Truck stop and diesel truck owners tax incentive

Effective June 7, 2006, owners of truck stops and heavy duty diesel trucks are allowed certain tax incentives for providing or using auxiliary power through on-board or stand alone electrification systems as external power sources to reduce air and noise pollution or reduce the consumption of diesel fuel. This incentive expired on July 1, 2015.

Truck stop owners are eligible for:

• A B&O tax deduction for income received for providing non-metered auxiliary power to heavy duty diesel trucks meeting certain qualifications.
• An exemption from retail sales tax and use tax for the construction of pedestals at truck stops and equipment to deliver power to the trucks.

Heavy duty diesel truck owners are eligible for an exemption from retail sales tax and use tax for equipment and labor which enables heavy duty diesel trucks to accept power through on-board electrification systems.

Recordkeeping requirements

All businesses must keep complete and adequate records from which the Department of Revenue may determine any tax for which the business may be liable. Such records must be preserved for a period of five years.

In general, records are to be kept, preserved, and presented upon request of the Department of Revenue which will demonstrate:

• The amount of gross receipts and sales form all sources, including barter or exchange transactions.
• The amount of all deductions, exemptions, or credits claimed through supporting documentation.

Such records may include general ledgers, sales journals, together with all bills, invoices, cash register tapes, or other documents or original entry supporting the books of account entries. The records should include all federal and state tax return reports and all schedules or work papers used in the preparation of tax reports or returns.

Suggested records:

• Federal income tax returns
• Washington Combined Excise Tax Returns
• General and subsidiary ledgers
• Sales and/or cash receipts journals
• Sales invoices
• Purchase/cash disbursement journals
• Purchase invoices for assets and expense items
• Financial statements
• Reseller permits and resale certificates (for sales on or before 12/31/2009) for wholesale sales
• Documentation for any exemption claimed or given and any deductions taken

Audit process

As a registered business, you may be selected for an audit. Audits are a routine procedure used to determine whether state excise taxes have been reported and paid correctly. The majority of businesses selected for audit are chosen at random using statistical methods.

What occurs during an audit?

During an audit, the auditor will:

• Verify income – amounts and classifications reported on return
• Reconcile calendar year sales
• Verify deductions and exemptions
• Verify sales or use tax paid on capital assets, consumable supplies, and articles manufactured for commercial or industrial use
• Review Washington State tax returns, along with state apportionment schedules and consolidated work papers
• Review federal income tax returns for the business
• Review summary accounting records and source documents
• Review journals, such as check registers, the general ledger, sales journal, general journal, cash receipts journal and any other records used to record income and expenses
• Review/test sales invoices
• Review/test purchase invoices (i.e., accounts payable, receipts)
• Review depreciation schedules, listing all assets acquired during the audit period along with purchase invoices for those assets
• Review reseller permit/resale certificate for any wholesale sales made
• Review supporting documentation for all deductions and exemptions
• Review annual reports
• Review other documents as necessary