Current through Register Vol. 24-06, March 15, 2024
(1)
Introduction. This rule
explains the provisions of chapter 82.23B RCW, which imposes an oil spill
response tax and an oil spill administration tax. Both of these taxes are
imposed on the privilege of receiving crude oil or petroleum products through
any of the following three ways at:
* A marine terminal in this state from a waterborne vessel or
barge operating on the navigable waters of this state;
* A bulk oil terminal within this state from a tank car, as of
July 1, 2015;
* A bulk oil terminal within this state from a tank car or a
pipeline, as of April 1, 2018.
RCW
82.23B.020.
Examples found in this rule identify a number of facts and then
state a conclusion. These examples should be used only as a general guide. The
tax results of other situations must be determined after a review of all the
facts and circumstances.
(2)
Definitions. For purposes of
this rule, the following terms as found in
RCW
82.23B.010 will apply.
(a)
Barrel. "Barrel" means a
unit of measurement of volume equal to forty-two United States gallons of crude
oil or petroleum product.
(b)
Bulk oil terminal. "Bulk oil terminal" means a facility of any
kind, other than a waterborne vessel, that is used for transferring crude oil
or petroleum products from a tank car or pipeline into the terminal's storage
tanks.
(c)
Crude oil.
"Crude oil" means any naturally occurring hydrocarbons coming from the earth
that are liquid at twenty-five degrees Celsius and one atmosphere of pressure
including, but not limited to, crude oil, bitumen and diluted bitumen,
synthetic crude oil, and natural gas well condensate.
(d)
Department. "Department"
means the department of revenue.
(e)
Marine terminal. "Marine
terminal" means a facility of any kind, other than a waterborne vessel, that is
used for transferring crude oil or petroleum products to or from a waterborne
vessel or barge.
(f)
Navigable waters. "Navigable waters" means those waters of the
state and their adjoining shorelines that are subject to the ebb and flow of
the tide, including the Columbia and Snake rivers.
(g)
Person. "Person" or
"company," herein used interchangeably, means any individual, receiver,
administrator, executor, assignee, trustee in bankruptcy, trust, estate, firm,
copartnership, joint venture, club, company, joint stock company, business
trust, municipal corporation, political subdivision of the state of Washington,
corporation, limited liability company, association, society, or any group of
individuals acting as a unit, whether mutual, cooperative, fraternal,
nonprofit, or otherwise and the United States or any instrumentality thereof.
RCW
82.04.030.
(h)
Petroleum product.
"Petroleum product" means any liquid hydrocarbons at atmospheric temperature
and pressure that are the product of the fractionation, distillation, or other
refining or processing of crude oil, and that are used as, use-able as, or may
be refined as fuel or fuel blendstock including, but not limited to, gasoline,
diesel fuel, aviation fuel, bunker fuel, and fuels containing a blend of
alcohol and petroleum.
(i)
Pipeline. "Pipeline" means an interstate or intrastate pipeline
subject to regulation by the United States Department of Transportation under
49 C.F.R. Part 195 in effect as of April 1, 2018, through which oil moves in
transportation, including line pipes, valves, and other appurtenances connected
to line pipes, pumping units, and fabricated assemblies associated with pumping
units.
(j)
Previously taxed
product. "Previously taxed product" means any crude oil or petroleum
product which has been received in this state in a manner subject to the tax
imposed by chapter 82.23B RCW and upon which such tax has been paid.
(k)
Tax. "Tax" means the oil
spill response and oil spill administration taxes imposed by chapter 82.23B
RCW.
(l)
Taxpayer.
"Taxpayer" means the person owning crude oil or petroleum products immediately
after receipt of the same into the storage tanks of a marine or bulk oil
terminal in this state and who is liable for the tax.
(m)
Tank car. "Tank car" means a
rail car, the body of which consists of a tank for transporting
liquids.
(n)
Waterborne
vessel or barge. "Waterborne vessel or barge" means any ship, barge, or
other watercraft capable of traveling on the navigable waters of this state and
capable of transporting any crude oil or petroleum product in quantities of ten
thousand gallons or more for purposes other than providing fuel for its motor
or engine.
(3)
Imposition, base, and reporting of tax. The taxes are imposed on
the privilege of receiving crude oil or petroleum products at:
* A marine terminal within this state from a waterborne vessel
or barge operating on the navigable waters of this state;
* A bulk oil terminal within this state from a tank car,
beginning July 1, 2015; or
* A bulk oil terminal within this state from a pipeline,
beginning April 1, 2018.
The tax is levied upon the owner of the crude oil or petroleum
products immediately after receipt of the same into the storage tanks of a
marine or bulk oil terminal from a tank car, pipeline or waterborne vessel or
barge. RCW 82.23B.-020.
(a)
Tax
is due. The tax is due for payment together with the timely filing of
the tax return on which it is reported, on or before the twenty-fifth day of
the month following the month in which the taxable receipt of crude oil or
petroleum products occurs. If receipt commences on the last day of any month
and extends past midnight, the receipt at the election of the marine or bulk
oil terminal may be deemed to have occurred during the following month or may
be deemed to have been completed at midnight on the last day of the month on
which it was commenced.
(b)
Compute the number of net barrels. The number of barrels received
must be computed as the net barrels received by the marine or bulk oil terminal
operator. Net barrels must be computed by using an industry standard adjustment
to gross barrels received to account for variations in temperature and content
of water or other nonpetroleum substances.
(4)
Tax collection by the marine or
bulk oil terminal operator. Unless the taxpayer has been issued a direct
payment certificate as provided in subsection (5) of this rule, the operator of
any marine or bulk oil terminal located in this state where crude oil or
petroleum products are received and placed into storage tanks is responsible
for the collection of the tax from the taxpayer.
(a)
Personally liable for the
tax. Failure to collect the tax from the taxpayer and remit it to the
department will cause the marine or bulk oil terminal operator to become
personally liable for the tax, unless the terminal operator has billed the
taxpayer for the tax or notified the taxpayer in writing of the imposition of
the tax.
(i) The tax has been billed to a
taxpayer when an invoice, statement of account, or notice of imposition of the
tax is mailed or delivered to the taxpayer by the marine or bulk oil terminal
operator within the operator's normal billing cycle, and separately states the
dates of receipt, rate of tax, number of barrels received and placed into
storage tanks, and the amount of the tax required to be collected by the
operator.
(ii) A taxpayer has been
notified of the imposition of the tax when, within twenty days from the date of
receipt, a notice is mailed or delivered to the taxpayer, or to an agent of the
taxpayer authorized to accept notices of this type other than the marine or
bulk oil terminal operator. This notice must separately state the dates of
receipt, rate of tax, number of barrels received into storage tanks, and the
amount of the tax required to be collected by the operator.
(iii) Marine and bulk oil terminal operators
must maintain a record of the names and addresses of taxpayers billed for the
tax, or in cases where taxpayers are sent written notification of the
imposition of the tax, the names and addresses of the persons to whom notice is
sent. Such records must indicate those persons billed or notified from whom the
tax has been collected. On request, the records must be made available for
inspection by the department.
(b)Tax must be held in trust.
The tax collected must be held in trust by the marine or bulk oil terminal
operator until paid to the department. The tax is due from the operator, along
with reports and returns on forms prescribed by the department, within
twenty-five days after the end of the month in which the tax is
collected.
(c)
Use of direct
payment certificate. A marine or bulk oil terminal operator who relies
in good faith on a direct payment certificate (see subsection (5) of this rule)
issued to a taxpayer is relieved from any liability for the collection of the
tax from the taxpayer. A marine or bulk oil terminal operator is likewise
relieved from liability for collection of the tax from a taxpayer if the
terminal operator relies in good faith on a current roster of certificate
holders that bears the name of a taxpayer and is published by the
department.
(5)
Direct payment to the department. Any taxpayer may apply to the
department in writing for permission to pay the tax directly to the department.
On approval of the department, any taxpayer making application for direct
payment will be issued a direct payment certificate entitling the taxpayer to
pay the tax directly to the department.
(a)
Qualifications for direct payments. To qualify for direct payment,
the taxpayer must meet the following requirements:
(i) The taxpayer must be registered with the
department.
(ii) The taxpayer must
file a bond with the department in an amount equal to two months' estimated
liability for the tax, but in no event less than ten thousand dollars. The bond
must be executed by the taxpayer as principal, and by a corporation approved by
the department and authorized to engage in business as a surety company in this
state, as surety. Two months' estimated tax liability shall be the total number
of barrels received and placed into the storage tanks of a marine or bulk oil
terminal in this state by the taxpayer during the two months in the immediately
preceding twelve-month period, with the highest number of barrels received
multiplied by the total tax rate. If the department determines that the result
of the foregoing calculation does not represent a fair estimate of the actual
tax liability that the taxpayer is expected to incur, it may set the bond
requirement at such higher amount as the department determines in its judgment
will secure the payment of the tax. The bond requirement may be waived with
proof satisfactory to the department that the taxpayer has sufficient assets
located in this state to ensure payment of the tax.
(iii) The taxpayer must be current in all of
its tax obligations to the state having filed all returns as required by Title
82 RCW.
(b)Review
of bond amount. The department may, from time to time, review the amount
of any bond filed by a taxpayer possessing a direct payment certificate and
may, with twenty days' written notice to the taxpayer, require such higher bond
as the department determines to be necessary to ensure payment of the tax. The
filing of a substitute bond in such higher amount is a condition to the
continuation of the right to make direct payment under this rule.
(c)
A direct payment certificate can be
revoked. The department may revoke a direct payment certificate issued
under this rule if the taxpayer fails to maintain a current registration, fails
to file a substitute bond within twenty days of a written request by the
department, or becomes delinquent in the payment of the tax.
(d)
Taxpayers holding a direct payment
certificate. The department maintains a current roster of all taxpayers
who have a direct payment certificate. Copies of the roster are made available
on a monthly basis to any interested person requesting to be placed on the
roster subscription list. Requests to be placed on the roster subscription list
should be mailed to Taxpayer Services, Department of Revenue, P.O. Box 47478,
Olympia, WA 98504-7478.
(e)
Application for a direct payment certificate. Applications for a
direct payment certificate must be in writing and must include the name and
address of the applicant, the applicant's registration number if currently
registered, and the name and phone number of a contact person. The application
must also contain a statement that if the application is approved, the taxpayer
consents to public disclosure of the taxpayer's direct payment certificate
status, including any subsequent revocation of any issued certificates.
Certificate applications should be mailed to Taxpayer Account Administration,
Attn: Oil Spill Tax Unit, Department of Revenue, P.O. Box 47476, Olympia, WA
98504-7476.
(6)
Exemption - Previously taxed crude oil or petroleum products. The
oil spill response and administration taxes apply only to the first receipt of
crude oil or petroleum products at a marine or bulk oil terminal in this state.
RCW
82.23B.030 provides an exemption for the
subsequent receipt at a marine or bulk oil terminal in this state of previously
taxed crude oil or petroleum products. This exemption applies even though the
previously taxed crude oil or petroleum products are refined or processed prior
to subsequent transportation and receipt.
(7)
Presumption. Any receipt of
crude oil or petroleum products at a marine terminal within this state from a
water-borne vessel or barge operating on the navigable waters of this state, at
a bulk oil terminal within this state from a tank car or pipeline, is presumed
to be subject to the tax.
(a)
Certification of previous payment of the oil spill tax. A person
may rebut this presumption of taxability by documenting that the crude oil or
petroleum products received were previously subject to the tax. The proof may
be in the form of information on the invoice or a written certification from
the seller at the time of shipment or exchange. The written certification must
be in substantially the form below, stating that all or a specific, stated
portion of the crude oil or petroleum products were previously subject to the
tax or, in the alternative, stating the amount of tax remitted or to be
remitted to the state respective to the crude oil or petroleum products being
sold.
Certification of Previous Payment of the Oil Spill Tax
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(b)
Example 1. Crude oil is
received at a marine terminal in this state and the tax is remitted. The crude
oil is then commingled with previously untaxed crude oil from a source not
involving a receipt at a marine terminal, such as a receipt from a tank car.
The commingled crude oil is refined into two petroleum products such as jet
kerosene and unleaded gasoline. The petroleum products are then placed on
separate waterborne vessels or barges and are shipped to a second marine
terminal in this state. The receipt of petroleum products at the second marine
terminal is presumed to be subject to the tax. The presumption may be rebutted
by proof of what portion of each product of the shipment was previously subject
to tax. Proof may be made by means of information on the invoice or a written
certification that substantially conforms with the requirements set forth in
subsection (7)(a) of this rule.
(c)
Example 2. Petroleum product is received at a marine terminal in
this state and the tax is remitted. Substances that were not previously subject
to the tax are added to the petroleum product resulting in an increase of the
volume of the petroleum product. The petroleum product is then placed on a
waterborne vessel or barge and received at a second marine terminal in this
state. At time of receipt at the second marine terminal, the tax is due on the
incremental increase in volume of the petroleum product caused by the addition
of the substances.
(8)
Export credit. A credit is allowed against the tax for any crude
oil or petroleum products exported from or sold for export from the state.
RCW
82.23B.040.
(a)
Credit for previously taxed
product. Any person who exports or sells for export any previously taxed
product may take an export credit. When the person taking the export credit is
not the person who remitted the tax, the proof of payment of tax may be made by
information on an invoice or written certification that substantially conforms
to the requirements set forth in subsection (7)(a) of this rule.
(b)
When product is exported. A
person exports product when the person actually transports the product beyond
the borders of this state for purposes of sale, or delivers the product to a
common carrier for delivery and subsequent sale or use at a point outside this
state. Documentation of export is described in (d) of this
subsection.
(c)
Sales of
previously taxed product for export. A person sells product for export
when, as a necessary incident to a contract of sale, the seller agrees to, and
does deliver previously taxed product:
(i) To
the buyer at a destination outside this state;
(ii) To a carrier consigned to and for
transportation to a destination outside this state;
(iii) To the buyer alongside or aboard a
vessel or other vehicle of transportation under circumstances where it is clear
that the process of exporting the product has begun; or
(iv) Into a pipeline for transportation to a
destination outside this state.
In all circumstances, there must be a certainty of export
evidenced by some overt step taken in the export process. A sale for export
will not necessarily be deemed to have occurred if the product is merely in
storage awaiting shipment, even though there is reasonable certainty that the
product will be exported. The intention to export, as evidenced for example, by
financial and contractual relationships, does not indicate certainty of export
if the product has not commenced its journey outside this state. The product
must actually enter the export stream. Sales of petroleum products by delivery
into the fuel tank of a vessel or other vehicle in quantities greater than one
hundred gallons will be considered placed into the export stream, provided the
vessel or vehicle is immediately destined for a point outside this state and
the seller obtains and keeps the documentary evidence discussed in (d) of this
subsection.
(d)
Certificate of export. A person who takes the credit for export
must show that the previously taxed product was exported or sold for export. An
export or a sale for export may be shown by obtaining and keeping any of the
following documentary evidence:
(i) A bona
fide bill of lading in which the seller is the shipper/consignor and by which
the carrier agrees to transport the product to the buyer at a destination
outside this state; or
(ii) A
written certification in substantially the following form:
Certificate of Export
I hereby certify that the crude oil or petroleum products
specified herein, purchased by or transferred to the undersigned from (seller
or transferor), have been received into the export stream and are for export
for sale or use outside Washington state. I will become liable for any tax
credit granted (seller or transferor) pertaining to any crude oil or petroleum
products that are not so exported outside Washington state. This certificate is
given with full knowledge of, and subject to the legally prescribed penalties
for fraud.
Registration No ......... Type of Business .......
(If applicable)
Firm Name ............ Registered Name .......
(If different)
Authorized Signature ............................
Title .........................................
Identity of Product ..............................
(Kind and amount by volume)
Date ..............; or
(iii) Documents consisting of:
(A) Purchase orders or contracts of sale
which show that the seller is required to place the product into the export
stream, e.g., "f.a.s. vessel"; and
(B) Local delivery receipts, tripsheets,
waybills, warehouse releases, etc., reflecting how and when the product was
delivered into the export stream; and
(C) When available, records showing that the
products were packaged, numbered, or otherwise handled in a way that is
exclusively attributable to products sold for export.
(e)
Circumstances when
credit is not available. Only the export or sale for export of crude oil
or petroleum products will qualify for the export credit. Crude oil or
petroleum products are not eligible for the export credit if, prior to export,
they are subject to further processing or used as ingredients in other
compounds unless the resulting products are themselves crude oil or petroleum
products.
(f)
Location
exchange agreement. Crude oil or petroleum products delivered to
purchasers in other states pursuant to location exchange agreements do not
qualify for the export credit unless the crude oil or petroleum products were
previously subject to the tax, and credit has not yet been taken. A location
exchange agreement is any arrangement where crude oil or petroleum products
located in this state are exchanged through an accounts crediting system, or
any other method, for like substances located in other states. Any person
acquiring previously taxed product in this state for which no credit has been
taken may claim a credit on any such product subsequently exported or sold for
export, provided all of the requirements set forth in subsections (8) and (9)
of this rule have been met.
(g)
Maintenance of records. Persons claiming the export credit must
maintain records necessary to verify that the qualifications for taking the
credit have been met. For this purpose any person claiming a credit who
maintains those records required by WAC
458-20-19301
(Multiple activities tax credit), subsection (9), will be considered to have
satisfied the requirements of this subsection.
(9)
Amount of credit. The amount
of the credit is equal to the tax previously paid on the crude oil or petroleum
product exported or sold for export and for which credit has not already been
taken. In no event will a credit be allowed in excess of the tax paid on the
product exported or sold for export.
(a)
Credit for amount billed or written on certification. If the
person claiming the credit is not the taxpayer, the credit will be equal to
that portion of the tax billed on an invoice or shown on a written
certification that substantially conforms with the requirements set forth in
subsection (7)(a) of this rule which relates to the particular product exported
or sold for export.
To determine the amount of tax reflected on an invoice that
relates to a particular product exported or sold for export, it may be
necessary to convert the tax paid from a rate per barrel to a rate per gallon
or some other unit of measurement. This conversion is computed by taking the
total amount of tax paid on an invoice for a particular product and dividing
that figure by the total quantity of the product expressed in terms of the unit
of measurement used for export. The credit is then computed by multiplying the
converted rate times the quantity of product exported or sold for
export.
(b)
Accounting methods for determining credit for commingled products.
When the product exported is previously taxed product commingled with untaxed
product a person claiming the export credit may compute the amount of
previously taxed product using one of the following methods:
(i) First-in, first-out method. Under this
method the export credit is computed by treating existing inventory as sold
before later acquired inventory.
(ii) Average of tax paid method. Under this
method, the export credit is determined by calculating the average rate of tax
paid on all inventory. This method requires computing the tax by making
adjustments in the rate of tax paid on all products on hand as they are removed
from or added to storage.
(iii) Any
other method approved by the department.
(c)Use of selected method. The
use of one of the methods set forth in this subsection (9) to account for tax
paid on commingled crude oil or petroleum products constitutes an election to
continue using the method selected. Once selected, no change in accounting
method is permitted without the prior consent of the department.
(d)
Examples. The following
examples show how to compute the credit.
(i)
Example 3. A petroleum products distributor purchases 100 barrels
each of premium unleaded gasoline and regular unleaded gasoline. The invoice
from the refiner separately states that the invoice includes $5.00 of tax for
each of the two types of products. The distributor pays the invoiced amount and
later sells 2,000 gallons of the premium unleaded and 4,000 gallons of the
regular unleaded to a retailer located outside Washington. To compute the
amount of credit on the export sales, the distributor must convert the tax paid
from barrels to gallons. Since there are 42 US gallons in a barrel and 200
barrels purchased, the number of gallons equals 8400 (42 × 200). The per
gallon tax paid on both products is equal to .119 cents per gallon ($10.00 /
8400). The distributor would be eligible for credit equal to $2.38 for the
premium unleaded (2,000 × $.00119) and $4.76 for the regular unleaded
(4,000 × $.00119).
(ii)
Example 4. A petroleum products distributor purchases 100 barrels
of unleaded gasoline on which the tax has been remitted for a portion. The
invoice for the unleaded separately states that the total price includes $4.00
of tax. This previously taxed product is commingled with 30 barrels of other
previously untaxed gasoline. The distributor sells 2,940 gallons of commingled
product to a retailer for sale outside Washington. The tax paid on the
previously taxed product is equal to .095 cents per gallon ($4.00 / 4200).
Since the exported product has been blended with product that has not been
taxed, only 76.9% of the exported product is eligible for credit (100 / 130).
The credit is $2.15 (2,940 × .769 × $.00095).
(iii)
Example 5. A petroleum
distributor purchases 100 barrels of gasoline and receives from the seller an
invoice that states that the tax has been paid on 90% of the shipped product.
The distributor exports the 100 barrels. The petroleum distributor may claim an
export credit of $4.50. (90% of 100 barrels equals 90 barrels times the tax
rate of $.05 equals $4.50.)
(iv)
Example 6. A petroleum distributor purchases 100 barrels of
unleaded gasoline from refinery A and later purchases 100 barrels from refinery
B. The distributor stores all of its unleaded gasoline in a single storage
tank. The invoice from refinery A separately states the amount of tax on the
gasoline as $5.00 and the refinery B invoice states the tax as $4.00. The
distributor pays the two invoiced amounts and sells 2,100 gallons of the
commingled unleaded to a retailer located outside Washington. The distributor
then purchases 100 more barrels of unleaded gasoline from distributor C.
Distributor C's invoice separately states the tax as $3.00. Following payment
of the invoice, the distributor exports an additional 2,100 gallons of
unleaded. The distributor could choose to calculate the tax using one of the
methods of accounting described in (b) of this subsection.
(A) Under the first-in, first-out method, the
distributor would treat all 4,200 gallons sold as if it was the unleaded
gasoline purchased from refinery A. Under this method, the credit would be
equal to .119 cents per gallon ($5.00 / 4,200) or $5.00 total ($.00119 ×
4,200).
(B) Under the average of
tax paid method the distributor would recompute the tax paid on average for the
entire commingled amount, making adjustments as gasoline is sold or gasoline is
added. Prior to the addition of the purchases from refinery B or distributor C,
the rate would be .119 cents per gallon ($5.00 / 4,200). Following the addition
of the 100 barrels from refinery B, the tank contains 8,400 gallons. The rate
of tax would now be .107 cents per gallon (($5.00 + $4.00) / 8,400). Out of
this amount 2,100 gallons is exported in the first sale. The credit for this
sale would be equal to $2.25 ($.00107 × 2,100).
(10)
Credit for
use of petroleum products. A person having paid the tax imposed by
chapter 82.23B RCW may claim a refund or credit for the following:
(a) The use of petroleum products as a
consumer for a purpose other than as a fuel. For this purpose, the term
consumer shall be defined as provided in
RCW
82.04.190; or
(b) The use of petroleum products as a
component or ingredient in the manufacture of an item which is not a
fuel.
(c) The amount of refund or
credit claimed may not exceed the amount of tax paid by the person making such
claim on the petroleum products so consumed or used.
Statutory Authority:
RCW
82.23B.050 and
82.32.300. 02-16-016, §
458-20-260, filed 7/26/02, effective 8/26/02; 92-24-049, § 458-20-260,
filed 11/30/92, effective 12/31/92. Statutory Authority:
RCW
82.23B.050. 92-10-006, § 458-20-260,
filed 4/24/92, effective 5/25/92.