purposes of the
distressed area deferral program, also includes computer
programming, the production of computer software, and other computer-related
services, but only when the computer programming, production of computer
software, or other computer-related services are performed by a manufacturer as
defined under
RCW
82.04.110 and contribute to the production of
a new, different, or useful substance or article of tangible personal property
for sale; and the activities performed by research and development laboratories
and commercial testing laboratories. (Chapter 16, Laws of 2010.)
(l) "Operationally complete" means the
project is capable of being used for its intended purpose as described in the
application.
(m) "Person" has the
meaning given in
RCW
82.04.030. "Person" does not include the
state of Washington or its institutions. "Person" can be either a lessee or a
lessor, who can apply separately for individual investment projects at the same
site, if they comply with the other requirements of chapter 82.60 RCW. The
lessor/owner of the structure is not eligible for deferral unless the
underlying ownership of the buildings, machinery, or equipment vests
exclusively in the lessor/owner, or unless the lessor has by written contract
agreed to pass the economic benefit of the deferral to the lessee in the form
of reduced rent payments.
(n)
"Qualified buildings" means construction of new structures, and expansion or
renovation of existing structures for the purpose of increasing floor space or
production capacity, used for manufacturing and research and development
activities.
"Qualified buildings" are limited to structures used for
manufacturing and research and development activities. "Qualified buildings"
include plant offices and warehouses if such facilities are essential or an
integral part of a factory, mill, plant, or laboratory. "Office" means space
used by professional, clerical, or administrative staff. For plant office space
to be a qualified building its use must be essential or integral to the
manufacturing or research and development operation. Office space that is used
by supervisors and their staff, by technicians, by payroll staff, by the safety
officer, and by the training staff are examples of qualifying office space.
"Warehouse" means facilities used for the storage of raw materials or finished
goods.
(o) "Qualified
employment position" means a permanent full-time employee employed in the
eligible investment project during the entire tax year. The "entire tax year"
means the full-time position is filled for a period of 12 consecutive months.
"Full time" means at least 35 hours a week, 455 hours a quarter, or 1,820 hours
a year.
(p) "Qualified machinery
and equipment" means all new industrial and research fixtures, equipment, and
support facilities that are an integral and necessary part of a manufacturing
or research and development operation. "Qualified machinery and equipment"
includes computers, desks, filing cabinets, photocopiers, printers, software,
data processing equipment, laboratory equipment; manufacturing components such
as belts, pulleys, shafts and moving parts; molds, tools and dies; operating
structures; and all equipment used to control or operate machinery. It also
includes machinery and equipment acquired under the terms of a lease by the
recipient. "New" as used in this subsection means either new to the taxing
jurisdiction of the state or new to the certificate holder.
(q) "Recipient" means a person receiving a
tax deferral under this program.
(r) "Research and development" means the
development, refinement, testing, marketing, and commercialization of a
product, service, or process before commercial sales have begun. As used in
this subsection, "commercial sales" excludes sales of prototypes or sales for
market testing if the total gross receipts from such sales of the product,
service, or process do not exceed $1,000,000.
(302)
Issuance of deferral
certificate. The department will issue a sales and use tax deferral
certificate for state and local sales and use taxes due under chapters 82.08,
82.12, and 82.14 RCW for an eligible investment project. The department will
state on the certificate the amount of tax deferral for which the recipient is
eligible. Recipients must keep track of how much tax is deferred.
(303)
Eligible investment
amount. There may or may not be a hiring requirement, depending on the
location of the project.
(a)
No hiring
requirements. There are no hiring requirements for qualifying projects
located in distressed counties, MSAs, median income counties,
governor-designated counties, or timber impact towns. Monitoring and reporting
procedures are explained in subsection (310) of this rule. Buildings that will
be used partly for manufacturing or research and development and partly for
other purposes are eligible for a deferral on a proportionate basis. Subsection
(304) of this rule explains the procedure for apportionment.
(b)
Hiring requirements. There
are hiring requirements for qualifying projects located in CEZs, in counties
containing CEZs, or in contiguous counties. Total qualifying project costs,
including any part of the project that would qualify under
RCW
82.08.02565 and
82.12.02565, must be examined to
determine the number of positions associated with the project. An applicant who
knows at the time of application that he or she will not fill the required
qualified employment positions is not eligible for the deferral. Applicants
must make good faith estimates of anticipated hiring. The applicant applies for
a deferral of investment that correlates to the estimated number of persons to
be hired. The investment must include the sales price of machinery and
equipment eligible for the sales and use tax exemption under
RCW
82.08.02565 and
82.12.02565. An applicant can
amend the number of persons hired until completion of the project. The
qualified employment positions filled by December 31 of the year of completion
are the benchmark to be used during the next seven years in determining hiring
compliance.
(i) Total qualifying project costs
are divided by 750,000, the result being the qualified employment
positions.
(ii) In addition, the
number of qualified employment positions created by an investment project will
be reduced by the number of full-time employment positions maintained by the
recipient in any other community in this state that are displaced as a result
of the investment project. This reduction requires a reexamination of whether
the 75 percent hiring requirement (as explained below) is met.
(iii) This number, which is the result of (i)
and (ii) of this subsection, is the number of positions used as the benchmark
over the life of the deferral. For recipients locating in a CEZ or a county
containing a CEZ, 75 percent of the new positions must be filled by residents
of a CEZ located in the county where the project is located. The department has
instituted a geographic information system (GIS) to assist taxpayers in
determining taxing jurisdiction boundaries, local tax rates, and a mapping and
address lookup system to determine whether a specific address is within a CEZ.
The system is available on the department's internet website at
http://www.dor.wa.gov. For
recipients located in a contiguous county, residents of an adjacent
unemployment or governor-designated county must fill 75 percent of the new
positions.
(iv) The qualified
employment positions are reviewed each year, beginning December 31st of the
year the project is operationally complete and each year for seven years. If
the recipient has failed to create the requisite number of positions, the
department will issue an assessment as explained under subsection (311) of this
rule.
(v) In addition to the hiring
requirements for new positions under (b) of this subsection, the recipient of a
deferral for an expansion or diversification of an existing facility must
ensure that he or she maintains the same percentage of employment positions
filled by residents of the contiguous county or the CEZ that existed prior to
the application being made. This percentage must be maintained for seven
years.
(vi) Qualified employment
positions do not include those positions filled by persons hired in excess of
the ratio of one employee per required dollar of investment for which a
deferral is granted. In the event an employee is either voluntarily or
involuntarily separated from employment, the employment position will be
considered filled if the employer is either training or actively recruiting a
replacement employee, so long as the position is not actually vacant for any
period in excess of 30 consecutive days.
(304)
Apportionment of costs between
qualifying and nonqualifying investments. The deferral is allowable only
in respect to investment in the construction of a new building or the expansion
or renovation of existing buildings used in manufacturing, research and
development, or commercial testing.
(a) Where
a building(s) is used partly for manufacturing, research and development, or
commercial testing and partly for purposes that do not qualify for deferral
under this rule, the deferral will be determined by apportionment of the total
project costs. The applicable tax deferral will be determined by apportionment
according to the ratio of the square footage of that portion of the building(s)
directly used for manufacturing, research and development, or commercial
testing purposes bears to the square footage of the total building(s).
Apportionment formula:
Click to view
image
Percent Eligible x Total Project Costs = Eligible Costs.
"Total Project Costs" means cost of multipurpose buildings and
other improvement costs associated with the deferral project. Machinery and
equipment are not included in this calculation. Common areas, such as hallways
and bathrooms, are not included in the square feet figure for either the
numerator or the denominator. The cost of the common areas is multiplied by the
percent eligible to determine the portion of the common area that is eligible
for deferral.
Eligible Tax Deferred = Eligible Cost x Tax
Rate.
(b) Qualified
machinery and equipment is not subject to apportionment.
(305)
Leased equipment. The
amount of tax deferral allowable for leased equipment is the amount of the
consideration paid by the recipient to the lessor over the initial term of the
lease, excluding any period of extension or option to renew, up to the last
date for repayment of the deferred taxes. After that date the recipient must
pay the appropriate sales taxes to the lessor for the remaining term of the
lease.
(306)
Application
procedure and review process. An application for sales and use tax
deferral under this program must be made prior to the initiation of
construction and the acquisition of machinery and equipment. Persons who apply
after construction is initiated or after acquisition of machinery and equipment
are not eligible for the program. Applications for persons subject to hiring
requirements must include information regarding the estimated total project
cost and the qualified employment positions.
(a) Application forms may be obtained from
the department's website at dor.wa.gov, or by contacting the department at
360-705-6705.
(b) The department
will verify the information contained in the application and approve or
disapprove the application within 60 days. If approved, the department will
issue a tax deferral certificate. If disapproved, the department will notify
the applicant as to the reason(s) for disapproval. The U.S. Post Office
postmark or fax date will be used as the date of application.
(c) The applicant may seek administrative
review of the department's disapproval of an application within 30 days from
the date of notice of disallowance pursuant to the provisions of WAC
458-20-100 (Informal
administrative reviews). The filing of a petition for review with the
department starts a review of departmental action.
(307)
Eligible area criteria.
The statewide and county unemployment statistics last published by the
department will be used to determine eligible areas based on unemployment.
Median income county designation is based on data produced by the office of
financial management and made available to the department on November 1 of each
year. The timber impact town designation is based on information provided by
the department of employment security.
If an investment project is located in an area that qualifies
under more than one type of eligible area, the department will automatically
assign the project to the eligible area that imposes the least burden on the
taxpayer and with the greatest benefit to the taxpayer. If the applicant elects
to be bound by the requirements of the other potential eligible area, the
applicant must make a written statement to that effect. For example, on May 1,
1998, the city of Yakima qualifies as a CEZ, and the entire county of Yakima
qualifies as an unemployment county. The CEZ requirements are more restrictive
than the unemployment county requirements. The department will assign the
project to the distressed area eligible area unless the applicant elected to be
bound by the CEZ requirements.
(308)
Use of the certificate. A
tax deferral certificate issued under this program is for the use of the
recipient for deferral of sales and use taxes due on each eligible investment
project. Deferral is limited only to investment in qualified building or
qualified machinery and equipment as defined in subsection (301) of this rule.
Thus, sales and use taxes cannot be deferred on items that do not become part
of the qualified buildings, machinery, or equipment. In addition, the deferral
is not to be used to defer the taxes of the persons with whom the recipient
does business, persons the recipient hires, or employees of the recipient.
The tax deferral certificate is used in a manner similar to
that of a resale certificate as set forth in WAC
458-20-102, Resale certificates.
The certificate holder must provide a copy of the tax deferral certificate to
the seller at the time goods or services are purchased. The seller is relieved
of the responsibility for collection of the sales or use tax upon presentation
of the certificate. The seller must retain a copy of the certificate as part of
its permanent records for a period of at least five years. A blanket
certificate may be provided by the certificate holder and accepted by the
seller covering all such purchases relative to the eligible project. The seller
is liable for business and occupation tax on all tax deferral
sales.
(309)
Project
operationally complete. An applicant must provide the department with
the estimated cost of the investment project at the time the application is
made. Following approval of the application and issuance of a deferral
certificate, a certificate holder must notify the department, in writing, when
the value of the investment project reaches the estimated cost as stated on the
tax deferral certificate.
(a) If a certificate
holder has reached its level of estimated costs and the project is not
operationally complete, the certificate holder may request an amended
certificate stating a revised amount upon which the deferral is requested.
Requests must be mailed or faxed to the department.
(b) The certificate holder must notify the
department in writing when the construction project is operationally complete.
The department will certify the date on which the project was operationally
complete. The recipient of the deferral must maintain the manufacturing or
research and development activity for eight years from this date.
(310)
Reporting and
monitoring procedure.
(a) Requirement
to submit annual reports. Each recipient of a deferral granted after July 1,
1995, must submit a report to the department on December 31st of the year in
which the investment project is certified by the department as having been
operationally completed, and on December 31st of each of the seven succeeding
calendar years. The report must be made to the department in a form and manner
prescribed by the department. The report must contain information regarding the
actual employment related to the project and any other information required by
the department. If the recipient fails to submit a report or submits an
inadequate or falsified report, the department may declare the amount of
deferred taxes outstanding to be immediately due and payable. An inadequate or
falsified report is one that contains material omissions or contains knowingly
false statements and information.
(b)
Requirement to submit annual
surveys. Effective April 1, 2004, each recipient of a tax deferral
granted under chapter 82.60 RCW after June 30, 1994, must complete an annual
survey instead of an annual report. If the economic benefits of
the deferral are passed to a lessee as provided in
RCW
82.60.020(4), the lessee
must agree to complete the annual survey and the applicant is not required to
complete the annual survey. Refer to WAC
458-20-268 (Annual surveys for
certain tax adjustments) for more information on the requirements to file
annual surveys.
(311)
Repayment of deferred taxes. Repayment of tax deferred under
chapter 82.60 RCW is excused, except as otherwise provided in
RCW
82.60.070 and this subsection, on an
investment project for which a deferral has been granted under chapter 82.60
RCW after June 30, 1994.
(a) Taxes deferred
under this chapter need not be repaid on machinery and equipment for lumber and
wood product industries, and sales of or charges made for labor and services,
of the type which qualified for exemption under
RCW
82.08.02565 or
82.12.02565.
(b) The following describes the various
circumstances under which repayment of the deferral may be required.
Outstanding taxes are determined by reference to the following table. The table
presumes the taxpayer maintained eligibility for the entire year.
Repayment Year
|
|
Percentage of Deferred Tax Waived
|
1
|
(Year operationally complete)
|
0%
|
2
|
|
0%
|
3
|
|
0%
|
4
|
|
10%
|
5
|
|
15%
|
6
|
|
20%
|
7
|
|
25%
|
8
|
|
30%
|
Any action taken by the department to disqualify a recipient
for tax deferral or require payment of all or part of deferred taxes is subject
to administrative review pursuant to the provisions of WAC
458-20-100 (Informal
administrative reviews). The filing of a petition for review with the
department starts a review of departmental action. See subsection (24)(d) of
this rule for repayment and waiver for deferrals with hiring
requirements.
(c)
Failure of investment project to satisfy general conditions. If,
on the basis of the recipient's annual report or other information, including
that submitted by the department of employment security, the department finds
that an investment project is not eligible for tax deferral for reasons other
than failure to create the required number of qualified employment positions,
the department will declare the amount of deferred taxes outstanding to be
immediately due. For example, a reason for disqualification would be that the
facilities are not used for a manufacturing or research and development
operation.
(d)
Failure of
investment project to satisfy required employment positions conditions.
If, on the basis of the recipient's annual report or other information, the
department finds that an investment project has been operationally complete for
three years and has failed to create the required number of qualified
employment positions, the amount of taxes deferred will be immediately due. The
department will assess interest at the rate and as provided for delinquent
excise taxes under
RCW
82.32.050 (retroactively to the date the
application was filed). There is no proration of the amount owed under this
subsection. No penalties will be assessed.
(e)
Failure of investment project to
satisfy employee residency requirements. If, on the basis of the
recipient's annual report or other information, the department finds that an
investment project under
RCW
82.60.040(1)(b) or (c) has
failed to comply with any requirement of
RCW
82.60.045 for any calendar year for which
reports are required under this subsection, 12.5 percent of the amount of
deferred taxes will be immediately due. For each year a deferral's requirements
are met 12.5 percent of the amount of deferred taxes will be waived. The
department will assess interest at the rate provided for delinquent excise
taxes under
RCW
82.32.050, retroactively to the date the
application was filed. Each year the employment requirement is met, 12.5
percent of the deferred tax will be waived, if all other program requirements
are met. No penalties will be assessed.
(f) The department of employment security
makes and certifies to the department all determinations of employment and
wages required under this subsection.
(312)
Debt not extinguished because of
insolvency or sale. Insolvency or other failure of the recipient does
not extinguish the debt for deferred taxes nor will the sale, exchange, or
other disposition of the recipient's business extinguish the debt for the
deferred taxes. Transfer of ownership does not terminate the deferral. The
deferral is transferred, subject to the successor meeting the eligibility
requirements of this chapter, for the remaining periods of the deferral. Any
person who becomes a successor (see WAC
458-20-216) to such investment
project is liable for the full amount of any unpaid, deferred taxes under the
same terms and conditions as the original recipient.
(313)
Disclosure of information.
Applications and reports received by the department under chapter 82.60 RCW are
not confidential and are subject to disclosure. (RCW
82.60.100.) Effective April 1, 2004, all
information collected in annual surveys, except the amount of tax deferral
taken, is confidential and not subject to disclosure. Information on the amount
of tax deferral taken in annual surveys is not confidential and may be
disclosed to the public upon request.
PART IV
Applications from July 1, 1994, to June 30,
1995
(401)
Definitions. For the purposes of this part, the following
definitions apply for applications made on and after July 1, 1994, and before
July 1, 1995.
(a) "Acquisition of equipment
or machinery" means the date the equipment and machinery is under the dominion
and control of the recipient.
(b)
"Applicant" means a person applying for a tax deferral under chapter 82.60
RCW.
(c) "Certificate holder" means
an applicant to whom a tax deferral certificate has been issued.
(d) "Computer-related services" means
services that are connected or interact directly in the manufacture of computer
hardware or software or the programming of the manufactured hardware. This
includes the manufacture of hardware such as chips, keyboards, monitors, any
other hardware, and the components of these items. It includes creating
operating systems and software that will be copied and sold as canned software.
"Computer-related services" does not include information services. The
activities performed by the manufacturer to test, correct, revise, and upgrade
software or hardware before they are approved for sale to the consumer are
considered computer-related services in this instance.
(e) "Department" means the department of
revenue.
(f) "Eligible area" means:
(i) Unemployment county. A county in which
the average level of unemployment for the three calendar years preceding the
year in which an application is filed exceeds the average state unemployment
for those years by 20 percent. The department may compare the county's average
unemployment rate in the prior three years to 120 percent of the state's
average unemployment rate based on official unemployment figures published by
the department of employment security;
(ii) MSA. A metropolitan statistical area, as
defined by the Office of Federal Statistical Policy and Standards, United
States Department of Commerce, in which the average level of unemployment for
the calendar year immediately preceding the year in which an application is
filed under chapter 82.60 RCW exceeds the average state unemployment for such
calendar year by 20 percent;
(iii)
CEZ. A designated community empowerment zone approved under
RCW
43.63A.700;
(iv) Timber impact area towns. A town with a
population of less than 1,200 persons that is located in a county that is a
timber impact area, as defined in
RCW
43.31.601, but that is not an unemployment
county as defined in this subsection;
(v) Contiguous county. A county that is
contiguous to an unemployment county or a governor's designation county;
or
(vi) Governor's designation
county. A county designated by the governor as an eligible area under
RCW
82.60.047.
(g)
(i)
"Eligible investment project" means that portion of an investment project
which:
(A) Is directly utilized to create at
least one new full-time qualified employment position for each $750,000 of
investment on which a deferral is requested; and
(B) Either initiates a new operation, or
expands or diversifies a current operation by expanding, equipping, or
renovating an existing facility with costs in excess of 25 percent of the true
and fair value of the facility prior to improvement. "Improvement" means the
physical alteration by significant expansion, modernization, or renovation of
an existing facility, excluding land, where the cost of such expansion, etc.,
exceeds 25 percent of the true and fair value of the existing facility prior to
the initiation of the expansion or renovation. The term "improvement" is
further defined to include those portions of an existing facility which do not
increase the usable floor space, but is limited to the renovation,
modernization, or any other form of alteration or addition and the equipment
and machinery installed therein during the course of construction. The 25
percent test may be satisfied by considering the value of both the building and
machinery and equipment; however, at least 40 percent of the total renovation
costs must be attributable to the physical renovation of the building structure
alone. "True and fair value" means the value listed on the assessment roles as
determined by the county assessor for the buildings or equipment for ad valorem
property tax purposes at the time of application.
(ii) "Eligible investment project" does not
include either an investment project undertaken by a light and power business
as defined in
RCW
82.16.010, other than cogeneration projects
that are both an integral part of a manufacturing facility and owned at least
50 percent by the manufacturer, or investment projects that have already
received deferrals under chapter 82.60 RCW.
(h) "Industrial fixture" means an item
attached to a building or to land. Fixtures become part of the real estate to
which they are attached and upon attachment are classified as real property,
not personal property. Examples of "industrial fixtures" are fuel oil lines,
boilers, craneways, and certain concrete slabs.
(i) "Initiation of construction," in regards
to the construction of new buildings, means the commencement of on-site
construction work.
(j) "Initiation
of construction," in regards to the construction of expanding or renovating
existing structures for the purpose of increasing floor space or production
capacity used for manufacturing and research and development, means the
commencement of the new construction by renovation, modernization, or
expansion, by physical alteration.
(k) "Investment project" means an investment
in qualified buildings or qualified machinery and equipment, including labor
and services rendered in the planning, installation, and construction of the
project. A person who does not build or remodel his or her own building, but
leases from a third party, is eligible for sales and use tax deferral on the
machinery and equipment provided that an investment in qualified machinery and
equipment is made by such person and a new structure used to house the
manufacturing activities is constructed.
(l) "Manufacturing" has the meaning given in
RCW
82.04.120. Manufacturing, for purposes of the
distressed area deferral program, also includes computer programming, the
production of computer software, and other computer-related services, but only
when the computer programming, production of computer software, or other
computer-related services are performed by a manufacturer as defined in
RCW
82.04.110 and contribute to the production of
a new, different, or useful substance or article of tangible personal property
for sale; and the activities performed by research and development laboratories
and commercial testing laboratories. (Chapter 16, Laws of 2010.)
(m) "Operationally complete" means the
project is capable of being used for its intended purpose as described in the
application.
(n) "Person" has the
meaning given in
RCW
82.04.030. "Person" does not include the
state of Washington or its institutions. "Person" can be either a lessee or a
lessor, who can apply separately for individual investment projects at the same
site, if they comply with the other requirements of chapter 82.60 RCW. The
lessor/owner of the structure is not eligible for deferral unless the
underlying ownership of the buildings, machinery, or equipment vests
exclusively in the lessor/owner, or unless the lessor has by written contract
agreed to pass the economic benefit of the deferral to the lessee in the form
of reduced rent payments.
(o)
"Qualified buildings" are limited to structures used for manufacturing and
research and development activities. "Qualified buildings" include plant
offices and warehouses if such facilities are essential or an integral part of
a factory, mill, plant, or laboratory. "Office" means space used by
professional, clerical, or administrative staff. For plant office space to be a
qualified building its use must be essential or integral to the manufacturing
or research and development operation. Office space that is used by supervisors
and their staff, by technicians, by payroll staff, by the safety officer, and
by the training staff are examples of qualifying office space. "Warehouse"
means facilities used for the storage of raw materials or finished
goods.
(p) "Qualified employment
position" means a permanent full-time employee employed in the eligible
investment project during the entire tax year. The "entire tax year" means the
full-time position is filled for a period of 12 consecutive months. "Full time"
means at least 35 hours per week, 455 hours a quarter, or 1,820 hours a
year.
(q) "Qualified machinery and
equipment" means all new industrial and research fixtures, equipment, and
support facilities that are an integral and necessary part of a manufacturing
operation or research and development operation. "Qualified machinery and
equipment" includes: Computers, software, data processing equipment, laboratory
equipment; manufacturing components such as belts, pulleys, shafts and moving
parts; molds, tools and dies; operating structures; and all equipment used to
control or operate machinery. It also includes machinery and equipment acquired
under the terms of a lease by the recipient. "New" as used in this subsection
means either new to the taxing jurisdiction of the state or new to the
certificate holder.
(r) "Research
and development" means the development, refinement, testing, marketing, and
commercialization of a product, service, or process before commercial sales
have begun. As used in this subsection, "commercial sales" excludes sales of
prototypes or sales for market testing if the total gross receipts from such
sales of the product, service, or process do not exceed $1,000,000.
(s) "Recipient" means a person receiving a
tax deferral under this program.
(402)
Issuance of deferral
certificate. The department will issue a sales and use tax deferral
certificate for state and local sales and use taxes due under chapters 82.08,
82.12, and 82.14 RCW for an eligible investment project. The department will
state on the certificate the amount of tax deferral for which the recipient is
eligible. Recipients must keep track of how much tax is deferred.
(403)
Eligible investment
amount.
(a) Projects located in
unemployment counties, MSAs, governor-designated counties, or timber impact
towns are eligible for a deferral on the portion of the investment project that
represents one new qualified employment position for each $750,000 of
investment. The eligible amount is computed by dividing the total qualifying
project costs by 750,000, the result being the qualified employment positions.
In addition, the number of qualified employment positions created by an
investment project will be reduced by the number of fulltime employment
positions maintained by the recipient in any other community in this state that
are displaced as a result of the investment project. This is the number of
positions used as the hiring benchmark. The qualified employment positions must
be filled by the end of year three. Monitoring and reporting procedures are set
forth in subsection (410) of this rule. In addition, buildings that will be
used partly for manufacturing or research and development and partly for other
purposes are eligible for a deferral on a proportionate basis. Subsection (404)
of this rule explains the procedure for apportionment.
(b) Projects located in CEZs, counties
containing CEZs, or counties contiguous to an eligible county, are eligible for
a deferral if the project meets specific hiring requirements. The recipient is
eligible for a deferral on the portion of the investment project that
represents one new qualified employment position for each $750,000 of
investment. The eligible amount is computed by dividing the total qualifying
project costs by 750,000, the result being the qualified employment positions.
This is the number of positions used as the hiring benchmark over the life of
the deferral. The qualified employment positions are reviewed each year,
beginning December 31st of the year the project is operationally complete and
each year for seven years. Monitoring and reporting procedures are set forth in
subsection (410) of this rule. In addition, buildings that will be used partly
for manufacturing or research and development and partly for other purposes are
eligible for a deferral on a proportionate basis. Subsection (404) of this rule
explains the procedure for apportionment.
(c) In addition to the hiring requirements
for new positions under (b) of this subsection, the recipient of a deferral for
an expansion or diversification of an existing facility must ensure that he or
she maintains the same percentage of employment positions filled by residents
of the contiguous county or the CEZ that existed prior to the application being
made. This percentage must be maintained for seven years. The department has
instituted a geographic information system (GIS) to assist taxpayers in
determining taxing jurisdiction boundaries, local tax rates, and a mapping and
address lookup system to determine whether a specific address is within a CEZ.
The system is available on the department's internet website at
www.dor.wa.gov.
(d) Qualified employment positions does not
include those persons hired in excess of the ratio of one employee per required
dollar of investment for which a deferral is granted. In the event an employee
is either voluntarily or involuntarily separated from employment, the
employment position will be considered filled if the employer is either
training or actively recruiting a replacement employee so long as the position
is not actually vacant for any period in excess of 30 consecutive
days.
(404)
Apportionment of costs between qualifying and nonqualifying
investments. The deferral is allowable only in respect to investment in
the construction of a new building or the expansion or renovation of existing
buildings used in manufacturing, research and development.
(a) Where a building(s) is used partly for
manufacturing or research and development and partly for purposes which do not
qualify for deferral under this rule, the deferral will be determined by
apportionment of the total project costs. The applicable tax deferral will be
determined by apportionment according to the ratio of the square footage of
that portion of the building(s) directly used for manufacturing or research and
development purposes bears to the square footage of the total building(s).
Apportionment formula:
Click to view
image
Percent Eligible x Total Project Costs = Eligible Costs.
"Total Project Costs" means cost of multipurpose buildings and
other improvement costs associated with the deferral project. Machinery and
equipment are not included in this calculation. Common areas, such as hallways
and bathrooms, are not included in the square feet figure for either the
numerator or the denominator. The cost of the common areas is multiplied by the
percent eligible to determine the portion of the common area that is eligible
for deferral.
Eligible Tax Deferred = Eligible Cost x Tax
Rate.
(b) Qualified
machinery and equipment is not subject to apportionment.
(405)
Leased equipment. The
amount of tax deferral allowable for leased equipment is the amount of the
consideration paid by the recipient to the lessor over the initial term of the
lease, excluding any period of extension or option to renew, up to the last
date for repayment of the deferred taxes. After that date the recipient must
pay the appropriate sales taxes to the lessor for the remaining term of the
lease.
(406)
Application
procedure and review process. An application for sales and use tax
deferral under this program must be made prior to the initiation of
construction and the acquisition of machinery and equipment. Persons who apply
after construction is initiated or after acquisition of machinery and equipment
are not eligible for the program.
(a)
Application forms may be obtained from the department's website at dor.wa.gov,
or by contacting the department at 360-705-6705.
(b) The department will verify the
information contained in the application and approve or disapprove the
application within 60 days. If approved, the department will issue a tax
deferral certificate. If disapproved, the department will notify the applicant
as to the reason(s) for disapproval. The U.S. Post Office postmark or fax date
will be used as the date of application.
(c) The applicant may seek administrative
review of the department's disapproval of an application within 30 days from
the date of notice of disallowance pursuant to the provisions of WAC
458-20-100 (Informal
administrative reviews). The filing of a petition for review with the
department starts a review of departmental action.
(407)
Eligible area criteria.
The department will use the statewide and county unemployment statistics as
last published by the department. Timber impact town designation is based on
information provided by the department of employment security. The department
will update the list of eligible areas by county, annually.
(408)
Use of the certificate. A
tax deferral certificate issued under this program will be for the use of the
recipient for deferral of sales and use taxes due on each eligible investment
project. Deferral is limited only to investment in qualified buildings or
qualified machinery and equipment as defined in subsection (401) of this rule.
Thus, sales and use taxes cannot be deferred on items that do not become part
of the qualified buildings, machinery, or equipment. In addition, the deferral
is not to be used to defer the taxes of the persons with whom the recipient
does business, persons the recipient hires, or employees of the recipient. The
tax deferral certificate is be used in a manner similar to that of a resale
certificate as set forth in WAC
458-20-102, Resale certificates.
The certificate holder must provide a copy of the tax deferral certificate to
the seller at the time goods or services are purchased. The seller will be
relieved of the responsibility for collection of the sales or use tax upon
presentation of the certificate. The seller must retain a copy of the
certificate as part of its permanent records for a period of at least five
years. A blanket certificate may be provided by the certificate holder and
accepted by the seller covering all such purchases relative to the eligible
project. The seller is liable for business and occupation tax on all tax
deferral sales.
(409)
Project
operationally complete. An applicant must provide the department with
the estimated cost of the investment project at the time the application is
made. Following approval of the application and issuance of a tax deferral
certificate, a certificate holder must notify the department, in writing, when
the value of the investment project reaches the estimated cost as stated on the
tax deferral certificate.
(a) If a certificate
holder has reached its level of estimated costs and the project is not
operationally complete, the certificate holder may request an amended
certificate stating a revised amount upon which the deferral of sales and use
taxes is requested. Requests must be mailed or faxed to the
department.
(b) The certificate
holder must notify the department in writing when the construction project is
operationally complete. The department will certify the date on which the
project was operationally complete. The recipient of the deferral must maintain
the manufacturing or research and development activity for eight years from
this date.
(c) The recipient will
be notified in writing of the total amount of deferred taxes, the date(s) upon
which the deferred taxes must be paid, and any reports required to be submitted
in the subsequent years. If the department disallows any portion of the amount
of sales and use taxes requested for deferral, the recipient may seek
administrative review of the department's action within 30 days from the date
of the notice of disallowance pursuant to the provisions of WAC
458-20-100 (Informal
administrative reviews). The filing of a petition for review with the
department starts a review of departmental action.
(410)
Reporting and monitoring
procedure.
(a) Requirement to submit
annual reports. Each recipient of a sales and use tax deferral must submit a
report to the department on December 31st of the year in which the investment
project is certified by the department as having been operationally completed,
and on December 31st of each of the seven succeeding calendar years. The report
must be made to the department in a form and manner prescribed by the
department. The report must contain information regarding the actual employment
related to the project and any other information required by the department. If
the recipient fails to submit a report or submits an inadequate or falsified
report, the department may declare the amount of deferred taxes outstanding to
be immediately due and payable. An inadequate or falsified report is one that
contains material omissions or contains knowingly false statements and
information.
(b) Requirement to
submit annual surveys. Effective April 1, 2004, each recipient of a tax
deferral granted under chapter 82.60 RCW after June 30, 1994, must complete an
annual survey instead of an annual report. If the economic
benefits of the deferral are passed to a lessee as provided in
RCW
82.60.020(4), the lessee
must agree to complete the annual survey and the applicant is not required to
complete the annual survey. Refer to WAC
458-20-268 (Annual surveys for
certain tax adjustments) for more information on the requirements to file
annual surveys.
(411)
Repayment of deferred taxes. Repayment of tax deferred under
chapter 82.60 RCW is excused, except as otherwise provided in
RCW
82.60.070 and this subsection on an
investment project for which a deferral has been granted under chapter 82.60
RCW after June 30, 1994.
(a) The following
describes the various circumstances under which repayment of the deferral may
be required. Outstanding taxes are determined by reference to the following
table. The table presumes the taxpayer maintained eligibility for the entire
year. See subsection (c) for repayment and waiver for deferrals with hiring
requirements.
Repayment Year
|
|
Percentage of Deferred Tax Waived
|
1
|
(Year operationally complete)
|
0%
|
2
|
|
0%
|
3
|
|
0%
|
4
|
|
10%
|
5
|
|
15%
|
6
|
|
20%
|
7
|
|
25%
|
8
|
|
30%
|
Any action taken by the department to disqualify a recipient
for tax deferral or require payment of all or part of deferred taxes is subject
to administrative review pursuant to the provisions of WAC
458-20-100 (Informal
administrative reviews). The filing of a petition for review with the
department starts a review of departmental action.
(b)
Failure of investment project to
satisfy general conditions. If, on the basis of the recipient's annual
report or other information, including that submitted by the department of
employment security, the department finds that an investment project is not
eligible for tax deferral, other than failure to create the required number of
positions, the department will declare the amount of deferred taxes outstanding
to be immediately due. For example, a reason for disqualification would be that
the facility is not used for manufacturing or research and development
operations.
(c)
Failure of
investment project to satisfy employment positions conditions. If, on
the basis of the recipient's annual report or other information, the department
finds that an investment project has been operationally complete for three
years and has failed to create the required number of qualified employment
positions, the amount of taxes deferred will be immediately due. The department
will assess interest at the rate and as provided for delinquent excise taxes
under RCW
82.32.050 (retroactively to the date of
deferral). No penalties will be assessed.
(d)
Failure of investment project to
satisfy employee residency requirements. If, on the basis of the
recipient's annual report or other information, the department finds that an
investment project under
RCW
82.60.040(1)(b) or (c) has
failed to comply with the special hiring requirements of
RCW
82.60.045 for any calendar year for which
reports are required under this subsection, 12.5 percent of the amount of
deferred taxes will be immediately due. For each year a deferral's requirements
are met 12.5 percent of the amount of deferred taxes will be waived. The
department will assess interest at the rate provided for delinquent excise
taxes under
RCW
82.32.050, retroactively to the date of
deferral. No penalties will be assessed.
(e) The department of employment security
makes and certifies to the department all determinations of employment and
wages required under this subsection, per request.
(412)
Debt not extinguished because of
insolvency or sale. Insolvency or other failure of the recipient does
not extinguish the debt for deferred taxes nor will the sale, exchange, or
other disposition of the recipient's business extinguish the debt for the
deferred taxes. Transfer of ownership does not terminate the deferral. The
deferral is transferred, subject to the successor meeting the eligibility
requirements of this chapter, for the remaining periods of the deferral. Any
person who becomes a successor (see WAC
458-20-216) to such investment
project is liable for the full amount of any unpaid, deferred taxes under the
same terms and conditions as the original recipient.
(413)
Disclosure of information.
Applications and reports received by the department under chapter 82.60 RCW are
not confidential and are subject to disclosure. (RCW
82.60.100.) Effective April 1, 2004, all
information collected in annual surveys, except the amount of tax deferral
taken, is confidential and not subject to disclosure. Information on the amount
of tax deferral taken in annual surveys is not confidential and may be
disclosed to the public upon request.
PART V
Applications from July 1, 1992, to June 30,
1994
(501)
Definitions. For the purposes of this part, the following
definitions apply for applications made after July 1, 1992, but before July 1,
1994:
(a) "Acquisition of equipment or
machinery" means the equipment and machinery is under the dominion and control
of the recipient.
(b) "Applicant"
means a person applying for a tax deferral under chapter 82.60 RCW.
(c) "Certificate holder" means an applicant
to whom a tax deferral certificate has been issued.
(d) "Computer-related services" means
services that are connected or interact directly in the manufacture of computer
hardware or software or the programming of the manufactured hardware. This
includes the manufacture of hardware such as chips, keyboards, monitors, any
other hardware, and the components of these items. It includes creating
operating systems and software that will be copied and sold as canned software.
"Computer-related services" does not include information services. The
activities performed by the manufacturer to test, correct, revise, and upgrade
software or hardware before they are approved for sale to the consumer are
considered computer-related services in this instance.
(e) "Department" means the department of
revenue.
(f) "Eligible area" means:
(i) Unemployment county. A county in which
the average level of unemployment for the three calendar years preceding the
year in which an application is filed exceeds the average state unemployment
for those years by 20 percent. The department may compare the county's average
unemployment rate in the prior three years to 120 percent of the state's
average unemployment rate based on official unemployment figures published by
the department of employment security;
(ii) MSA. A metropolitan statistical area, as
defined by the Office of Federal Statistical Policy and Standards, United
States Department of Commerce, in which the average level of unemployment for
the calendar year immediately preceding the year in which an application is
filed under chapter 82.60 RCW exceeds the average state unemployment for such
calendar year by 20 percent; or
(iii) CEZ. Beginning July 1, 1993, a
designated community empowerment zone approved under
RCW
43.63A.700.
(g)
(i)
"Eligible investment project" means that portion of an investment project
which:
(A) Is directly utilized to create at
least one new full-time qualified employment position for each $300,000 of
investment on which a deferral is requested; and
(B) Either initiates a new operation, or
expands or diversifies a current operation by expanding, or renovating an
existing building with costs in excess of 25 percent of the true and fair value
of the plant complex prior to improvement. "Improvement" means the physical
alteration by significant expansion, modernization, or renovation of an
existing plant complex, excluding land, where the cost of such expansion, etc.,
exceeds 25 percent of the true and fair value of the existing plant complex
prior to the initiation of the expansion or renovation. The term "improvement"
is further defined to include those portions of an existing building which do
not increase the usable floor space, but is limited to the renovation,
modernization, or any other form of alteration or addition and the equipment
and machinery installed therein during the course of construction. The 25
percent test may be satisfied by considering the value of both the building and
machinery and equipment; however, at least 40 percent of the total renovation
costs must be attributable to the physical renovation of the building structure
alone. "True and fair value" means the value listed on the assessment rolls as
determined by the county assessor for the land, buildings, or equipment for ad
valorem property tax purposes at the time of application; or
(C) Acquires machinery and equipment to be
used for either manufacturing or research and development. The lessor/owner of
the structure is not eligible for a deferral unless the underlying ownership of
the buildings, machinery, and equipment vests exclusively in the same
person.
(ii) "Eligible
investment project" does not include any portion of an investment project
undertaken by a light and power business as defined in
RCW
82.16.010 or investment projects that have
already received deferrals under chapter 82.60 RCW.
(h) "Industrial fixture" means an item
attached to a building or to land. Fixtures become part of the real estate to
which they are attached and upon attachment are classified as real property,
not personal property. Examples of "industrial fixtures" are fuel oil lines,
boilers, craneways, and certain concrete slabs.
(i) "Initiation of construction," in regards
to the construction of new buildings, means the commencement of on-site
construction work.
(j) "Initiation
of construction," in regards to the construction of expanding or renovating
existing structures for the purpose of increasing floor space or production
capacity used for manufacturing and research and development, means the
commencement of new construction by renovation, modernization, or expansion, by
physical alteration.
(k)
"Investment project" means an investment in qualified buildings and qualified
machinery and equipment, including labor and services rendered in the planning,
installation, and construction of the project.
(l) "Manufacturing" has the meaning given in
RCW
82.04.120. Manufacturing, for purposes of the
distressed area deferral program, also includes computer
programming, the production of computer software, and other computer-related
services, but only when the computer programming, production of computer
software, or other computer-related services are performed by a manufacturer as
defined in
RCW
82.04.110 and contribute to the production of
a new, different, or useful substance or article of tangible personal property
for sale; and the activities performed by research and development laboratories
and commercial testing laboratories. (Chapter 16, Laws of 2010.)
(m) "Operationally complete" means the
project is capable of being used for its intended purpose as described in the
application.
(n) "Person" has the
meaning given in
RCW
82.04.030. "Person" does not include the
state of Washington or its institutions. "Person" can be either a lessee or a
lessor, who can apply separately for individual investment projects at the same
site, if they comply with the other requirements of this chapter. The
lessor/owner of the structure is not eligible for deferral unless the
underlying ownership of the buildings, machinery, or equipment vests in the
lessor/owner.
(o) "Qualified
buildings" are limited to structures used for manufacturing and research and
development activities. "Qualified buildings" include plant offices and
warehouses if such facilities are essential or an integral part of a factory,
mill, plant, or laboratory. "Office" means space used by professional,
clerical, or administrative staff. For plant office space to be a qualified
building, its use must be essential or integral to the manufacturing or
research and development operation. Office space that is used by supervisors
and their staff, by technicians, by payroll staff, by the safety officer, and
by the training staff are examples of qualifying office space. "Warehouse"
means facilities used for the storage of raw materials or finished
goods.
(p) "Qualified employment
position" means a permanent full-time employee employed in the eligible
investment project during the entire tax year. The "entire tax year" means the
full-time position is filled for a period of 12 consecutive months. "Full time"
means at least 35 hours a week, 455 hours a quarter, or 1,820 hours a
year.
(q) "Qualified machinery and
equipment" means all new industrial and research fixtures, equipment, and
support facilities that are an integral and necessary part of a manufacturing
operation or research and development operation. "Qualified machinery and
equipment" includes: Computers, software, data processing equipment, laboratory
equipment; manufacturing components such as belts, pulleys, shafts and moving
parts; molds, tools and dies; operating structures; and all equipment used to
control or operate machinery. It also includes machinery and equipment acquired
under the terms of a long- or short-term lease by the recipient. "New" as used
in this subsection means either new to the taxing jurisdiction of the state or
new to the certificate holder.
(r)
"Recipient" means a person receiving a tax deferral under this
program.
(s) "Research and
development" means the development, refinement, testing, marketing, and
commercialization of a product, service, or process before commercial sales
have begun. As used in this subsection, "commercial sales" excludes sales of
prototypes or sales for market testing if the total gross receipts from such
sales of the product, service, or process do not exceed
$1,000,000.
(502)
Issuance of deferral certificate. The department will issue a
sales and use tax deferral certificate for state and local sales and use taxes
due under chapters 82.08, 82.12, and 82.14 RCW for an eligible investment
project. The department will state on the certificate the amount of tax
deferral for which the recipient is eligible. Recipients must keep track of how
much deferral is taken.
(503)
Eligible investment amount. Recipients are eligible for a deferral
on investment used to create employment positions.
(a) Total qualifying project costs must be
examined to determine the number of positions associated with the project.
Total qualifying project costs are divided by 300,000, the result being the
qualified employment positions. This is the number of positions used as the
hiring benchmark at the end of year three. The qualified employment positions
are reviewed in the third year, following December 31st of the year the project
is operationally complete. If the recipient has failed to create the requisite
number of positions, the department will issue an assessment under subsection
(511) of this rule. Buildings that will be used partly for manufacturing or
research and development and partly for other purposes are eligible for a
deferral on a proportionate basis. Subsection (504) of this rule explains the
procedure for apportionment.
(b)
Qualified employment positions does not include those persons hired in excess
of the ratio of one employee per required dollar of investment for which a
deferral is granted. In the event an employee is either voluntarily or
involuntarily separated from employment, the employment position will be
considered filled if the employer is either training or actively recruiting a
replacement employee so long as the position is not actually vacant for any
period in excess of 30 consecutive days.
(504)
Apportionment of costs between
qualifying and nonqualifying investments. The deferral is allowable only
in respect to investment in the construction of a new building or the expansion
or renovation of existing buildings directly used in manufacturing, research
and development, or commercial testing laboratories.
(a) Where a building(s) is used partly for
manufacturing or research and development, or commercial testing and partly for
purposes, which do not qualify for deferral under this rule, the deferral will
be determined by apportionment of the total project costs. The applicable tax
deferral will be determined by apportionment according to the ratio of the
square footage of that portion of the building(s) directly used for
manufacturing or research and development purposes bears to the square footage
of the total building(s).
Apportionment formula:
Click to view
image
Percent Eligible x Total Project Costs = Eligible Costs.
"Total Project Costs" means cost of multipurpose buildings and
other improvement costs associated with the deferral project. Machinery and
equipment are not included in this calculation. Common areas, such as hallways
and bathrooms, are not included in the square feet figure for either the
numerator or the denominator. The cost of the common areas is multiplied by the
percent eligible to determine the portion of the common area that is eligible
for deferral.
Eligible Tax Deferred = Eligible Cost x Tax
Rate.
(b) Qualified
machinery and equipment is not subject to apportionment.
(505)
Leased equipment. The
amount of tax deferral allowable for leased equipment is the amount of the
consideration paid by the recipient to the lessor over the initial term of the
lease, excluding any period of extension or option to renew, up to the last
date for repayment of the deferred taxes. After that date the recipient must
pay the appropriate sales taxes to the lessor for the remaining term of the
lease.
(506)
Application
procedure and review process. An application for sales and use tax
deferral under this program must be made prior to the initiation of
construction and the acquisition of equipment or machinery. Persons who apply
after construction is initiated or finished or after acquisition of machinery
and equipment are not eligible for the program.
(a) Application forms may be obtained from
the department's website at dor.wa.gov, or by contacting the department at
360-705-6705.
(b) The department
will verify the information contained in the application and either approve or
disapprove the application within 60 days. If approved, the department will
issue a tax deferral certificate. If disapproved, the department will notify
the applicant as to the reason(s) for disapproval. The U.S. Post Office
postmark or fax date will be used as the date of application.
(c) The applicant may seek administrative
review of the department's refusal to issue a certificate pursuant to the
provisions of WAC
458-20-100 (Informal
administrative reviews), within 30 days from the date of notice of the
department's refusal, or within any extension of such time granted by the
department. The filing of a petition for review with the department starts a
review of departmental action.
(507)
Unemployment criteria. For
purposes of making application for tax deferral and of approving such
applications, the statewide and county unemployment statistics last published
by the department will be used to determine eligible areas. The department will
update the list of eligible areas by county, on an annual basis.
(508)
Use of the certificate. A
tax deferral certificate issued under this program is for the use of the
recipient for deferral of sales and use taxes due on each eligible investment
project. Deferral is limited only to investment in qualified buildings or
qualified machinery and equipment as defined in subsection (501) of this rule.
Thus, sales and use taxes cannot be deferred on items that do not become part
of the qualified buildings, machinery, or equipment.
The tax deferral certificate is to be used in a manner similar
to that of a resale certificate as set forth in WAC
458-20-102, Resale certificates.
The certificate holder must provide a copy of the tax deferral certificate to
the seller at the time goods or services are purchased. The seller will be
relieved of the responsibility for collection of the sales or use tax upon
presentation of the certificate. The seller must retain a copy of the
certificate as part of its permanent records for a period of at least five
years. A blanket certificate may be provided by the certificate holder and
accepted by the seller covering all such purchases relative to the eligible
project. The seller is liable for business and occupation tax on all tax
deferral sales. The deferral certificate is to defer the taxes of the
recipient. For example, the deferral is not to be used to defer the taxes of
the persons with whom the recipient does business, persons the recipient hires,
or employees of the recipient.
(509)
Project operationally
complete. An applicant must provide the department with the estimated
cost of the investment project at the time the application is made. Following
approval of the application and issuance of a tax deferral certificate, a
certificate holder must notify the department, in writing, when the value of
the investment project reaches the estimated cost as stated on the tax deferral
certificate.
(a) If a certificate holder has
reached its level of estimated costs and the project is not operationally
complete, the certificate holder may request an amended certificate stating a
revised amount upon which the deferral of sales and use taxes is requested.
Requests must be mailed or faxed to the department.
(b) The certificate holder must notify the
department in writing when the construction project is operationally complete.
The department will certify the date on which the project was operationally
complete. The recipient of the deferral must maintain the manufacturing or
research and development activity for eight years from this date.
(c) The recipient will be notified in writing
of the total amount of deferred taxes, the date(s) upon which the deferred
taxes must be paid, and any reports required to be submitted in the subsequent
years. If the department disallows all or any portion of the amount of sales
and use taxes requested for deferral, the recipient may seek administrative
review of the department's action pursuant to the provisions of WAC
458-20-100, within 30 days from
the date of the notice of disallowance.
(510)
Reporting and monitoring
procedure. Requirement to submit annual reports. Each recipient of a
sales and use tax deferral must submit a report to the department on December
31st of each year during the repayment period until the tax deferral is repaid.
The report must be made to the department in a form and manner prescribed by
the department. The report must contain information regarding the actual
employment related to the project and any other information required by the
department. If the recipient fails to submit a report or submits an inadequate
or falsified report, the department may declare the amount of deferred taxes
outstanding to be immediately assessed and payable. An inadequate or falsified
report is one that contains material omissions or contains knowingly false
statements and information.
(511)
Repayment of deferred taxes. The recipient must begin paying the
deferred taxes in the third year after the date certified by the department as
the date on which the construction project has been operationally completed.
(a) The first payment will be due on December
31st of the third calendar year after such certified date, with subsequent
annual payments due on December 31st of the following four years, with amounts
of payment scheduled as follows:
Repayment Year
|
|
Percentage of Deferred Tax Waived
|
1
|
(Year certified operationally complete)
|
0%
|
2
|
|
0%
|
3
|
|
0%
|
4
|
|
10%
|
5
|
|
15%
|
6
|
|
20%
|
7
|
|
25%
|
8
|
|
30%
|
(b) The
department may authorize an accelerated repayment schedule upon request of the
recipient. Interest will not be charged on any taxes deferred under this part
during the period of deferral, although other penalties and interest applicable
to delinquent excise taxes may be assessed and imposed for any delinquent
payments during the repayment period pursuant to chapter 82.32 RCW.
(c) Taxes deferred on the sale or use of
labor directly applied in the construction of an investment project for which
deferral has been granted need not be repaid, provided eligibility for the
granted tax deferral has been perfected by meeting all of the eligibility
requirements, based upon the recipient's annual December 31st reports and any
other information available to the department. The recipient must establish, by
clear and convincing evidence, the value of all construction and installation
labor for which repayment of sales tax is sought to be excused. Such evidence
must include, but is not limited to: A written, signed, and dated itemized
billing from construction/installation contractors or independent third party
labor providers which states the value of labor charged separately from the
value of materials. This information must be maintained in the recipient's
permanent records for the department's review and verification. In the absence
of such itemized billings in its permanent records, no recipient may be excused
from repayment of sales tax on the value of labor in an amount exceeding 30
percent of its gross construction or installation contract charges. The value
of labor for which an excuse from repayment of sales or use tax may be received
will not exceed the value which is subject to such taxes under the general
provisions of chapters 82.08 and 82.12 RCW.
(d)
Failure of investment project to
satisfy general conditions. If, on the basis of the recipient's annual
report or other information, including that submitted by the department of
employment security, the department finds that an investment project is not
eligible for tax deferral for reasons other than failure to create the required
number of qualified employment positions, the department will declare the
amount of deferred taxes outstanding to be immediately due. For example, a
reason for disqualification would be the facility is not used for a
manufacturing or research and development operation.
(e)
Failure of investment project to
satisfy required employment positions. If, on the basis of the
recipient's annual report or other information, the department finds that an
investment project has been operationally complete for three years and has
failed to create the required number of qualified employment positions, the
department will assess interest but not penalties, on the deferred taxes for
the project. The department will assess interest at the rate provided for
delinquent excise taxes under
RCW
82.32.050, retroactively to the date of the
date of deferral. No penalties will be assessed.
(f) The department of employment security
makes and certifies to the department all determinations of employment and
wages required under this subsection, per request.
(g) Any action taken by the department to
assess interest or disqualify a recipient for tax deferral will be subject to
administrative review pursuant to the provisions of WAC
458-20-100 (Informal
administrative reviews). The filing of a petition for review with the
department starts a review of departmental action.
(512)
Debt not extinguished because of
insolvency or sale. Insolvency or other failure of the recipient does
not extinguish the debt for deferred taxes nor will the sale, exchange, or
other disposition of the recipient's business extinguish the debt for the
deferred taxes. Transfer of ownership does not terminate the deferral. The
deferral is transferred, subject to the successor meeting the eligibility
requirements of this chapter, for the remaining periods of the deferral. Any
person who becomes a successor (see WAC
458-20-216) to such investment
project will be liable for the full amount of any unpaid, deferred taxes under
the same terms and conditions as the original recipient.
(513)
Disclosure of information.
Applications and reports received by the department under chapter 82.60 RCW are
not confidential and are subject to disclosure. (RCW
82.60.100.)
Statutory Authority:
RCW
82.32.300 and
82.01.060(2).
10-21-052, § 458-20-24001A, filed 10/14/10, effective 11/14/10; 06-17-007,
§ 458-20-24001A, filed 8/3/06, effective 9/3/06; 04-01-127, §
458-20-24001A, filed 12/18/03, effective 1/18/04. Statutory Authority:
RCW
82.32.300. 01-12-041, § 458-20-24001A,
filed 5/30/01, effective 6/30/01.