| WAC 193 C |
Imports
and exports--Sales of goods from or to persons in foreign countries. |
| SOURCE |
DOCUMENT |
DETER. NO |
DATE OF ISSUE |
DESCRIPTION |
| WAC: |
458-20-193C |
|
03/06/1986 |
Imports
and exports--sales of goods from or to person in foreign countries. |
| RCW: | 82.04.480 |
|
1975 |
Sales in own name--Sales as
agent. |
| |
82.32.070 |
|
1999 |
Records to be
preserved--Examination--Estoppel to question assessment--Unified business
identifier account number records. |
| ETA: |
3108.2009 |
|
2/2/09 |
Foreign trade zones |
| |
22.04.193 |
|
7/1/66 |
SERVICE CHARGES ON GOODS PURCHASED FOR EXPORT Cancelled 06/30/99 |
| |
126.16.193 |
|
8/5/66 |
STORAGE AND HANDLING OF GRAIN FOR EXPORT Cancelled effective 6/30/2004 |
| |
143.04.193 |
|
8/12/66 |
SALES OF FLOUR TO GOVERNMENT FOR EXPORT Cancelled 06/30/04. |
| |
448.04.193C |
|
5/31/72 |
DOMESTIC INTERNATIONAL SALES CORPORATIONS (DISC) Cancelled 1/29/09. This ETA addresses the taxation of DISCs. DISCs were a status under the Internal Revenue Code and are no longer authorized. This ETA is obsolete. |
| |
558.04.193C/224 |
|
12/31/92 |
FOREIGN SALES CORPORATIONS Cancelled 1/29/09. This ETA addresses the taxation of foreign sales corporations (FSCs). FSCs were a status under the Internal Revenue Code and are no longer authorized. This ETA is obsolete. |
| |
2028.04.193 |
|
2/1/06 |
Foreign Trade Zones Revised 2/2/09 See ETA 3108.2009 |
| INDUSTRY GUIDES: |
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| SPECIAL
NOTICES: |
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| DIRECTIVE: | |
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| RPM: | |
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| WTD: |
1 WTD 323 |
86-283 |
|
EXPORT
-- COMMENCEMENT OF MOVEMENT -- STREAM OF EXPORT COMMERCE. The export movement
of goods sold to foreign buyers may commence before the goods are placed upon
foreign bound transportation vehicles, but such sales must always satisfy the
criteria of Rule 193A in order to be tax exempt.Determination 83-203 clarified. |
| |
1 WTD 361 |
105Wn2d912 |
|
Business
and Occupation Tax -- Implementing Regulations -- Scope. Under statutes which
limit business and occupation tax deductions to those required by the United
States Constitution, the Department of Revenue has no power to expand
exporting exemptions by regulation.RCW 82.04.4286; WAC 458-20-193C. |
| |
1 WTD 361 |
105Wn2d912 |
|
Business
and Occupation Tax -- Exports -- Floating Log Storage. Logs set aside by a
domestic firm to fill a specific order from a foreign purchaser are not in
the export stream, for purposes of the business and occupation tax
exemptions, when the logs are stored by floating them in a holding area
without committing them to a particular carrier or releasing possession.Nature of Action:A log exporter sought recovery of business
and occupation taxes paid on logs held in floating storage pending shipment
to a foreign purchaser. |
| |
2 WTD 143 |
87-17 |
|
B&O
TAX -- COMMERCE -- EXPORTS -- LOGS -- STORAGE YARD -- COAST
PACIFIC TRADING, INC., cited.Tax upheld where taxable transaction--the
sale of the logs--was completed before the logs were towed from storage to be
loaded aboard ship.Logs found not to
have entered "export stream" even though they were sold to foreign
purchasers and delivered to the towing company with instructions to transport
the logs to a particular port for shipment on a named carrier.Tax on foreign sales is valid unless logs
are delivered to the foreign buyer at shipside. |
| |
2 WTD 183 |
87-36 |
|
B&O
TAX -- DEDUCTION -- EXPORT SALE -- VEHICLE OF TRANSPORTATION. Though rule
allowing B&O tax deduction for export sales was drafted in contemplation
of the more typical sale in which exported goods are shipped via some vehicle
of transportation, a sale of a vehicle of transportation itself may qualify
as a deductible export sale so long as it can be established at the time of
sale that there is (a) certainty of export, and (b) actual entrance into the
export stream. |
| |
4 WTD 383 |
87-355 |
|
B&O
TAX -- INTERSTATE/FOREIGN SALES -- TAX EXEMPTION -- UNIFORM COMMERCIAL CODE
(U.C.C.) -- INAPPLICABILITY. The excise taxability of sales to buyers located
outside this state is governed by the Revenue Act of Title 82 RCW, not the
provisions of U.C.C.. law, chapter 62A.2-319. Rules 193A and C contain proofs
of interstate/foreign deliveries required to perfect entitlement to tax
exemption. |
| |
6 WTD 243 |
88-295 |
|
B&O
TAX -- EXEMPTION -- WHOLESALING -- EXPORT SALES -- BROKERS LISTED AS
PURCHASERS.Although in the final
analysis a taxpayer must be taxed in accordance with the actual established
substantive nature of its sales, Rule 193C prescribes the method by which
sellers must establish throughout their own documentation that the nature of
those sales warrant an exemption from tax. |
| |
8 WTD 149 |
89-398 |
|
B&O
TAX -- RETAIL SALES TAX -- DEDUCTION -- EXPORTS -- FOREIGN BUYERS --
DELIVERING IN WASHINGTON. The mere issuance of documentation to Canadian
customers to allow them to cross the U.S.-Canadian border without duty is not
sufficient under Rule 193C to establish certainty of export. |
| |
8 WTD 251 |
89-471 |
|
B&O
TAX -- IMPORTS -- STREAM OF COMMERCE. Where taxpayer imports vehicles into
Washington and prepares them for resale in this state, the activity is
B&O taxable.Vehicles are not in
unbroken stream of commerce, and taxpayer's activities in this state are
sufficient to constitute nexus. |
| |
8 WTD 277 |
89-478 |
|
EXPORTS
-- COMMENCEMENT OF MOVEMENT -- STREAM OF EXPORT COMMERCE.The export movement of goods sold to
foreign buyers may commence before the goods are placed upon foreign-bound
transportation, but such sales must always satisfy the criteria of Rule 193C
in order to be tax exempt.Where
taxpayer fails to show that it has actually placed the goods in the stream of
export commerce, the criteria are not met.Carrinton Co. v. Dept. of Rev., 84Wn. 2d 444 (1974); Determination No., 88-155, 5 WTD 179 (1988). |
| |
8 WTD 345 |
89-509 |
|
WHOLESALING
B&O TAX -- EXEMPTION -- EXPORT SALES -- COMMENCEMENT OF MOVEMENT --
DOCUMENTATION. The export movement of goods sold for delivery in a foreign
country may commence before the goods are placed upon foreign bound
transportation vehicles, but such sales must always satisfy the documentation
requirements of Rule 193C for tax exemption. |
| |
11 WTD 407 |
91-236 |
|
SALES AND DELIVERIES TO
OUT-OF-STATE BUYERS -- FREIGHT COLLECT -- WHOLESALING B&O TAX --
EXEMPTION. Seafood products sold by a Washington seller which are shipped
freight collect or freight prepaid to out-of-state buyers and destinations
are exempt from wholesaling B&O tax.Accord:Det. 89-355, 8 WTD 83
(1989). |
| |
13 WTD 27 |
91-020R |
|
B&O
TAX -- NEXUS -- IMPORT/EXPORT EXEMPTION.Where a [foreign] manufacturer sells airline galleys to foreign
airline carriers and has them assembled, delivered, and repaired in this
state by its Washington affiliate, the selling activity is B&O
taxable.The Washington manufacturer's
activities in this state are sufficient to constitute nexus, and the galleys
have been taken out of the unbroken stream of commerce.Accord: Det. No. 89-471, 8 WTD 251 (1989). |
| |
13 WTD 33 |
91-020E |
|
EXPORTS -- DEDUCTION --
COMMENCEMENT OF EXPORT. Process of exportation must have begun for export
deduction to apply.When a Washington
seller/manufacturer delivers a component part to another manufacturer for
inclusion in a product which will be exported when finished, export deduction
does not apply. |
| |
14 WTD 199 |
94-035 |
|
SERVICE B&O -- BUY-SELL FSC
-- 85% SAFE HARBOR -- ECONOMIC PROCESS COSTS.A buy-sell foreign sales corporation may not deduct economic process
costs or exclude payments for its services unless those services were
provided outside of Washington or the payments qualify as advances or
reimbursements under Rule 111. |
| |
14 WTD 199 |
94-035 |
|
SERVICE
B&O -- FOREIGN SALES CORPORATIONS -- PROFIT ADJUSTMENT.Adjustments under IRS guidelines for
transfer pricing involving foreign sales corporations are not taxable for
goods delivered outside of Washington. |
| |
16 WTD 1 |
93-316 |
|
B&O TAX -- DEDUCTION --EXPORT -- ENTRY INTO EXPORT STREAM.For there to have been "entry into
the export stream" and "unbroken continuity of movement" for
purposes of the export deduction, any delay in shipping goods must be
"reasonable and in furtherance of the intended transportation." |
| |
16 WTD 1 |
93-316 |
|
B&O
TAX -- DEDUCTION -- EXPORT -- ENTRY INTO EXPORT STREAM -- STORAGE.Goods have not entered the export stream -
or acquired tax immunity - when they have been delivered to an entity for
storage prior to actual overseas shipment to specified buyers. |
| |
19 WTD 477 |
99-300 |
|
B&O TAX – SALES OF GOODS VS.
COMMISSION INCOME – AGENT – IMPORTER.To determine whether an importer takes title to goods it purchases and
sells as the owner or acts as an agent receiving commission income, documents
of sale to the U.S. customers offer the best evidence.Actual payment for the goods by the
customers indicate exempt purchases from the owner, while commission payments
for the services of an agent would be taxable.Letters of credit conditioned upon
providing title indicate the party required to provide title has title. |
| |
19 WTD 477 |
99-300 |
|
B&O TAX – SALES OF GOODS VS.
COMMISSION INCOME – AGENT – IMPORTER.The commissions paid customers to an agent are taxed under the service
and other activities classification.Because title to the goods did not flow to or through the agent, the
income received by the agent was not for goods, but was commission income
taxable under the service and other activities classification.Invoices, contracts, and payment records
are evidence of the nature of the transaction. |
| |
24 WTD 230 |
04-0232 |
|
B&O TAX – WHOLESALING --
IMPORTS – FEDERAL TRADE ZONE (“FTZ”) – FEDERAL TRADE ZONES ACT -- FEDERAL
PREEMPTION.A B&O selling tax
imposed by this state on a foreign company’s sales into this state from an
FTZ does not subvert the intent of, diminish the advantages conferred by, or
impede the purposes of the Federal Trade Zones Act.ETA
2011-3S.32 announces the withdrawal of 24 WTD 230. Refer to ETA 2028. Refer
to ETA 2028 for issues applying to taxpayers who are similarly situated to
taxpayer in 24 WTD 230. |
| |
24 WTD 230 |
04-0232 |
|
B&O TAX – WHOLESALING –
IMPORT-EXPORT CLAUSE -- IMPORTS FROM FTZ.Because imported goods are no longer considered to be “in transit”
when they enter their state of destination under Michelin, the assessment of B&O tax on a seller who delivers goods
manufactured in an FTZ from foreign ingredients to its Washington customers
is not constitutionally prohibited. ETA 2011-3S.32
announces the withdrawal of 24 WTD 230. Refer to ETA 2028 for issues applying
to taxpayers who are similarly situated to taxpayer in 24 WTD 230. |
| |
24 WTD 230 |
04-0232 |
|
B&O TAX – WHOLESALING –
IMPORTS – FTZ -- DELIVERY TO WASHINGTON BUYER FROM FTZ.Coast Pacific Trading does not permit Rule 193C to be interpreted as authorizing a
deduction from a seller’s B&O tax when the seller delivers goods to
Washington buyers from an out-of-state FTZ. ETA
2011-3S.32 announces the withdrawal of 24 WTD 230. Refer to ETA 2028 for
issues applying to taxpayers who are similarly situated to taxpayer in 24 WTD
230. |
| |
24 WTD 230 Withdrawn See ETA 3133.2012 |
04-0232 |
09/19/2005 |
The taxpayer in this determination manufactured products in a Foreign
Trade Zone (FTZ) located in another state. From there, it sold and delivered products directly to its
customers in Washington. The taxpayer protested imposition of wholesaling B&O tax on those sales,
arguing that Washington's B&O tax on goods coming from an FTZ was preempted by the federal FTZ
Act, prohibited by the Import-Export Clause of the United States Constitution, and also prohibited by
the Department's own rule, WAC 458-20-193C. The Department ruled that neither the Foreign Trade
Zone Act nor the Import-Export Clause preempted Washington's tax and that Rule 193C could not be
interpreted to provide an exemption not provided by the United States Constitution.
The Department believes that Det. 04-0232 correctly found that the taxpayer in the determination was
liable for B&O tax. However, the Department has decided that publication of the determination's
discussion of the federal Import-Export Clause and Rule 193C was premature. In light of the questions
raised during the rule-making process for Rule193C on the legal justification of taxing imports and
exports while they remain in transit, and the potential impact on Washington businesses, the Department
has decided that it should wait for further clarification of the law before proceeding with action in this
area. A case involving similar circumstances is pending before the West Virginia Supreme Court. The
ultimate resolution of that case may provide additional guidance for the Department. Until further
notice, the Department will continue to apply Rule 193C as currently written. |
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