Current through Register Vol. 24-06, March 15, 2024
(1)
Introduction. This rule describes the tire fee imposed under
RCW
70A.205.405 and the studded tire fee imposed
under RCW
46.37.427. This rule also describes how
business and occupation (B&O), sales, and use taxes apply to tire fees,
battery core charges and core deposits or credits, including the exemptions
described in
RCW
82.08.036 and
82.12.038.
(a)
Other rules that may be
relevant. Readers may want to refer to other rules for additional
information, including those in the following list:
(i) WAC
458-20-228 Returns, payments,
penalties, extensions, interest, stays of collection.
(ii) WAC
458-20-278 Returned goods,
defective goods-Motor vehicle lemon law.
(b)
Examples. This rule contains
examples that 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 of the facts and
circumstances.
(2)
Tire fee.
(a)
What is the
tire fee? The tire fee as described in
RCW
70A.205.405 is a one-dollar fee collected by
the seller from the buyer on every retail sale of each new replacement vehicle
tire. If new tires are leased, the fee must be collected once at the beginning
of the lease.
(b)
How do I
report the tire fee? A seller must report on the excise tax return the
number of new replacement vehicle tires sold. Tire sellers may retain 10
percent of the fee and must remit the remainder to the department of revenue
(department). As a result, the amount that must be reported and paid to the
department is the number of new replacement vehicle tires sold during the tax
reporting period multiplied by 90 cents.
(c)
What if the seller fails to collect
the fee or does not pay the fee on time? The seller is personally liable
for payment of the fee, whether or not the fee is collected from the buyer. Any
seller who appropriates or converts the fee collected to their own use or to
any use other than the payment of the fee by the due date, minus the 10 percent
retained, is guilty of a gross misdemeanor. Interest and penalties apply to
late payments.
(d)
What
happens if a buyer fails to pay the fee? The tire fee, until paid by the
buyer to the seller or the department, is considered a debt from the buyer to
the seller. Any buyer who refuses to pay the fee is guilty of a
misdemeanor.
(e)
Is sales tax
imposed on the tire fee? No. The measure of the sales tax does not
include the tire fee. See
RCW
82.08.036.
(f)
Is the 10 percent amount retained
by the seller subject to B&O tax? Yes. The seller must report the
retained amount as gross income under the service and other activities tax
classification on the excise tax return.
(g)
What tires are subject to the tire
fee? All new replacement vehicle tires are subject to the tire fee.
Refer to RCW 70A.205.015 for the
definition of "vehicle."
(i) Examples of
vehicles for which new replacement tires are subject to the fee include:
(A) Automobiles;
(B) Trucks;
(C) Recreational vehicles;
(D) Trailers;
(E) All-terrain vehicles (ATVs);
(F) Agricultural vehicles, such as tractors
or combines;
(G) Industrial
vehicles, such as forklifts;
(H)
Construction vehicles, such as loaders or graders; and
(I) Golf carts.
(ii) Bicycles, wheelbarrows, and hand trucks
are examples of devices to which the new replacement tire fee does not
apply.
(iii) The tire fee does not
apply to the sale of retreaded vehicle tires. Nor does it apply to tires
provided free of charge under the terms of a recall or
warranty.
(h)
May I
refund the fee if a tire is returned? If a customer returns the
purchased new tire and the entire selling price is refunded to the customer,
the one-dollar tire fee is likewise refundable. The refunded amount may be
claimed on the excise tax return in the same manner as refunded sales tax. If
the seller does not refund the full sales price to the customer, the one-dollar
fee is not refundable.
(i)
Does the tire fee apply on sales to the federal government or Indians and
Indian tribes? The tire fee is not imposed on sales to the federal
government and need not be collected by the seller. The tire fee does not apply
to sales of tires delivered to enrolled members or tribes in "Indian country."
For information on sales to the federal government, see WAC
458-20-190 Sales to and by the
United States and certain entities created by the United States-Doing business
on federal reservations-Sales to foreign governments, and for sales to Indians
and Indian tribes, see WAC
458-20-192 Indians-Indian
country.
(j)
If the sale is
exempt from sales tax, is the tire fee due? Statutory exemptions from
sales tax do not apply to the tire fee. The tire fee is due on every retail
sale of a new replacement tire whether or not sales tax is
due.
(3)
Studded
tire fee.
(a)
What is the
studded tire fee? The studded tire fee as described in
RCW
46.37.427 is a five dollar fee imposed on the
retail sale of each new tire sold that contains studs. The seller will collect
the fee from the buyer. For the purpose of this subsection, "new tire sold that
contains studs" means a tire that is manufactured for vehicle purposes and
contains metal studs, and does not include bicycle tires or retreaded vehicle
tires.
(b)
Who remits the
studded tire fee to the department? The seller collects the five dollar
fee from the buyer and holds it in trust until paid to the department; however,
the seller may retain 10 percent of the fee collected.
(c)
What if the seller fails to collect
the fee or does not pay the fee on time? Interest and penalties, as
described in subsection (2)(c) of this rule also apply to the studded tire
fee.
(d)
What happens if a
buyer fails to pay the fee? As with the tire fee, a buyer who refuses to
pay the fee is guilty of a misdemeanor. See subsection (2)(d) of this
rule.
(e)
Is sales tax
imposed on the tire fee? No. The seller is collecting the fee as an
agent for the state and thus the measure of sales tax does not include the
studded tire fee. For additional information on taxpayers acting as collecting
agents, see WAC
458-20-195 Taxes,
deductibility.
(f)
Is the 10
percent amount retained by the seller subject to B&O tax? Yes. As
with the tire fee, the seller must report the retained amount as gross income
under the service and other activities tax classification on the excise tax
return.
(g)
Is the studded
tire fee refundable if the tire is returned? If a new studded tire is
returned, the studded tire fee is handled the same as the tire fee as described
in subsection (2)(h) of this rule.
(h)
Does the studded tire fee apply to
tires sold to the federal government or Indians and Indian tribes? With
respect to these sales, the studded tire fee is handled the same as the tire
fee described in subsection (2)(i) of this rule.
(i)
If the sale is exempt from sales
tax, is the studded tire fee due? As with the tire fee described in
subsection (2)(j) of this rule, statutory exemptions from sales tax do not
apply to the studded tire fee.
(4)
Core deposits or credits - Battery
core charges.
(a)
Definitions. For purposes of this rule, the following definitions
apply:
(i)
Core deposits or
credits. "Core deposits or credits" means the amount representing the
value of returnable products such as batteries, starters, brakes, and other
products with returnable value added for purposes of recycling or
remanufacturing.
(ii)
Battery
core charge. "Battery core charge" refers to a core deposit, not less
than five dollars, that a seller by law must retain when a retail purchaser has
no used battery to exchange or trade in. A buyer may return within 30 days of
the purchase with a used battery of equivalent size and claim the core charge
amount. See
RCW
70A.205.515 and
70A.205.520.
(b)
How is tax calculated when the
buyer receives a core deposit or credit? Retail sales and use taxes do
not apply to consideration received in the form of core deposits or credits
when a purchaser exchanges or trades in a core for recycling or
remanufacturing. Therefore, the measure of the sales or use tax may be reduced
by the amount of the core deposit or credit. See
RCW
82.08.036 and
82.12.038. The core deposit and
credit exemptions apply only to the retail sales and use taxes. There is no
equivalent exemption or deduction for B&O tax purposes. Therefore, the
amount reported under the appropriate B&O tax classification must include
the value of core deposits or credits.
(c)
Examples.
(i)
Example 1. A customer
purchases at retail a new replacement battery and reconditioned starter,
providing the seller with a battery core and a starter core in exchange. The
selling price of the new battery, including the battery core charge, is $60.00.
The customer is allowed a $5.00 credit because a battery core is exchanged,
meaning the cost of the battery to the customer, excluding sales tax, is
$55.00. The selling price of the starter is $50.00. The seller allows a $3.00
credit for the starter core, meaning the cost to the customer, excluding sales
tax, is $47.00. Retailing B&O tax is due upon the total value of cash plus
core value, in this case $110.00, or $60.00 plus $50.00. However, the $8.00 of
core deposits or credits may be deducted from the measure of the retail sales
tax under RCW 82.08.036. Thus, retail sales
tax is due on $102.00, or $55.00 plus $47.00.
(ii)
Example 2. The seller in
Example 1 delivers the starter and battery cores accepted in the exchange to
wholesalers. A starter wholesaler issues a refund and a battery wholesaler
issues a credit memorandum to be applied against future wholesale battery
purchases. The return of the used products by the auto parts store for
recycling or remanufacturing and subsequent receipt of a refund or credit for
the core deposit or credit is not considered taxable consideration for purposes
of the B&O tax.
Statutory Authority:
RCW
82.32.300,
82.01.060(2),
70.95.630, and
70.95.640. 09-19-136, §
458-20-272, filed 9/22/09, effective 10/23/09. Statutory Authority:
RCW
82.32.330,
82.01.060(2), and
34.05.230. 06-12-017, §
458-20-272, filed 5/26/06, effective
6/26/06.