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WAC 135 Extracting natural products.  
SOURCE DOCUMENT DETER. NO DATE OF ISSUE DESCRIPTION
       
WAC: 458-20-135 02/01/10 These rules all refer to resale certificates. Proposed action is to add standard language to recognize reseller permits for sales made on or after January 1, 2010.
  458-20-135   04/17/1986 Extracting natural products.Updated 6/17/00.
         
       
RCW: 82.04.100   1987 Extractor.
  82.04.130   1967 Commercial or industrial use.
  82.04.230   1993 Tax upon extractors.
  82.04.250   1993 Tax on retailers.
  82.04.270   1994 Tax on wholesalers, distributors.
  82.04.290   1995 Tax on selected business services, financial businesses, or other business or service activities.
  82.04.440   1994 Persons taxable on multiple activities--Credits.
  82.04.260   2007 update Tax on manufacturers and processors of various foods and by-products -- Research and development organizations -- Travel agents -- Certain international activities -- Stevedoring and associated activities -- Low-level waste disposers -- Insurance agents, brokers, and solicitors--Hospitals -- Commercial airplane activities -- Timber product activities -- Canned salmon processors.
  82.04.280   1994 Tax on printers, publishers, highway contractors, extracting or processing for hire, cold storage warehouse or storage warehouse operation, insurance general agents, radio and television broadcasting, consumer as defined in RCW 82.04.190(6)--Cold storage warehouse defined--Storage warehouse defined--Periodical or magazine defined.
  82.08.020   1992 Tax imposed---Retail sales--Retail car rental.
  82.08.02565   1999 Exemptions--Sales of machinery and equipment for manufacturing, research and development, or a testing operation--Labor and services for installation--Exemption certificate--Rules.
  82.12.020   1999 Use Tax -- Imposed.
  82.12.010   1999 Definitions.
  82.12.02565   1999 Exemptions--Machinery and equipment used for manufacturing, research and development, or a testing operation.
  82.16.020   1989 Public utility tax imposed--Additional tax imposed--Deposit of moneys.
         
       
ETA: 3021.2009 2/2/09 A statement of purpose and intent with respect to issues involving the forestry products industry
  3059.2009 2/2/09 Processing meat by-products
  67.04.135 7/15/66 EXTRACTING TAX CLASSIFICATION IN REGARD TO LOGGING OPERATIONS -  This document addresses the taxability of unloading logs onto flat cars.  It is no longer needed. WAC 458-20-13501 (Timber harvest operations) addresses this issue. Cancelled by ETA 2003-3s 07/16/2001
  373.08.171 6/12/70 RETAIL SALES TAX: LOGGING PERFORMED AS AN INCIDENT TO CONSTRUCTION OF PRIVATELY OWNED ROADS - Repealed 7/16/2001
  401.04.135 7/3/70 OYSTER STRING PRODUCTION - These documents all identify specific activities that are considered manufacturing activities.  A number of these activities have been incorporated as examples of manufacturing activities in the revised WAC 458-20-135 (Extracting natural products) or 458-20-136 (Manufacturing, processing for hire, fabricating) as adopted on May 17, 2000.  These examples and the information provided elsewhere in the revised rules provide sufficient guidance to allow the repeal of all of the listed ETAs.  Cancelled by ETA 2003 -1s  6/17/00.
  403.04.135 7/3/70 PROCESSING MEAT BY-PRODUCTS Revised 2/2/09 See ETA 3059.2009
  420.08.12.102.  135 12/31/92 SEEDLINGS USED IN REFORESTATION PROGRAMS -   This document explains that the retail sales and use taxes apply to seedlings used in reforestation programs.  This document is no longer needed because the taxability of seedlings is addressed in WAC 458-20-13501. Cancelled by ETA 2003-3s 07/16/2001
  541.04.45.33. 135/259 2/15/91 TAX LIABILITIES ON FOREST LANDOWNERS AND HARVESTERS:  SALE OF STANDING TIMBER VS. SALE OF LOGS -   This document explains tax-reporting responsibilities associated with two different types of timber sales.  This document is no longer needed because the information was incorporated into WAC 458-20-13501. Cancelled by ETA 2003-3s 07/16/2001
         
       
INDUSTRY GUIDES:   November 2002 Commercial Fishing Guide
         
         
SPECIAL NOTICES:      
Subject Title Reference:      
Agricultural     8/6/09 Taxability of Selling Harvested Mushrooms and Other Forest Products
      04/01/2002 Harvested Mushrooms and Other Forest Products Sales
      01/16/1996 Manufacturer's Sales and Use Tax Exemption - Logging Equipment
      08/06/2000 The Tax Application for Tree and/or Stump Removal from Existing Orchards
Explosives     4/26/2002 Taxability of Sales of Explosives
Timber Products     06/18/2007 Timber Activities - Reduced Business and Occupation Tax Rate
         
       
DIRECTIVE      
         
       
RPM: None      
         
       
WTD: 1 WTD 213 86-263   BUSINESS AND OCCUPATION TAX - AGRICULTURAL EXEMPTION - SHELLFISH EXTRACTING.The raising and harvesting of shellfish is not an agricultural activity for excise tax purposes and is not exempt from business and occupation tax.
  1 WTD 353 86-292   USE TAX - ROAD CONSTRUCTION - EXTRACTED MATERIALS.The extraction and application upon the roadway of materials by a road builder is a use of those materials for use tax purposes.
  1 WTD 353 86-292   USE TAX - ROAD CONSTRUCTION - EXTRACTED MATERIALS - LOGGING ROADS - SALES TAX COLLECTED FROM CUSTOMER.Use tax will not be asserted on the use of extracted materials by persons building logging roads where those persons held a reasonable and good faith belief that they were performing a retail sale and they collected sales tax from their customers on the total charge.
  1 WTD 353 86-292   USE TAX - VALUE OF ARTICLE USED - ROAD CONSTRUCTION - MATERIALS EXTRACTED BUT NOT PROCESSED.Prior to December 28, 1982, under the terms of Excise Tax Bulletin (ETB) 4.8.12.171, use tax is not applied to materials extracted by road builders and used in building roads if the materials are not processed or manufactured.As of that date, under the terms of the ETB as revised, use tax is applicable.Under the ETB it is measured by the cost of extraction.Where cost figures are not available the tax is measured by the retail selling price, as nearly as possible, of similar products.
  2 WTD 143 87-17   EXTRACTING TAX - SELLING PRICE - VALUE - TIMBER - ETB 302.The value of products extracted is determined by the gross proceeds of sales, not the price paid for similar logs.
  7 WTD 273 89-163   B&O TAX - EXTRACTING - FOREST EXCISE TAX.The legislature has expressly stated that tax due under Forest Excise Tax statutes of chapter 84.33 RCW is in addition to B&O tax.
  9 WTD 231 90-108   PUBLIC UTILITY TAX -- MOTOR TRANSPORTATION -- HAULING LOGS -- EXTRACTOR FOR HIRE. Persons performing logging activities for others under a logging contract are extractors for hire.A portion of the income of an extractor for hire from logging contracts attributable to hauling logs is subject to the Motor Transportation Public Utility Tax.
  9 WTD 231 90-108   B&O TAX -- EXTRACTING -- LOGGING ROAD CONSTRUCTION -- CONSTRUCTION CREDITS.Where taxpayer/extractor has purchased a timber contract and builds logging roads, amounts received by the taxpayer as "road building credits" are not credits against the purchase price of the timber contract, but B&O taxable payments for building the logging roads benefiting the seller of the timber contract.
  10 WTD 29 90-234   B&O TAXES -- CONSTRUCTION OF LOGGING ROAD -- EXTRACTING VS. MOTOR TRANSPORTATION -- BILLED ON PER YARD BASIS.The tax consequences of a contract to construct a logging road in connection with a timber harvesting operation do not change solely because the taxpayer computes and bills the contract on a per yard of rock transported basis and/or stockpiles the rock at an intermediate location prior to the actual road construction.
  11 WTD 163 91-110   EXTRACTING B&O TAX -- MOTOR TRANSPORTATION PUT TAX -- LOG HAULING ACTIVITY -- LOG LOADING ACTIVITY -- DELIVERY CONTRACT WITH BOTH ACTIVITIES.Where the taxpayer has a delivery contract to transport logs and the contract necessitates that the taxpayer perform logging and loading activities, the income from the contract is proportionately subject to Extracting B&O tax and Motor Transportation Public Utility Tax.
  11 WTD 177 91-142   LANDOWNER--SALES OF LOGS--B&O TAX--EXTRACTOR--AMOUNT SUBJECT TO TAX.When a landowner retains ownership of timber until it is scaled, the landowner is the extractor and the wholesaler of the timber, and subject to B&O tax on its gross proceeds for the timber.It is allowed a credit for the lesser of the wholesaling or extracting tax under Rule 19301.Accord: ETB 541.
  13 WTD 341 93-187   RETAIL SALES TAX -- EXTRACTOR FOR HIRE -- MOVING OF EARTH -- OPEN-PIT MINE -- REMOVAL OF ORE, WASTE AND OVERBURDEN.The "moving of earth" is a sales taxable activity.However, where a person contracts with the owner to remove ore, waste, and overburden in connection with an open-pit mining operation, the person is performing as an extractor for hire and does not charge sales tax on its charges for performing the extractive services.
  15 WTD 1 94-095   EXTRACTORS -- EXTRACTORS FOR HIRE -- TIMBER -- LOGGING -- DISTINGUISHED.A person is an extractor if he has title to standing timber before the timber is severed from the land, regardless of who actually cuts the timber. A person is an "extractor for hire" where that person (or another person engaged on his behalf) cuts timber and does not take title to the logs until after the timber is severed from the land.
  18 WTD 17 97-183   USE TAX -- ROCK USED IN LOGGING ROAD CONSTRUCTION.When a taxpayer severs rock from the ground, the rock becomes tangible personal property.If the taxpayer is the consumer of the rock, the taxpayer will owe use tax on the value of the rock.
  18 WTD 17 97-183   USE TAX -- ROCK USED IN LOGGING ROAD CONSTRUCTION.The measure of the use tax for the use of rock extracted by a road builder is the total cost of extraction, not merely the taxpayer's costs.
  19 WTD 515 99-325   MANUFACTURING EQUIPMENT AND MACHINERY EXEMPTION - EXTRACTING.Machinery and equipment used for the crushing, and/or blending of rock, sand, stone, gravel, or ore is machinery and equipment used in a manufacturing operation.See RCW 82.04.100.Machinery and equipment used in a manufacturing operation is exempt from retail sales tax if it meets the "used directly" and "majority use" requirements.
  19 WTD 582 99-288   RETAIL SALES TAX -- MANUFACTURING EQUIPMENT AND MACHINERY (M&E) EXEMPTION --EXTRACTING -- MANUFACTURING OPERATION -- WHERE MANUFACTURING OPERATION BEGINS.The use of a loader at a manufacturing site by a producer and seller of ready-mix concrete and sand and gravel products, limited to moving previously quarried but unprocessed materials from stockpiles to the sorting and washing area, is not use in a manufacturing operation.Only those activities that take place after the first screen are considered part of the manufacturing operation.
  19 WTD 804 99-183   USE TAX DEFERRAL - QUALIFYING ACTIVITIES.Mining and transportation activities do not qualify as manufacturing activities.Rock crushing and smelting activities qualify as a manufacturing activity.
  21 WTD 298 00-154ER   RCW 82.04.320: B&O TAX - EXEMPTIONS - RENTALS - LICENSES.The labeling of payments as royalties or rents is not controlling in determining whether the payments are for the rental of real property or for a license or other right involving the use of real property.
  21 WTD 298 00-154ER   RCW 82.04.320: B&O TAX - EXEMPTIONS - RENTALS - LICENSES - MINERAL LEASES.In general, royalties received under a mineral lease are for the grant of the right to extract natural products and are treated as a license, a profit a prendre, or an incorporeal heriditament, not as the rental of real property.
  24 WTD 147 02-0199   B&O TAX: VALUE OF PRODUCTS.All costs, including certain period costs, must be included in the calculation of "value or products."
  24 WTD 151 02-0199R   B&O TAX -- VALUE OF PRODUCTS.All costs, including certain period costs, must be included in the calculation of "value or products."
  31 WTD 24 11-0080 05/31/2012 WAC 458-20-135, WAC 458-20-118; B&O TAX – RENTALS – LICENSES – MINERAL LEASES. Royalties received under a mineral lease are for the grant of the right to extract natural products and are treated as a license or a profit a prendre, not as the rental of real property.
  31 WTD 31 11-0097 05/31/2012 Rule 135; Rule 13501; RCW 82.08.02565; RCW 82.12.02565; RCW 82.04.100. EXTRACTING VERSUS MANUFACTURING - MACHINERY & EQUIPMENT EXEMPTION. Taxpayer’s purchase of a feller buncher was not exempt from deferred sales tax and/or use tax, since taxpayer did not use it directly in a manufacturing operation. Taxpayer only used the feller buncher to fell, cut and take trees, by definition an extracting activity, and not part of the manufacturing operation of cutting, delimbing, and measuring of trees already felled, cut, or taken.
  32 WTD 188 12-0191 09/09/2013 RULE 135; RCW 82.04.2907, RCW 82.04.290: SOURCING THE SALE OF INTANGIBLE PROPERTY – ROYALTIES.  Income from the sale of Alaska individual fishing quotas (IFQs) is subject to the service and other activities B&O tax classification, and as an intangible, is sourced to the domicile of the seller under the doctrine of mobilia sequuntur personam.
       
         
OTHER: