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WAC 136 Manufacturing, processing for hire, fabricating.
SOURCE DOCUMENT DETER. NO DATE OF ISSUE DESCRIPTION
       
WAC: 458-20-136   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.
  458-20-136   05/17/2000

Manufacturing, processing for hire, fabricating.Effective ---6/17/00

WAC 458-20-136 has been revised to address the issue of when the combining or assembly of items is a manufacturing activity.
         
       
RCW: 82.04.040   1961 "Sale," "casual or isolated sale."
  82.04.110   1971 Manufacturer.
  82.04.120   1989 "To manufacture."
  82.04.240   1993 Tax on manufacturers.
  82.04.250   1993 Tax on retailers.
  82.04.270   1994 Tax on wholesalers, distributors.
  82.04.480   1975 Sales in own name--Sales as agent.
  82.04.260   1995/ amended 2008 Tax on buyers, wholesalers, manufacturers, and processors of various foods and by-products--Research and development organizations--Nuclear fuel assemblies--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.
  82.04.450   1983 Value of products, how determined.
  82.04.2403   1994 Manufacturer tax not applicable to cleaning fish
  82.04.337   1987 Exemption- Amounts received by hop growers or dealers for processed hops shipped outside of state
  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.
  82.12.020   1994 Use tax imposed.
  82.12.02565   1999 Exemptions--Machinery and equipment used for manufacturing, research and development, or a testing operation.
  82.14.030   1989 Sales and use taxes authorized--Additional taxes authorized--Maximum rates.
  82.16.050   1994 Deductions in computing tax.
         
       
ETA: 3112.2011   04/29/2011 Processing Perishable Meat Products

The Department issued Excise Tax Advisory (ETA) 3122.2011 Processing Perishable Meat Products. This ETA was originally issued as ETA 2035 in March 2007 to explain who is entitled to the preferential business and occupation (“B&O”) tax rate based on the Washington State Supreme Court decision, Agrilink Foods, Inc. v. Washington State Department of Revenue, 153 Wn.2d 392 (2005).


The following header has been added to this ETA to explain that it does not apply during the period of June 1, 2010 through December 1, 2010.


This ETA applies to periods prior to June 1, 2010 and after December 1, 2010. For the period of June 1, 2010 through December 1, 2010, 2ESSB 6143, Part V, limited the preferential B&O tax rate for processors of perishable meat to specific activities and products. Refer to 2ESSB 6143, Part V, for additional information about these limitations.

  3162.2009   01/14/10 Aerospace "tooling" under Substitute Senate Bill 6828 Substitute Senate Bill (SSB) 6828 (Chapter 81, Laws of 2008) provides a number of incentives for the aerospace industry.  Several of these incentives relate to “tooling” specifically designed for use in manufacturing commercial airplanes or commercial airplane components.  This Excise Tax Advisory (ETA) addresses the Department’s interpretation of this term.  

  3014.2009   2/2/09 Manufacturing contaminant incidentally used for other purposes
  3020.2009   2/2/09 Measure of manufacturing tax on articles produced partly within and partly without the state
  3021.2009   2/2/09 A statement of purpose and intent with respect to issues involving the forestry products industry
  3071.2009   2/2/09 Public Road Construction Materials – Measure of Tax
  3112.2009   2/2/09 Processing Perishable Meat Products
  23.12.136   7/1/66 USE TAX ON ARTICLES MANUFACTURED BY A PUBLIC ROAD CONTRACTOR Revised 2/2/09 See ETA 3071.2009
  25.04.136   7/1/66 MANUFACTURING AND WHAT CONSTITUTES TAXABLE ACTIVITY - 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.
  29.04.136   7/1/66 COOKING CRABS AS MANUFACTURING WITHIN THE STATE - 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.
  75.04.136   7/22/66 MIXING OF INGREDIENTS AS "MANUFACTURING"  - 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.
  81.04.136   7/22/66 MANUFACTURING WHERE PLANT AND MATERIALS USED ARE OWNED BY ANOTHER - The information provided in this document was incorporated into a revised WAC 458-20-136.  Cancelled by ETA 2003 -1s  6/17/00.
  87.04.136   7/22/66 LABOR COSTS PAID BY ANOTHER CORPORATION. -This document is no longer needed.  It explains that in the described situation labor costs paid by the owner of a cannery and cold storage plant to the operator was subject to the processing for hire B&O tax.  The document notes that cannery workmen were not employees of the cannery owner, despite the fact that the amounts received by the operator were the exact amount of all payroll expenses.  WAC 458-20-105 (Employees distinguished from persons engaged in business) provides a more detailed and helpful description of the factors one needs to consider when determining employer/employee status.   In addition, WAC 458-20-136 as adopted in May 2000 explains that persons operating a manufacturing facility owned by another is considered a processor for hire.  Cancelled by ETA 2003 -2s 6/30/00.
  109.04.136   7/29/66 MANUFACTURING CONTAMINANT INCIDENTALLY USED FOR OTHER PURPOSES Revised 2/2/09 See ETA 3014.2009
  155.04.136   8/19/66 THE MANUFACTURING TAX EXEMPTION FOR PRODUCTS SOLD AT WHOLESALE WITHIN THE STATE -The information is incorrect as it does not recognize subsequent legislation regarding the multiple activities tax credits.
  Cancelled by ETA 2003 -0  6/30/99
  172.04.136   8/19/66 STAINING OF LUMBER CONSTITUTES MANUFACTURING - 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  6/30/00.
  174.04.136   8/26/1966 SPLITTING OF PEAS AS MANUFACTURING.  The document fails to recognize the special manufacturing B&O tax rate provided specifically for these activities.  Cancelled by ETA 2003 -0  6/30/99.
  241.04.136   9/16/66 CHERRY PROCESSING WHICH INCLUDES BRINE CURING, WASHING, PITTING, SIZING AND SORTING - 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.
  394.04.136   7/3/70 ACTIVITIES FOR HIS OWN USE OR INCIDENTAL TO THE TAXPAYER'S MAJOR ACTIVITY -  This document explains the taxability of miscellaneous income associated with and the use of products manufactured for commercial or industrial while engaging in timber harvest activities.  It is no longer needed because these issues are addressed in WAC 458-20-13501. Cancelled by ETA 2003-3s 07/16/2001
  395.04.136   7/3/70 IN-STATE SALES OF MANUFACTURED RAW SEAFOOD PRODUCTS . The document provides incorrect tax rates and fails to recognize the tax-reporting requirements of the multiple activities tax credit provisions of RCW 82.04.440.  Cancelled by ETA 2003 -0  6/30/99.
  398.04.136   3/1/1993 COMBINING ITEMS TO ACHIEVE A SPECIAL PURPOSE PRODUCT IS MANUFACTURING  - WAC 458-20-136 has been revised to address the issue of when the combining or assembly of items is a manufacturing activity.  Cancelled by ETA 2003 -1s  6/17/00.
  465.04.136   7/17/74 SHEARING STEEL SHEETS & SPLITTING STEEL COILS AS MANUFACTURING.  Simply stating that these activities are manufacturing.  While this information may have been news on July 17th of 1974, it is of little value today.  The tax principles needed to arrive at these decisions are currently provided in the rule. 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.
  466.04.136   7/17/74 ASSEMBLY OF FRUIT BINS AS MANUFACTURING  -Simply stating that these activities are manufacturing.  While this information may have been news on July 17th of 1974, it is of little value today.  The tax principles needed to arrive at these decisions are currently provided in the rule.-  WAC 458-20-136 has been revised to address the issue of when the combining or assembly of items is a manufacturing activity.  Cancelled by ETA 2003 -1s  6/17/00. 
  469.04.136   7/17/74 REROLLING PAPER ROLLS, CUTTING PAPER TO SPECIFIC LENGTHS, EMBOSSING, FOLDING, AND PACKAGING AS MANUFACTURING.  Simply stating that these activities are manufacturing.  While this information may have been news on July 17th of 1974, it is of little value today.  The tax principles needed to arrive at these decisions are currently provided in the rule. 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.
  474.04.136   7/31/74 TAXABILITY OF THE MANUFACTURE OF "REFINERY GAS" - WAC 458-20-121 (Sales of heat or steam—Including production by cogeneration), while not specifically identifying refinery gas, does explain that person who produce their own fuel to generate heat, steam, etc. are subject to B&O tax, even if the fuel is a by-product of a manufacturing process.  Cancelled by ETA 2003 -2s  6/30/00.
  479.12.178/136   7/31/74 USE TAX APPLIED TO MANUFACTURER'S USE OF GOVERNMENT-OWNED TOOLING   The information in this document is incorrect due to subsequent legislation.  Cancelled by ETA 2003 -0  6/30/99.
  2035.04.136   3/16/07 Processing Perishable Meat Products. The purpose of this ETA is to explain who is entitled to the preferential B&O tax rate based on the Washington State Supreme Court decision, Agrilink Foods, Inc. v Washington State Department of Revenue, 153 Wn.2d 392 (2005). The scope of this ETA is limited to manufacturers and sellers of perishable meat products sold at wholesale. Revised 2/2/09 See ETA 3112.2009
       
         
       
INDUSTRY GUIDES:   Jan 2011 Denturists
      Manufacturing Industries
         
         
SPECIAL NOTICES:      
Subject Title Reference:      
Fruit & Vegetable Processors     11/10/2011 Fruit and Vegetable Processors May Qualify for B&O Tax Refund
High Technology     09/15/2011 High Tech B&O Tax Credit Donation
Incentives     09/15/2011 High Tech B&O Tax Credit Donation
Manufacturing      11/18/2010 B&O Credit for Candy Manufacturers Repealed
Seafood Processing     10/26/2010 Changes to the B&O Tax Preferences for Perishable Meat Products and Fruit or Vegetable Products Updated 11/17/10
Orthotic Prosthetic     01/30/1998 Tax Due on Commercial Use of Molds by Orthotic and Prosthetic Manufacturers
      06/26/1998 Business and Occupation Tax Classification and Rate Changes
Manufacturing     08/21/2000 Tax Changes for Manufacturers of Dairy Products
Composting Facilities     8/13/09 Reporting Instructions for Composting Facilities
      03/18/2003 Reporting Instructions for Composting Facilities
Biofuel     06/24/2003 Biofuel Manufacturers
Aerospace/ Incentives     01/15/2004 Aerospace Industry Manufacturer Tax Incentives
Aerospace/ Incentives     03/22/2004 Aerospace Industry Sales & Use Tax Exemption for Computer Hardware, Software & Peripherals
Beef Processors     04/29/2004 B&O Tax Relief for Certain Beef Processors
Aerospace     06/01/2004 Aerospace Industry B&O Tax Credit for Preproduction Development Expenditures
Aerospace/ Incentives     05/12/2004 Aerospace Industry B&O Tax Credit for Property Taxes Paid
Aircraft Prototype     07/16/2004 Aircraft Prototype Exemption
      06/07/2005 Processing Perishable Meat Products
Beef Processors     06/08/2005 Clarification for Certain Beef Processors Impacted by the Ban on American Beef Products
Fruit & Vegetable Processors     06/13/2005 Fruit and Vegetable Processors Tax Exemption
Beer & Wine     8/6/09 Direct Wine Sales to Consumers - New Registration and Tax Collection Requirements
      04/17/2006 Beer and Wine Sales to Retailers
Beer & Wine/ Wine Shipments     05/10/2006 Direct Wine Sales to Consumers - New Registration and Tax Collection Requirements
Timber Products     05/22/2006 Timber Activities - Reduced Business and Occupation Tax Rate
Agricultural     05/25/2006 Dairy Product Processors Receive B&O Tax Exemption
Seafood Processing     05/26/2006 Seafood Processors Receive B&O Tax Exemption
Fruit & Vegetable Processors     05/31/2006 Fruit and Vegetable Processors Tax Exemption - New E-file Requirement
High Technology/ Incentives     06/01/2006 Biotechnology Product & Medical Device Manufacturers - Tax Incentives (Cross Reference 24003)
Incentives/ Manufacturing/ Semiconductor Materials     12/21/2006 Semiconductor Materials Manufacturers Tax Incentives (SHB 3190 Chapter 84, Laws of 2006)
Incentives, Cold Storage Warehouse/ Warehouse   07/03/2007 Processing Plants and Cold Storage Warehouses
Rural County Incentives   07/12/2007 Rural County B&O Tax Credit for New Employees in Manufacturing - Modifications
Wineries   11/09/2007 Wineries May Qualify for B&O Tax Refund - For tax periods beginning January 1, 2003, through June 30, 2005
Wine Shipments   8/6/09 Direct Wine Sales to Consumers - New Registration and Tax Collection Requirements
Biofuel / Vegetable Oil   06/12/2008 Waste Vegetable Oil Exemption
Aerospace   06/13/2008 Tax Incentives for Federal Aviation Regulation Part 145 Repair Stations
Aerospace   06/13/2008 Aerospace Manufacturers Tax Incentives
Aerospace   06/13/2008 Aerospace Tooling Manufacturers Tax Incentives
Energy Efficient Commercial Equipment   06/24/2008 Energy Efficient Commercial Equipment - Sales Tax Incentive for Purchases
Timber Products   06/25/2008 Bio-composite Manufacturing Reduced B&O Tax Rate Restored
Incentives / Manufacturing   06/26/2008 Polysilicon Manufacturers Tax Incentives
Incentives     05/26/2010 Employee B&O Credit for Candy Manufacturers
Manufacturing      05/26/2010 Employee B&O Credit for Candy Manufacturers
Economic Nexus     05/28/2010 New "Economic Nexus" in Washington State May Impact "Foreign Corporations"
Economic Nexus     05/28/2010 New Apportionment Method
Economic Nexus     05/28/2010 Tax Attorneys and CPAs New "Economic Nexus" in Washington State May Impact Your Clients
Economic Nexus     05/28/2010 Registered Out-of-state Businesses Currently not Reporting Income from Service Activities - New Apportionment for Certain Income
Seafood Processing     06/03/2010 Changes to the B&O Tax Preferences for Perishable Meat Products and Fruit or Vegetable Products
Biofuel     06/28/2010 Biofuel Manufacturers - Tax Benefits for Manufacturers of Biodiesel Fuel, Biodiesel Alcohol Fuel, Feedstock and Wood Biomass Fuel
Economic Nexus     09/10/2010 B&O Tax Reporting Requirement Continues After Business Activity Stops (Trailing Nexus)
       
       
DIRECTIVE: None      
         
       
RPM: None      
         
       
WTD: 1 WTD 367 106 Wn 2d 391   BUSINESS AND OCCUPATION TAX - MANUFACTURING - MINIMAL ACTIVITIES. Whether an activity constitutes "manufacturing" as defined for the business and occupation tax by RCW 82.04.120 is not determined by the quantity of the activity or its percentage of the taxpayer's total effort, but by a qualitative comparison of the activity with the statutory definition.
  2 WTD 219 87-45   BUSINESS AND OCCUPATION TAX - MANUFACTURING - COMMERCIAL OR INDUSTRIAL USE - SIGNS.A taxpayer primarily engaged in retailing, which internally produces signs and other display materials for use in its stores, is engaged in manufacturing under the business and occupation tax.
  2 WTD 219 87-45   USE TAX - MANUFACTURED PROPERTY - COMMERCIAL OR INDUSTRIAL USE - SIGNS - DISPLAY MATERIALS.A taxpayer which manufactures signs for its own use in its retail stores is liable for use tax on the "value of the articles so used."
  3 WTD 443 86-295A   B&O TAX -- MANUFACTURER -- PROCESSOR FOR HIRE -- FUNGIBLE GOODS COMMINGLING.Person who produces finished products from materials supplied by customer is a processor for hire, notwithstanding that materials or finished products, due to their fungible nature, are commingled with other materials or finished products in the person's possession.
  4 WTD 141 87-312   B&O TAX - MANUFACTURING - WHAT CONSTITUTES.Cutting, sewing, and assembling materials and hardware to make a new product is manufacturing as defined by RCW 82.04.120.
  5 WTD 179 88-155   B&O TAX -- MANUFACTURING -- HOPS -- PELLETS AND EXTRACT.Raw hops which have been processed into hops pellets and hops extract are "new, different, and useful articles" under the rationale of enumerated case law, because a significant change has been accomplished when the end products are compared with the article before it was subjected to the process.
  5 WTD 179 88-155   B&O TAX -- MULTIPLE ACTIVITIES EXEMPTION -- CONSISTENCY WITH RCW 82.04.440.Because the very language of the multiple activities exemption (i.e., "with respect to . . . manufacturing of the products so sold") required that one look to the individual transactions involved to determine proper tax treatment, no merit found in assertion that RCW 82.04.440 precluded taxpayers (otherwise taxable as wholesalers) from being taxable as manufacturers when goods shipped out-of-state.
  5vWTD 179 88-155   B&O TAX -- EXEMPTION -- MULTIPLE ACTIVITIES -- INVALIDATION.The RCW 82.04.440 multiple activities exemption was ruled unconstitutional in Tyler Pipe Industries, Inc. v. Washington Department of Revenue, 483 U.S. ___, 97 L. Ed 2d 199, 107 S. Ct. 2810 (1987).The issue of remedy was remanded to the Washington Supreme Court.
  5 WTD 241 88-167   B&O TAX -- MANUFACTURING -- WHAT CONSTITUTES.The taxpayer's activity of buying patches and hats and sewing the patches on the hats and silk screening t-shirts for re-sale found to constitute manufacturing for purposes of the B&O tax.Manufacturing includes producing articles for sale from prepared materials by giving them new form, qualities or combinations.
  5 WTD 307 88-180   B&O TAX -- PUBLISHING -- PACKAGING -- MANUFACTURING DISTINGUISHED.A publisher and seller of educational materials does not become a manufacturer simply by packaging some items together as part of a series.To constitute manufacturing, the combining of the items must produce a new, different, or useful substance or article of tangible personal property.
  5 WTD 319 88-186   B&O TAX -- PRINTING AND PUBLISHED -- IN-HOUSE PRINTING -- INSURANCE COMPANY.An insurance company that prints and publishes items for its own use is subject to B&O tax on the costs for materials, labor, and overhead.THIS DETERMINATION HAS BEEN OVERRULED OR MODIFIED IN WHOLE OR PART BY DET.NO. 93-269ER, 14 WTD 153 (1995).
  6 WTD 255 88-303   B&O TAX -- MANUFACTURING -- CONTRACTING WITH OTHERS -- SOFTWARE DISKS AND PACKAGING.The duplicating of software disks and their packaging with documentation into a consumer-useful product results in "a new, different or useful . . . article of tangible personal property" and is thus manufacturing.
  6 WTD 255 88-303   ADMINISTRATIVE LAW -- B&O TAX -- MANUFACTURING -- PROCESSING FOR HIRE -- NONRESIDENT.An administrative agency has no authority to determine constitutionality of the law it administers.The Department may therefore not consider whether the provision in RCW 82.04.110 which exempts nonresidents whose materials are processed for hire in this state from the manufacturing tax is unconstitutional.
  6 WTD 299 88-316   B&0 TAX -- LIABILITY -- RELIANCE ON PRIOR AUDIT.During the period of taxpayer's audit, Washington taxpayers who made and sold products out-of-state were taxable under the Manufacturing classification of the B&O tax for those sales and under the Wholesaling or Retailing classification for their in-state sales.Taxpayers are obligated to inform themselves of tax ramifications of their activities.Prior audit which missed asserting tax on taxpayer's out-of-state sales does not entitle taxpayer to rely on error and escape taxation on those activities in later years.
  6 WTD 321 88-329   B&O TAX -- MANUFACTURING -- INTERMEDIATE SUBSTANCES -- END PRODUCT MANUFACTURED.The manufacturing B&O tax does not apply to the value of each intermediate substance produced during the manufacturing process which then becomes a component of the end product being made for sale.Only if such intermediate substances are withdrawn from the process are their possessions taxable.F.I.D.
  6 WTD 349 88-339   B&O TAX -- EXEMPTION MULTIPLE ACTIVITIES -- NATIONAL CAN -- REFUNDS.Refunds of business and occupation tax paid prior to June 23, 1987 will not be granted if the basis for the refund request is Tyler Pipe v. Washington, 483 U.S. ____, 97 L. Ed 2d 199, 107 S. Ct. 2810 (1987).
  6 WTD 371 88-354   B&O TAX -- MANUFACTURING -- SILK SCREEN PRINTING -- SHIRTS -- NEW, DIFFERENT OR USEFUL.Where taxpayer buys blank shirts and uses a silk screen process to imprint stripes, patterns, or designs on the shirts which are then sold in interstate commerce, the taxpayer's industrial activity produced a new, different or useful product which is subject to Manufacturing B&O tax.
  6 WTD 443 88-379   B&0 TAX -- PROCESSING FOR HIRE -- SERVICE --STORAGE -- MEASURE OF TAX.The activities of blending, processing, and packaging antifreeze and of mixing fuel fall within the classification of "processing for hire." Persons who process for hire are taxable under that classification upon the total charges made therefore, including associated storage, unloading and loading charges.
  7 WTD 43 88-440   B&O TAX -- PROCESSING FOR HIRE -- PACKING OF SEAFOOD.The packing of seafood belonging to others is taxable under the processing for hire classification when performed in conjunction with other processing activities.
  7 WTD 43 88-440   USE TAX -- PACKING MATERIALS -- USE BY PROCESSORS FOR HIRE.The use of articles of tangible personal property solely as packing materials by processors for hire is not subject to use tax.
  7 WTD 49 88-443   B&O TAX -- MANUFACTURING -- EDUCATIONAL KITS.Putting books, tapes, posters and similar items into a plastic container for shipment to customers is not a manufacturing activity.Determination No 88-180, 5 WTD 307 (1988).
  7 WTD 49 88-443   B&O TAX -- MANUFACTURING -- LAMINATING WITH CLEAR PLASTIC.Laminating paper materials with clear plastic through the use of a machine is a manufacturing activity.
  7 WTD 125 Withdrawn See ETA 3133.2012 89-38 01/17/2003 The determination incorrectly applied RCW 82.04.260(4) (formerly
82.04.260(8)) and ETA 3059.2008 to a rendering business whose primary function was to produce
nonperishable products. Because the taxpayer in the determination was not slaughtering, breaking or
processing perishable meat products, it was not entitled to the tax rate contained in RCW 82.04.260(4).
Generally, when a taxpayer is engaged in a process that includes multiple related activities, the
Department will look to the primary activity to determine the appropriate tax classification for the
process. ETA 3059.2008 explains the application of RCW 82.04.260(4) to taxpayers whose primary
activity is to slaughter, break or process perishable meat products.
  7 WTD 305 89-227   B&O TAX -- PRINTING AND PUBLISHING -- IN-HOUSE PRINTING.Persons acting for business purposes as their own printers are subject tax under the manufacturing B&O tax classification upon that activity.Group Health v. Department of Rev., 106 Wn. 2d 391 (1986); Det. No. 88-186, 5 WTD 319 (1988).
  8 WTD 139 89-393   MANUFACTURING -- DEBARKING OF LOGS.The debarking of logs is a manufacturing activity.The fact that this activity does not meet the federal definition of "manufacturing" for the export of logs does not alter the tax consequences in Washington state.
  8 WTD 157 89-406   MANUFACTURING TAX-- DEFINITION -- REMANUFACTURING ENGINES -- INTERSTATE DEDUCTION.The activity of remanufacturing used engine cores into remanufactured engines was found to constitute manufacturing within the definition of RCW 82.04.120 and 458-20-136 (Rule 136).Therefore sales of remanufactured engines sold and delivered outside the state could not be deducted as interstate sales.
  8 WTD 303 89-490   B&O TAX - MANUFACTURING - VALUE OF PRODUCTS - OUT-OF-STATE LEASE - TAXPAYER LEAVES WASHINGTON.When a taxpayer which has manufactured a product in this state for lease out-of-state subsequently removes itself from this state, that taxpayer will be required to continue to report the manufacturing tax measured by the lease payments as long as this state has any taxing jurisdiction over it.If jurisdiction over the taxpayer is to cease before the taxpayer has paid manufacturing tax on a measure equaling at least the product's "cost of production," the taxpayer will owe manufacturing tax on the balance of that measure.
  8 WTD 445 89-546   USE TAX -- MEASURE OF -- PRINTED MATERIALS.A county government which makes and uses printed materials is liable for use tax on the total value of such materials which value includes labor and overhead costs expended in the printing thereof.
  9 WTD 31 89-551   B&O TAXES -- MANUFACTURING -- BYPRODUCT -- MANUFACTURED IN CONJUNCTION WITH A MARKETABLE PRODUCT -- VALUE -- REFINERY GAS.The manufacturing tax applies to both products and byproducts of the same manufacturing process measured by the gross proceeds of sale of all products and byproducts sold, plus the value of any byproduct produced and put to commercial or industrial use.
  10 WTD 37 90-246   MANUFACTURING--FRESH FRUITS AND VEGETABLES--PROCESSOR FOR HIRE--ASEPTIC PROCESSING OF JUICE.A taxpayer who aseptically processes juice, so that it can be stored unrefrigerated for long periods of time, is performing a manufacturing activity in preserving the fruit.However, since this taxpayer is not the owner of the juice, it is taxable as a processor for hire, not as a manufacturer.
  10 WTD 71 90-275   USE TAX -- B&O TAX -- TOOLING -- COMMERCIAL OR INDUSTRIAL USE.Tooling made by a manufacturer who uses it to make airplane parts is subject to use tax and Manufacturing B&O tax.
  10 WTD 123 90-342   B&O TAX -- SOFTWARE -- PROCESSING FOR HIRE -- 20% RULE.A seller of software who hires third parties to copy diskettes and manual will be deemed the party furnishing the original diskettes and manuals notwithstanding the fact that the originals may been shipped directly to the third parties by the parent company of the seller.
  10 WTD 123 90-342   B&O TAX -- SOFTWARE -- PROCESSING FOR HIRE -- 20% RULE.In determining if one who employs a processor for hire furnishes more than 20% of the value of the materials or ingredients manufactured so as to be subject to Manufacturing B&O tax, intangible contributions such as the intelligence on an original computer diskette are to be taken into account.
  10 WTD 305 89-486A   MANUFACTURING B&O TAX -- VALUE OF THE PRODUCT --GROSS PROCEEDS OF SALE -- RENTALS.Where gross proceeds from rentals are not indicative of the true value of the subject matter of the sale, the gross proceeds are not "comparable sales" for purposes of establishing the value of a product for Manufacturing B&O tax.
  11 WTD 423 91-260   B&O TAXES -- MANUFACTURING -- DEFINITION --COMBINING AND ATTACHING PARTS.The combining and attaching of parts to a precast body in addition to installing the hydraulics and electrical systems into . . .machinery constitutes a manufacturing activity.Accord: Det. No. 87-312, 4 WTD 141 (1987).
  11 WTD 423 91-260   MANUFACTURING B&O TAX -- VALUE OF THE PRODUCT -- GROSS PROCEEDS OF SALE-- RENTALS.Where the gross proceeds from rental equipment are not indicative of the true value of the equipment being rented, gross rental proceeds should not be used to determine the value of a product for Manufacturing B&O tax.Accord: Det. No. 89-486A, 10 WTD 305 (1990).
  11 WTD 423 91-260   B&O TAXES -- MANUFACTURING -- DEFINITION --REPAIRING.The owner's activity of replacing worn out sorting bars into its rental equipment does not constitute a separate manufacturing activity.The labor and materials applied merely restore or prolong the utility of an existing article of tangible personal property.Accord: ETB 213; Det. No. 89-406, 8 WTD 157 (1989) distinguished.
  11 WTD 547 92-340   B&O TAX -- MANUFACTURING -- CONTRACTING WITH OTHERS -- SOFTWARE DISKS AND PACKAGING.The production of software disks and their packaging results in "a new, different or useful . . . article of tangible personal property" and is thus manufacturing.
  12 WTD 77 92-034   MANUFACTURING TAX -- DEFINITION -- MODEL BOAT KITS.The activity of combining hundreds of component parts with assembly instructions in order to produce easy-to-assemble model kits is taxable under the manufacturing tax classification on the gross proceeds of sale derived from those kits.Accord: ETB 298: Dist.: Det. No. 88-443, 7 WTD 49 (1988); Det. No. 88-180, 5 WTD 307 (1988).
  12 WTD 233 Withdrawn See ETA 3133.2012 92-231 09/28/2012 The taxpayer in this determination created gift baskets that contained
various individually wrapped food items. The determination correctly reached a conclusion that this
activity was not manufacturing. However, WAC 458-20-136 (Manufacturing, processing for hire,
fabricating.) was subsequently amended to clarify various factors that the Department considers in
determining whether an activity such as creating gift baskets is manufacturing. The determination does
not address these factors and has caused taxpayers confusion. For this reason, the Department has
determined that it is in the best interests of taxpayers that this determination be withdrawn.
  13 WTD 18 91-020   B&O TAX - MANUFACTURING - NONRESIDENT CORPORATION - MATERIALS PROCESSED FOR HIRE IN WASHINGTON.A foreign nonresident company will not be taxable as a manufacturer when it contracts to have materials processed for hire in this state.
  13 WTD 18 91-020   B&O TAX - PROCESSING FOR HIRE - MATERIALS SUPPLIED IN LARGE BY CUSTOMER.A taxpayer will be taxable as a processor for hire when it completes the assembly of manufactured galley systems shipped in from [Europe] by a foreign affiliate, using materials furnished by the foreign affiliate and supplying only the incidental fastening materials to complete the assembly, so that the value of material provided by it is less than 5% of the overall sales price for any one galley.
  13 WTD 18 91-020   THIS DETERMINATION HAS BEEN OVERRULED OR MODIFIED IN WHOLE OR PART BY DET.NO. 01-006,
20 WTD 124 (1999).
  14 WTD 92 94-255   MANUFACTURING TAX -- DEFINITION -- COMPRESSING HAY FOR SHIPMENT.The business activity of purchasing and compressing hay for shipping purposes is not a manufacturing activity because it does not result in a new, different or useful substance.
  14 WTD 180 94-015   MANUFACTURING B&O TAX -- VALUE OF PRODUCT -- GROSS PROCEEDS OF SALE.Engineering drawings incorporated into the manufacture of circuit boards are materials or ingredients of the final product whose value is measured by the gross proceeds of sale of the circuit boards and not by the cost basis of the engineering itself.
  15 WTD 19 94-115   B&0 TAX -- RETAIL SALES TAX -- SERVICE -- DEMONSTRATION -- CATER -- TRUE OBJECT.The classification of receipts from manufacturers to demonstrate their products and provide samples to potential customers is determined by the true object of the transaction.If the true object is a marketing activity, the receipts are taxable under the catch-all "service and other" business and occupation tax classification.
  16 WTD 18 94-244ER   MANUFACTURING -- PACKAGING -- COMBINING ITEMS TO ACHIEVE A SPECIAL PURPOSE -- ANALYSIS UNDER ETB 398.Absent new legislation, case law, or regulations, the 1993 revision to ETB 398 will be used exclusively to determine the tax consequences of combining items to achieve a special purpose product; the Department, in revising the ETB, considered and weighed all of the manufacturing/packaging cases that had been previously decided.
  16 WTD 18 94-244ER   MANUFACTURING v. PACKAGING -- COMBINING ITEMS TO ACHIEVE A SPECIAL PURPOSE. When Taxpayer has components manufactured to its specifications in Germany, including the stamping of its name on each piece, and has these components shipped in bulk to its Washington location where it packages the components in sets of six without modifying them.Taxpayer is engaged in mere packaging, and not manufacturing for B&O tax purposes.
  16 WTD 43 95-170   MANUFACTURING TAX -- DEFINITION -- PROCESSING FOR HIRE -- SIGNIFICANT CHANGE -- SORTING & COMPACTING SHEET METAL.The activity of sorting and compacting loose sheet metal into cubes for others is processing for hire if the sorting and compacting results in a "significant change" in the product.
  17 WTD 112 97-236   B&O TAX CREDITS -- MANUFACTURING -- DISTRESSED AREAS -- INTERNET SERVICES.Merely providing Internet services, such as creating Web pages, without producing tangible personal property for sale, or for commercial or industrial use does not qualify a person for the B&O tax credits program for distressed areas.
  18 WTD 26 98-110   B&O TAX -- MANUFACTURING - MAJOR COMPONENTS -- MINOR COST OF ASSEMBLY.The physical assembly of a motor and a pump constitute manufacturing because a "new, different and useful" product has been produced, even though the cost in time and money of such assembly is minimal when compared with the cost of its major components.
  18 WTD 26 98-110   B&O TAX -- MANUFACTURING -- PHYSICAL ASSEMBLY OF COMPONENTS -- ETB 398 --APPLICABILITY.ETB 398 is applicable when there is the combination and/or packaging of individual components, and not when various components are physically assembled in this state.While the source of components is one factor to be considered under ETB 398 in order to determine whether an activity is manufacturing, the source of components is not a factor when there is actual physical assembly.
  18 WTD 402 98-190   B&O TAX - PERISHABLE MEAT PRODUCTS. A person who slaughters and processes poultry is not selling the same processed meat product when he adds other foods items to the poultry to produce new or different food products, such as chicken Kiev or chicken marsala for example.Therefore, the person does not qualify for the special B&O tax classification and rate contained in RCW 82.04.260(7).Instead, the manufacturing B&O tax rate and classification found in RCW 82.04.270 applies.
  18 WTD 402 98-190   WHOLESALING B&O TAX -PERISHABLE MEAT PRODUCTS. Perishable meat products that are not manufactured or processed by a wholesaler must be perishable when sold in this state by the wholesaler in order for the special B&O tax classification and rate contained in RCW 82.04.260(7) to apply to the wholesale sales.
  19 WTD 212 98-224   B&O TAX -- PROCESSING FOR HIRE OR MANUFACTURING -- AGENCY SOFTWARE -- FULFILLMENT CENTER. Taxpayer's claim of agency on sales of computer software to customers was not recognized where Taxpayer failed to establish all of the requirements of Rule 159.
  19 WTD 316 98-049R   MANUFACTURING B&O - VALUE OF CANNED SOFTWARE - LEASED - LICENSED -- OUT-OF-STATE.A company that produces canned software in Washington, which leases or licenses the software to out-of-state users is subject to manufacturing B&O tax measured by the gross proceeds of sales, the total realized in lease or license fees from its customers for the software.
  19 WTD 423 99-011R   B&O TAX - PERISHABLE MEAT PRODUCTS. A taxpayer who processes perishable poultry and meat is not selling the same processed meat product when it adds other food items to the poultry and meat to produce a new or different food product, and the special B&O tax rate contained in RCW 82.04.260(7) does not apply to the wholesaling of this new product.
  19 WTD 463 99-198   B&O TAX - AGRICULTURAL EXEMPTION - LIQUID EGGS.The production of liquid eggs is the creation of a new, different, and useful substance.Notwithstanding the fact that a farmer does not combine liquid eggs with anything, (s)he loses the agricultural B&O exemption because (s)he engages in a manufacturing activity.
  19 WTD 468 99-198R   AGRICULTURAL EXEMPTION - LIQUID EGGS.The production of liquid eggs is the creation of a new, different, and useful substance.Notwithstanding the fact that a farmer does not combine liquid eggs with anything, (s)he loses the agricultural B&O exemption because (s)he engages in a manufacturing activity.
  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 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 594 99-296   RETAIL SALES TAX - MANUFACTURING MACHINERY AND EQUIPMENT ("M&E") EXEMPTION -USED DIRECTLY IN A MANUFACTURING OPERATION - EXEMPT AND NON-EXEMPT USES.The purchase of a crane is exempt from retail sales tax as manufacturing machinery or equipment under RCW 82.08.02565, even though it is used both on the manufacturing site and off-site, if the majority of its use is on-site.
  19 WTD 753 98-157   MANUFACTURING AND USE TAXES -- TEST -- REPAIRING OR MANUFACTURING -- SIGNIFICANT CHANGE -- FACTORS.To determine whether an activity constitutes repairing or manufacturing one must examine whether a "significant change" has taken place in the articleafter considering a variety of factors, including the following:whether the refurbishment merely restores the article to its original condition, whether the article's original functional utility is significantly enhanced, and whether the refurbishment process is so extensive so that a new, different or useful article results.
  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.
  20 WTD 117 00-119   B&O TAX -- PACKING MATERIALS -- PALLETS -- VALUE OF PRODUCTS MANUFACTURED.A manufacturer's separately-itemized charges for shipping pallets on which the manufacturer's product is held for sale, where title to the pallets passes to the customer upon delivery, are part of the value of the products manufactured, and therefore are part of the measure of the manufacturing B&O tax.
  21 WTD 97 99-143   SOYBEAN OIL -- MODIFYING.The special tax classifications in subsections (1) and (2) of RCW 82.04.260, relating to trading in soybeans, and the manufacturing of soybeans into soybean oil, do not apply to the activity of modifying bulk soybean oil to make specialty oils.
  21 WTD 97 99-143   MANUFACTURING -- NEW, DIFFERENT OR USEFUL -- SOYBEAN OIL.Where the taxpayer buys soybean and canola oil in bulk and modifies it to meet the requirements of various categories of users by adding agents that alter its physical and chemical qualities, and by heat sealing it to increase shelf life, the taxpayer's industrial activity produces a new, different or useful product under the rationale of applicable case law, because a significant change has been accomplished when the end products are compared with the article before it was subjected to the process.The activity is taxable under the manufacturing B&O tax classification.
  21 WTD 106 99-143R   FOOD MANUFACTURING.RCW 82.04.260 does not establish a sub-category of food manufacturing for B&O tax purposes, applicable to all food manufacturing.Rather, it establishes a handful of specific and narrow classifications, applicable to only a few crops and food products, and limited to certain types and stages of processing.
  21 WTD 106 99-143R   MANUFACTURING -- SOYBEANS INTO SOYBEAN OIL -- CANOLA INTO CANOLA OIL.RCW 82.04.260's provision relating to manufacturing soybeans into soybean oil and canola into canola oil does not cover all participants in the manufacturing process, between receipt of the beans for processing and creation of finished oil.
  22 WTD 49 01-157R   RCW 82.04.050: RETAIL SALES TAX - INGREDIENTS OR COMPONENTS - FUEL.Diesel fuel does not qualify, for retail sales tax purposes, as an ingredient or component of asphalt paving even though a residue from the combustion of the fuel is later added to the asphalt mix.The fuel does not retain its original chemical identity in the process and is not itself an ingredient in the final product.
  22 WTD 49 01-157R   RCW 82.04.050: RETAIL SALES TAX - CHEMICAL USED IN PROCESSING - FUEL.Diesel fuel does not qualify, for retail sales tax purposes, as a chemical used in processing asphalt paving even though a residue from the combustion of the fuel is later added to the asphalt mix.The fuel does not have as its primary purpose the creation of a chemical reaction directly through contact with an ingredient of a new article being produced.
  22 WTD 193 01-072   MANUFACTURING B&O TAX - USE TAX - STEVEDORING COMPANY - DOCKSIDE RAMP.Where a stevedoring company that leases a port facility adjacent to a navigable body of water builds a large ramp on the leased property, moves the ramp to the water's edge, and attaches it to the realty, it has not engaged in a taxable manufacturing activity.Use tax is due only on the materials used to construct the ramp.
  24 WTD 25 00-0089ER   B&O TAX -- "SEAFOOD" -- "MEAT" -- INTENT AND MEANING.In the absence of clear legislative guidance, the Department must make the best sense of a statute's intent and meaning using those tools that are available, including in this case a memorandum evidencing the evidence of a legislative staff's understanding of the factual circumstances surrounding a proposed amendment and the effect it would have on the then-existing RCW 82.04.260.
  24 WTD 25 00-0089ER   B&O TAX -- "MEAT" & "SEAFOOD" -- DIFFERENT WHOLESALING RATES -- "ESTABLISHED POLICY OBJECTIVE."There is no evidence that any established policy objective is violated by imposing different tax rates on "perishable meat products," which receive a special wholesaling rate under RCW 8204.260, and "seafood products," whose wholesale sales are taxable under the higher general wholesaling rate provided by RCW 82.04.270.
  24 WTD 25 00-0089ER   B&O TAX -- "PERISHABLE MEAT PRODUCTS" -- "SEAFOOD" -- DEFINITIONS.The Legislature intended the "perishable meat products" and "seafood products" sections of RCW 82.03.260 to be mutually exclusive, and "seafood" will not be considered to be "meat" when sold at wholesale in order to obtain the preferential wholesaling rate provided by RCW 82.04.260's "perishable meat products" section.
  24 WTD 36 03-0224E   MANUFACTURING B&O TAX -- HST - SELF-PRODUCED FUEL -STILL GAS - CATALYTIC COKE.Still gas produced and used by the taxpayer as a fuel is subject to tax, valued at the cost the taxpayer would have incurred to purchase a fuel of equivalent BTU value.In accordance with ETA 109, catalytic coke produced as a contaminate is not subject to B&O tax, even though it incidentally produces heat when consumed.
  24 WTD 36 03-0224E   RETAIL SALES TAX - INGREDIENTS OR COMPONENTS -CHEMICALS USED IN PROCESSING.Chemicals that leave residues in the finished product, which residues are not essential, necessary, or anything more than impurities, are not entitled to the ingredients or components exemption from retail sales tax.With respect to the chemicals used in processing exemption, the taxpayer has the burden to show that the primary purpose of the chemicals is to create a chemical reaction directly through contact with an ingredient of the new article being produced for sale.
  26 WTD 231 07-0082   RCW 82.04.120: MANUFACTURING B&O TAX -- MANUFACTURING -- DEFINITION - SIGNIFICANT CHANGE -- PITCH-MELTING PROCESS.A taxpayer's coal tar pitch melting process did not constitute a manufacturing activity where the liquefied pitch did not change chemically or functionally, did not change in value, and any change in the pitch's physical state was only temporary.
  30 WTD 36  09-0254R 10/12/11 RCW 82.04.260(4) – B&0 TAX – PERISHABLE MEAT PRODUCTS – RETAIL SALES.  The preferential B&O tax rate for the slaughtering, breaking and/or processing of perishable meat products does not apply to retail sales of meat products.
OTHER: