Current through Register Vol. 24-06, March 15, 2024
(1)
Introduction. Under chapter 82.23A RCW (hereinafter referred to as the "law"),
a petroleum product tax is imposed upon the wholesale value of petroleum
products in this state with specific credits and exemptions provided. The tax
is an excise tax upon the privilege of first possessing petroleum products in
this state. The tax is administered by the department of revenue.
(a) Chapter 82.23A RCW is administered
exclusively under this rule. The application of the petroleum product tax with
the exceptions noted below, is the same as the application of the hazardous
substance tax explained in WAC
458-20-252(1)(c).
(b) The petroleum product tax is imposed upon
any possession of petroleum products in this state by any person who is not
expressly exempt of the tax. However, it is the intent of the law that the
economic burden of the tax should fall only upon the first such possession in
this state just like the hazardous substance tax.
(2) Definitions. For purposes of this rule
the following definitions will apply.
(a)
"Tax" means the petroleum product tax imposed under chapter 82.23A
RCW.
(b) "Petroleum product" means
any plant condensate, lubricating oil, gasoline, aviation fuel, kerosene,
diesel motor fuel, benzol, fuel oil, residual fuel oil, asphalt base, and every
other product derived from the refining of crude oil, but the term does not
include crude oil or liquefiable gases.
(c) "Possession" means control of a petroleum
product located within this state and includes both actual and constructive
possession.
(i) "Control" means the power to
sell or use a petroleum product or to authorize the sale or use by
another.
(ii) "Actual possession"
occurs when the person with control has physical possession.
(iii) "Constructive possession" occurs when
the person with control does not have physical possession.
(d) "Previously taxed petroleum product"
means a petroleum product in respect to which the petroleum product tax has
been paid and that has not been remanufactured or reprocessed in any manner
(other than mere repackaging or recycling for beneficial reuse) since the tax
was paid.
(e) "Wholesale value" is
the tax measure or base. It means the fair market value determined by the
wholesale selling price at the place of use of similar products of like quality
and character.
(i) For purposes of determining
the tax for petroleum products introduced at the rack, the wholesale value is
determined when the petroleum product is removed at the rack unless the removal
is to a properly licensed petroleum products exporter for direct delivery to a
destination outside of the state. For all other cases, the wholesale value is
determined upon the first nonbulk possession in the state.
(ii) In cases where no sale has occurred,
wholesale value means the fair market wholesale value, determined as nearly as
possible according to the wholesale selling price at the place of use of
similar substances of like quality and character. In such cases, the wholesale
value shall be the "value of the products" as determined under the alternate
methods set forth in WAC
458-20-112.
(f) "Selling price" has the same meaning as
provided in WAC
458-20-252(2)(h).
(g) "State," for purposes of the credit
provisions of the petroleum product tax, means:
(i) A state of the United States other than
Washington, or any political subdivision of such other state;
(ii) The District of Columbia;
(iii) Any foreign country or political
subdivision thereof; and
(iv)
Territories and possessions of the United States.
(h) "Rack" means a mechanism for delivering
petroleum products from a refinery or terminal into a truck, trailer, rail-car,
or other means of nonbulk transfer. For purposes of this definition:
(i) "Nonbulk transfer" means a transfer of a
petroleum product that does not meet the definition of "bulk transfer" in
(h)(ii) of this subsection;
(ii)
"Bulk transfer" means a transfer of a petroleum product by pipeline or vessel;
and
(iii) "Terminal" means a
petroleum product storage and distribution facility that has been assigned a
terminal control number by the internal revenue service, is supplied by
pipeline or vessel, and from which certain petroleum products are removed at a
rack.
(3) Tax
rate and measure. The tax is imposed upon the privilege of possession of a
petroleum product in this state.
(a) The tax
rate is thirty one-hundredths of one percent (.003). Starting July 1, 2021, the
rate will be decreased from thirty one-hundreds of one percent (.003) to
fifteen one-hundreds of one percent (.0015).
(b) The tax measure or base is the wholesale
value of the petroleum product, as defined in this rule.
(c) The tax will apply for first possessions
of any petroleum products in all periods after its effective date unless the
department notifies taxpayers in writing of the department's determination that
the pollution liability reinsurance program trust account contains a sufficient
balance to cause a moratorium on the tax application. The department will again
notify taxpayers in writing if and when the account balance requires
reapplication of the tax.
(4) Exemptions. The following are expressly
exempt from the tax:
(a) Any successive
possessions of any previously taxed petroleum products are exempt in precisely
the manner as the same exemption for the hazardous substance tax. (Additional
information is provided in WAC
458-20-252(4)(a).)
If the tax is paid by any person other than the first person having taxable
possession of a petroleum product, the amount of tax paid shall constitute a
debt owed by the first person having taxable possession to the person who paid
the tax.
(b) Any possession of a
petroleum product by a natural person for use of a personal or domestic nature
rather than a business nature is exempt in precisely the manner as the same
exemption for the hazardous substance tax. (Additional information is provided
in WAC 458-20-252(4)(b).)
(c) Any possessions of the following
substances are tax exempt:
(i) Natural gas, or
petroleum coke;
(ii) Liquid fuel or
fuel gas used in processing petroleum;
(iii) Petroleum products that are exported
for use or sale outside this state as fuel.
(iv) The exemption for possessions of
petroleum products for export sale or use as fuel may be taken by any person
within the chain of distribution of such products in this state. To perfect its
entitlement to this exemption the person possessing such product(s) must take
from its buyer or transferee of the product(s) a written certification in
substantially the following form:
Certificate of Tax Exempt Export Petroleum Products
I hereby certify that the petroleum products specified herein,
purchased by or transferred to the undersigned, from (seller or transferor),
are for export for use or sale outside Washington state as fuel. I will become
liable for and pay any petroleum product tax due upon all or any part of such
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 and tax evasion.
Registration No. . ............................
(If applicable)
Type of Business .............................
Registered Name .............................
(If different)
Authorized Signature .............................
Title .............................
Identity of Petroleum Product
.............................
(Kind and amount by volume)
Date: ....................
(v) Each successive possessor of such
petroleum products must, in turn, take a certification in this form from any
other person to whom such petroleum products are sold or transferred in this
state. Failure to take and keep such certifications as part of its permanent
records will incur petroleum product tax liability by such sellers or
transferors of petroleum products.
(vi) Persons in possession of such petroleum
products who themselves export or cause the exportation of such products to
persons outside this state for further sale or use as fuel must keep the proofs
of actual exportation required by WAC
458-20-193C, parts A or B.
Carriers who will purchase fuel in this state to be taken out-of-state in the
fuel tanks of any ship, airplane, truck, or other carrier vehicle will provide
their fuel suppliers with this certification. Then such carriers will directly
report and pay the tax only upon the portion of such fuel actually consumed by
them in this state. (With respect to fuel brought into this state in fuel tanks
and partially consumed here, information regarding the credit provisions is
provided in WAC
458-20-252(5)(b).)
(vii) Blanket export exemption certificates
may never be accepted in connection with petroleum products exchanged under
exchange agreements.
(d)
Any possession of petroleum products packaged for sale to ultimate consumers.
This exemption is limited to petroleum products that are prepared and packaged
for sale at usual and ordinary retail outlets. Examples are containerized motor
oil, lubricants, and aerosol solvents.
(5) Credits. There are two distinct kinds of
tax credits against liability which are available under the law.
(a) A credit may be taken in the amount of
the petroleum product tax upon the value of fuel which is carried from this
state in the fuel tank of any airplane, ship, truck, or other vehicle. The
credit is applied in precisely the same manner as the hazardous substance tax
in WAC 458-20-252(5)(b).
The same form of certification as used for the fuel-in-tanks
hazardous substance tax credit in WAC
458-20-252(5)(b)(vi)
may be used.
(b) A credit
may be taken against the tax owed in this state in the amount of any other
state's petroleum product tax that has been paid by the same person measured by
the wholesale value of the same petroleum product tax.
(i) In order for this credit to apply, the
other state's tax must be significantly similar to Washington's tax in all its
various respects. The taxable incident must be on the act or privilege of
possessing petroleum products and the tax must be of a kind that is not
generally imposed on other activities or privileges; the tax purpose must be to
fund pollution liability insurance; and the tax measure must be stated in terms
of the wholesale value of the petroleum products, without deductions for costs
of doing business, such that the other state's tax does not constitute an
income tax or added value tax.
(ii)
The credit is applied in precisely the same manner as the state credit for
hazardous substance tax in WAC
458-20-252(5)(c).
The amount of the credit shall not exceed the petroleum product tax liability
with respect to that petroleum product.
(6) General administration and tax reporting.
The general administrative and tax reporting provisions for the hazardous
substance tax contained in WAC
458-20-252(8) through
(14) apply as well for the petroleum product
tax of this rule in precisely the same manner except the references to
"hazardous substance(s)" or "substance(s)" should be replaced with the words,
"petroleum products."
(7)
Expiration date. The petroleum product tax expires July 1, 2030.