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WAC 24001 Sales and use tax deferral -- Manufacturing and research/development activities in high unemployment counties -- Applications filed after June 30, 2010.
SOURCE DOCUMENT DETER. NO DATE OF ISSUE DESCRIPTION
WAC: 458-20-24001   10/14/2010  WAC 458-20-24001 (Rule 24001) and WAC 458-20-24001A (Rule 24001A) explain the sales and use tax deferral program in qualifying counties and community enterprise zones.

Chapter 82.60 RCW establishes a sales and use tax deferral program. These rules explain this program’s eligible area criteria, hiring requirements, reporting and monitoring procedures, and tax repayment requirements. They also explain the application procedure and review process, how the deferral certificate is to be used, and the record-keeping requirements of the deferral program.

The Department has amended these rules to recognize:

HB 3014 (chapter 16, Laws of 2010, 1st special session), which clarified the definition of manufacturing for applications filed prior to July 1, 2010 and changed the definition for those applications filed after June 30, 2010.  The legislation also amended the definition of a qualifying county for applications filed after June 30, 2010; and
E2SHB 1597 (chapter 106, Laws of 2010), which establishes that only those applications for the high technology deferral that have been approved are not confidential and subject to public disclosure. 

  458-20-24001   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.
  458-20-24001   08/16/1988 Sales and use tax deferral - Manufacturing and research/development facilities in distressed areas.Updated 6/30/01.
    08/03/2006 Sales and use tax deferral - Manufacturing and research/development activities in rural counties - Applications filed after March 31, 2004.
       
RCW: 82.60.030   1994 Application for deferral -- Contents.
  82.6   2007 Sales tax deferral; early application
       
ETA:      
  3163.2011   03/15/2011 Qualifying Equipment under the Data Center Exemption.
The Department issued the Excise Tax Advisory (ETA) 3163.2011 Qualifying Equipment under the Data Center Exemption. This (ETA) clarifies what equipment qualifies as eligible server equipment for purposes of the data center exemption under RCW 82.08.986 and 82.12.986.  The data center exemption provides retail and use tax exemptions to qualifying businesses of eligible server equipment to be installed, without intervening use, in an eligible computer data center, and to charges made for labor and services rendered in respect to installing eligible server equipment.  
INDUSTRY GUIDES:      
         
       
SPECIAL NOTICES:      
Subject Title Reference:      
Fruit & Vegetable Processors     03/02/2012 Failure to File Annual Tax Incentive Survey Results in Loss of Tax Incentive
Incentives     03/02/2012 Failure to File Annual Tax Incentive Survey Results in Loss of Tax Incentive
Public Utility Tax   5/20/09 Electric Utility Tax Credit for Rural Economic Development Revolving Fund
Public Utility Tax     04/30/2010 Electric Utility Tax Credit for Rural Economic Development Revolving Fund
Data Centers     05/11/2010 Purchase of Server Equipment and Power Infrastructure for Use in Eligible Data Centers - Sales/Use Tax Exemption
Incentives     05/12/2010 New List of Qualifying Counties for Sales & Use Tax Deferral Program Under ESHB 3014
Rural County Incentives     05/12/2010 New List of Qualifying Counties for Sales & Use Tax Deferral Program Under ESHB 3014
High Unemployment County     05/13/2010 Changes to the Rural County Sales and Use Tax Deferral Program
Incentives     05/13/2010 Changes to the Rural County Sales and Use Tax Deferral Program
Rural County Incentives     05/13/2010 Changes to the Rural County Sales and Use Tax Deferral Program
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
Economic Nexus     09/10/2010 B&O Tax Reporting Requirement Continues After Business Activity Stops (Trailing Nexus)
    08/12/1998 Eligible Areas for Tax Deferrals/Exemptions and Credits
    07/30/1999 Tax Incentives for Rural Counties
Incentives/ Rural County Incentives   05/19/2004 Rural County Tax Incentives: Deferral/Waiver Program Extended & Revised Software Manufacturing, Programming, & Help Desk B&O Tax Credits Reestablished
Annual Survey/ High Technology/ Rural County Incentives (Annual Survey)   12/17/2004 Annual Survey Special Notice
Incentives   06/03/2008 Sales and Use Tax Deferral for Corporate Headquarters Located in Community Empowerment Zones
DIRECTIVE: NONE      
RPM: NONE      
WTD: 3 WTD 187 87-179   TAX DEFERRAL -- MANUFACTURING FACILITIES -- DISTRESSED AREAS -- TIMELY APPLICATION -- SEPARATION OF INVESTMENT IN BUILDINGS FROM INVESTMENT IN MACHINERY AND EQUIPMENT. An application for deferral of sales and use tax with respect to the construction of manufacturing facilities in distressed areas of the state (Chapter 82.60 RCW) is not timely if it is submitted after the initiation of construction of a building but before initiation of construction of the machinery and equipment to be placed inside the building.An investment project, which is what the deferral applies to under the law, involves an investment in both buildings and machinery and equipment.The application must be submitted before the initiation of any portion of the project.
  7 WTD 345 89-265   SALES AND USE TAX DEFERRAL -- APPLICATION BEFORE CONSTRUCTION. RCW 82.62.030 requires that applicants for sales/use tax deferrals apply for the program before construction begins. Taxpayers who apply after construction is finished are not eligible for the program.
  7 WTD 345 89-265   SALES AND USE TAX DEFERRAL -- EQUIPMENT INSTALLATION -- LEASED BUILDINGS. The sales and use tax deferral for equipment and machinery is available only to applicants who install the equipment in a new leased facility. A renovated leased facility does not qualify for the deferral under the plain language of the statute.
  9 WTD 292-17 90-220   INTEREST -- ACCRUAL -- DUE DATE OF TAXES. Interest accrues on unpaid tax liabilities at the rate of 9% per annum from the date the tax was due. When taxes originally deferred are found to be due, the due date of the taxes is the due date given to the taxpayer when the liability is accelerated. Interest then accrues on that liability at 9% per annum, calculated from the last day of the year in which the taxes were due. The interest is not compounded, but is instead only simple interest, calculated on a daily basis.
  9 WTD 292-17 90-220   SALES AND USE TAX DEFERRAL -- MACHINERY AND EQUIPMENT -- NEW LEASED BUILDING. Machinery and equipment purchased for an eligible investment project is still eligible for the sales and use tax deferral if it is placed in a new, leased facility, whether or not that facility is eligible for the deferral.
  9 WTD 292-17 90-220   SALES AND USE TAX DEFERRAL -- NEW BUILDING-SOLD AND LEASED BACK. A building that is newly built and then sold to the owner of the land, who then leases it back to the builder, is not eligible for the sales and use tax deferral provided by Chapter 82.60, when the underlying ownership of the leased building and the machinery and equipment are not owned by the same person. Once the building has been sold, the original builder no longer has an investment in the building, nor any need forthe relief of delayed payment of the taxes, as it has recovered its investment through the sale of the building.
  9 WTD 305 BTA 37111   B&O TAX -- CREDITS ON NEW EMPLOYEES -- TIMELINESS OF APPLICATION. Taxpayer who does not dispute that it did not file an application for B&O tax credits before hiring new employees is properly denied the credit.
  9 WTD 305 BTA 37111   SALES AND USE TAX -- DEFERRAL PROGRAM-TIMELINESS OF APPLICATION --INITIATION OF CONSTRUCTION. Taxpayer's application for sales and use tax deferrals is untimely filed where filed after initiation of construction on the initial phase of the project, namely, the major renovation of the existing building.
  11 WTD 289 BTA 39498   Custom Apple protests the Department's Determination No. 90-320 denying sales and use tax deferral for its newly constructed apple processing packing plant located at Quincy, Washington.
  17 WTD 156 97-196   RETAIL SALES TAX -- DEFERRAL -- APPLICATION -- DISTRESSED COUNTIES -- DUE DATE.An application for a Distressed Area Tax Deferral certificate was untimely when it was submitted after on-site construction work on the project had begun.
  18 WTD 302 98-212   SALES AND USE TAX DEFERRAL – COSTS INCURRED BEFORE DATE OF TIMELY APPLICATION.When an application for sales and use tax deferral is timely submitted to the Department, i.e., before the “initiation of construction,” costs incurred before the application date will be allowable if they otherwise qualify.
  20 WTD 25 99-283   SALES AND USE TAX DEFERRAL -- APPLICATION BEFORE CONSTRUCTION.RCW 82.62.030 requires that applicants for sales/use tax deferrals apply for the program before construction begins.Taxpayers who apply after construction is finished are not eligible for the program. The fact that a taxpayer is not aware that an area has been designated as a distressed area before construction begins does not justify late application.
  20 WTD 247 00-070   SALES TAX -- USE TAX -- HIGH TECH BUSINESS TAX DEFERRALS -- REPLACEMENT MACHINERY, EQUIPMENT, PARTS AND REPAIRS.Replacement machinery, equipment, and replacement and repair parts and labor and services rendered in respect to installing, repairing, cleaning, altering or improving such machinery, equipment, and parts do not qualify as eligible investment projects under chapter 82.63 RCW (Tax Deferrals for High Technology Businesses).
  20 WTD 252 00-125   SERVICE B&O TAX -- CREDIT -- RESEARCH AND DEVELOPMENT SPENDING -- COMPUTER SOFTWARE.Taxpayer is not entitled to a B&O tax credit for its research and development spending on computer software due to the taxpayer’s internal use of the computer software.
  20 WTD 362 00-075   B&O TAX--TAX DEFERRAL FOR QUALIFIED HIGH-TECHNOLOGY RESEARCH AND DEVELOPMENT FACILITIES--The growing, monitoring, and assessment of genetically altered plants are research and development activities that qualify the costs of the facility for the high technology business tax deferral.
  22 WTD 223 03-0078   RETAIL SALES TAX -- USE TAX – DEFERRAL – MANUFACTURING MACHINERY AND EQUIPMENT (“M&E”) EXEMPTION -- MANUFACTURING – DEFINITION – CONTROLLED ATMOSPHERE STORAGE FACILITY."Manufacturing," for purposes of the deferral and M&E exemption, is defined in RCW 82.04.120.The operation of a controlled atmosphere storage facility is expressly excluded from the definition of manufacturing.Accordingly, the taxpayer qualifies for neither the M&E exemption nor the tax deferral.
  22 WTD 223 03-0078   RETAIL SALES TAX -- USE TAX – DEFERRAL – APPLICATION – FAILURE TO TIMELY FILE – CONFUSING INFORMATION – LEGISLATIVE INTENT.Even if the taxpayer’s activity qualified as manufacturing, the taxpayer would not qualify for the deferral because it failed to timely file its application.The taxpayer’s failure to timely file is not excused by confusing information it may have received.We are unable to disregard the specific statutory requirements to allow the deferral based on legislative intent.
  22 WTD 223 03-0078   RETAIL SALES TAX -- USE TAX – MANUFACTURING MACHINERY AND EQUIPMENT (“M&E”) EXEMPTION -- CONTROLLED ATMOSPHERE STORAGE FACILITY -- BUILDINGS.Even if the taxpayer’s activity qualified as manufacturing, the taxpayer would not qualify for the exemption because the controlled atmosphere storage facility is a building.
  23 WTD 369 04-0147   TAX DEFERRAL – DISTRESSED AREA – “QUALIFIED BUILDING” – WAREHOUSE LOCATED AWAY FROM MANUFACTURING FACILITY.“Qualified buildings” must be an “integral and necessary part of a manufacturing . . . operation,” and thus, contiguous to the actual factory, mill, or plant in order to qualify for tax deferral.
  23 WTD 369 04-0147   TAX DEFERRAL – DISTRESSED AREA – “QUALIFIED MACHINERY AND EQUIPMENT” – LOCATED AWAY FROM MANUFACTURING FACILITY.“Qualified machinery and equipment” must be an“integral and necessary part of a manufacturing . . . operation,” and thus located at the manufacturing site in order to qualify for tax deferral.
  24 WTD 163 03-0126   SALES TAX – USE TAX – DEFERRAL OF – CONSTRUCTION -- R&D -- DISTRESSED AREA.Eligibility for the retail sales/use tax deferral on the construction of a building in a distressed area to be used for manufacturing or research and development (R&D) depends, among other things, on whether the building or portions thereof are used for manufacturing or R&D upon completion of the construction project.
  24 WTD 330 03-0165   TAX DEFERRALS – QUALIFIED BUILDING – APPORTIONMENT OF COSTS.The Department shall apportion the costs of construction if a qualified building is used partly for manufacturing or research and development, and partly for other purposes.
  24 WTD 336 03-0165R   TAX DEFERRALS – QUALIFIED BUILDING – APPORTIONMENT OF COSTS.The Department shall apportion the costs of construction if a qualified building is used partly for manufacturing or research and development, and partly for other purposes.
  24 WTD 336 03-0165R   TAX DEFERRALS – APPORTIONMENT OF COSTS – TIME OF APPORTIONMENT.After the taxpayer has notified the Department of Revenue of completion of the eligible investment project, the Department of Revenue shall examine the completed project and, as of the date of examination, determine whether to apportion costs and the percentage of total construction costs eligible for deferral.
  25 WTD 90 05-0345   RETAIL SALES AND USE TAX -- DISTRESSED AREA DEFERRAL PROGRAM – APPLICATION – TIME OF.Application for deferral of taxes under the distressed area deferral program must be made before initiation of the construction of the investment project.
  28 WTD 84 08-0206 7/29/09 RURAL COUNTY DEFERRAL – OWNER/LESSOR – ELIGIBILITY FOR DEFERRAL.  Under 82.60.020(4)(b), the owner of a building that merely leases the building to a qualifying manufacturer  is not eligible for the rural county deferral because it is not a manufacturer, but may receive the deferral if it agrees in a written contract to pass the economic benefit of the deferral to the lessee and the lessee agrees to complete the annual surveys.
  28 WTD 84 08-0206 7/29/09 RURAL COUNTY DEFERRAL – LESSEE – ANNUAL SURVEY -- FILING.   Under RCW 82.60.070(1)(b), a lessee who has received the economic benefits of a deferral is required to file the required annual survey.
  28 WTD 84 08-0206 7/29/09 RURAL COUNTY DEFERRAL -- LESSEE – ANNUAL SURVEY – FAILURE TO FILE – LIABILITY FOR TAX.   If the lessee fails to timely file the annual survey, the lessee – not the lessor – is liable for the assessment of 12½ percent of the originally deferred tax. 
  28 WTD 84 08-0206 7/29/09 RURAL COUNTY DEFERRAL – OWNER/LESSOR – ANNUAL SURVEY – TIMELY FILING – FAILURE – WAIVERS.  By using the word “shall,” and by not providing for any waivers – even for good cause -- the legislature has enacted a mandate that the surveys be filed timely.
       
OTHER: