Current through Register Vol. 24-06, March 15, 2024
(1)
(a)
Introduction. This rule explains the retail sales and use tax
exemption, as described in
RCW
82.08.025661 and
82.12.025661, for the construction
of airplane maintenance repair stations operated by an eligible maintenance
repair operator.
(b)
Other
rules that may apply. Readers may also want to refer to additional rules
for further information, including the following:
(i) WAC
458-20-229 Refunds.
(ii) WAC
458-20-267 Annual tax performance
reports for certain tax preferences.
(2)
Definitions. For the
purposes of this rule, the following definitions apply:
(a)
"Airplane maintenance repair
station" has the same meaning as "repair station" adopted by the
National Air Transportation Association and is a maintenance facility that has
a certificate issued by the Federal Aviation Administration under Title 14 of
the Code of Federal Regulations (14 C.F.R.) Part 145 that is engaged in the
maintenance, preventive maintenance, inspection, alteration of airplanes, and
alteration of airplane products.
(b)
"Commercial airplane," as
defined in
RCW
82.32.550(1), is an airplane
certified by the Federal Aviation Administration for transporting persons or
property, and any military derivative of such an airplane.
(c)
"Component," as defined in
RCW
82.32.550(2), means a part
or system certified by the Federal Aviation Administration for installation or
assembly into a commercial airplane.
(d)
"Eligible maintenance repair
operator" means a person classified by the Federal Aviation
Administration as qualified to operate a Federal Aviation Regulation Part 145
certified repair station that is located in a commercial services airport owned
by a county with a population less than 1,000,000 or a commercial services
airport jointly owned by a city and county.
(e)
"Operationally complete"
means constructed to the point of being functionally capable of hosting the
repair and maintenance of airplanes.
(3)
Retail sales or use tax
exemption.
(a) Subject to the
requirements of
RCW
82.08.025661 and this rule, state and local
retail sales and use taxes do not apply to the items and services as described
in (b) of this subsection that are charged or sold to, or purchased or used by:
(i) An eligible maintenance repair operator
engaged in the maintenance of airplanes; or
(ii) A port district, political subdivision,
or municipal corporation, if the new airplane maintenance repair station is to
be leased to an eligible maintenance repair operator engaged in the maintenance
of airplanes.
(b) The
exempt items and services include:
(i) Labor
and services to construct a new airplane maintenance repair station;
(ii) Tangible personal property that will be
incorporated as an ingredient or component during the course of constructing
the new airplane maintenance repair station; and
(iii) Labor and services to install, during
the course of constructing the new airplane maintenance repair station,
building fixtures not otherwise eligible for the exemption under
RCW
82.08.02565.
(c) To qualify for the exemption described in
this rule, the port district, political subdivision, or municipal corporation
must have first entered into an agreement with an eligible maintenance repair
operator to build the new facility, prior to starting construction of the new
facility.
(4)
Remittance application. The exemption described in this rule is a
remittance.
(a) A business claiming the state
and local retail sales or use tax exemption must first pay all applicable state
and local retail sales or use taxes on all purchases qualifying for the
exemption under subsection (3)(b) of this rule.
(b) The business may then file a quarterly
remittance application with the department for the previously paid retail sales
or use tax that is determined by the department to qualify for the exemption.
The remittance form may be sent electronically to the department or to the
mailing address found in (b)(ii) of this subsection.
(i) The remittance application must specify
and separately identify the amount of the exempted state and local retail sales
and use taxes claimed and the qualifying purchases or acquisitions for which
the exemption is claimed, along with any supporting documents required by the
department. Refer to the department's website at dor.wa.gov for documentation
requirements.
(ii) The application
for remittance is titled "Application for Refund or Credit" and is available on
the department's website at dor.wa.gov. You may also contact the telephone
information center at 360-705-6705 or write to the following address:
Attn: New Construction for FAR Part 145
Repair Station Refunds
Taxpayer Account Administration Division
Department of Revenue
P.O. Box 47476
Olympia, WA 98504-7476
(c) Local retail sales and use taxes that
qualify for this exemption are eligible for remittance the first quarter after
construction commences.
(d) State
retail sales and use taxes that qualify for this exemption are eligible for
remittance the later of either:
(i) The date
on which the airplane maintenance and repair station has been operationally
complete for four years; or
(ii)
December 1, 2021.
(e) The
business must provide written notice to the department when the maintenance and
repair station is operationally complete as defined in subsection (2)(e) of
this rule. The notice should be sent electronically to the department or to the
mailing address found in (b)(ii) of this subsection.
(f) The state and local retail sales and use
taxes described in this rule are not eligible for remittance on purchases of
items or services under subsection (3)(b) of this rule that occur on or after
the exemption's expiration date of January 1, 2031.
(5)
Department must determine
eligibility.
(a) The department must
determine eligibility for the exemption based on information provided by the
business and through audit and other administrative records.
(b) The business must retain, in adequate
detail to enable the department to determine whether the equipment or
construction meets the criteria under this rule, construction invoices and
documents including, but not limited to, invoices, proof of tax paid, and
documents describing the location and size of new structures.
(c) By the end of the calendar quarter that
follows the quarter in which the refund application was submitted, the
department will remit qualified exempted amounts to a qualifying business, in
accordance with subsection (4)(c) and (d) of this rule, for local and state
retail sales and use taxes.
(d) The
department may not remit the state portion of the retail sales and use taxes
paid if the business did not report at least 100 average employment positions
with an average annualized wage of $80,000 to the employment security
department for four consecutive calendar quarters, beginning with the first
calendar quarter after the date the facility is issued an occupancy permit by
the local permit issuing authority. The business must provide the department
with the unemployment insurance number provided to the employment security
department for verification of employment requirements.
If a new airplane maintenance repair station owned by a port
district, political subdivision, or municipal corporation is leased to an
eligible maintenance repair operator engaged in the maintenance of airplanes,
only the business lessee, and not the lessor, must meet the employment
requirement described in (d) of this subsection.
(6)
Annual tax performance
report. An eligible maintenance repair operator receiving a remittance
under this rule must electronically file an annual report with the department
in accordance with
RCW
82.32.534. For more information about filing
an annual report, see WAC
458-20-267 and visit the
department's website at dor.wa.gov or contact the telephone information center
at 360-705-6705.