Methods to determine substantial use threshold

A motor carrier may choose one of the methods listed below to determine if its motor vehicles and trailers satisfy the substantial use threshold for exemption from use tax. The method must be applied to all trucks, tractors, and trailers within the fleet. Regardless of the method selected, a vehicle will not be considered as used in interstate hauls unless the vehicle actually crosses the boundaries of the state and is used in part outside of Washington. The motor carrier may change the method with prior written consent of the Department of Revenue.

The methods are as follows:

Line crossing: Compares the number of interstate for hire hauls made by a motor vehicle or trailer to the total number of for hire hauls. The motor vehicle or trailer must actually cross the boundaries of this state or be used for hauls which begin and end outside this state.

Mileage: Compares interstate mileage associated with the for hire hauls made by a motor vehicle or trailer, to the total mileage associated with its for hire hauls. The motor vehicle or trailer must actually cross the boundaries of this state, or haul exclusively outside this state, to be considered interstate mileage. (Empty mileage qualifies as part of the mileage from an interstate haul.)

Revenue: Compares interstate for hire revenue generated by a particular motor vehicle or trailer to the total for hire revenue.

The revenue generated by the motor vehicle or trailer actually crossing the boundaries of this state, or hauling exclusively outside this state, is considered to be interstate revenue. If the motor carrier uses more than one motor vehicle or trailer to transport the cargo, the revenue generated from hauling this cargo must be allocated between the motor vehicles and/or trailers used. For the purposes of determining use tax liability, a vehicle will not be considered as having interstate revenue even if the haul originates or ends outside Washington unless the vehicle actually crosses the boundaries of the state.

Other: Any other method may be used when approved in advance and in writing by the Department of Revenue.

REMEMBER: If a vehicle is used both in hauling for hire and in hauling the carrier’s own products, the “substantial use” is determined solely on the usage in hauling for hire.

Washington Administrative Code (WAC) 458-20-17401 provides examples and additional information on determining substantial use.