Factory flooring

All vehicles purchased by a dealer and placed into inventory carry a surcharge from the manufacturer for interest expense credits. A portion of this surcharge is for the dealer's holdback program and the rest is for the dealer's Wholesale Floor Plan Protection Program (WFPP).

Holdback program

This amount is a credit to the dealer's open account in the month or quarter immediately following the date the vehicle is invoiced to the dealership.

​WFPP (Wholesale Floor Plan Protection Program)

This plan has two options.

Option 1: The dealership receives the holdback automatically. It is not contingent on the dealer financing or even selling the vehicle. The second portion under the WFPP is returned to the dealer in a different format. An amount derived by formula is credited to the dealer during the month immediately following the date the dealership was invoiced for the vehicle. The dealer receives a certain number of "interest free" days and a guaranteed rate for additional days.

If the vehicles are financed through a lender, not the manufacturer, a credit is given to the dealership for all additional interest paid above the guaranteed rate up to the rate charged by the manufacturer. This amount is computed up to the date the vehicle is sold and is credited to the dealer's open account.

Option 2: Both portions are credited to the dealer's open account on a monthly basis. The dealer receives credit for exactly the same surcharge listed on its purchase invoice that it paid to the manufacturer.

Tax due

No tax is due on these credits, they are merely an adjustment to the original purchase price of the vehicle.

Other programs

Dealers receive payment from manufacturers through a number of programs. The taxability of the payments depends on the nature of the program. Payments that are bona fide cash discounts taken by the dealer or represent an adjustment to the dealer's purchase price are not subject to tax. However, payments (whether credits against future purchases, checks, or cash) received for providing any services to the manufacturer are subject to B&O tax. For example, dealers are often required by the manufacturer to inspect, condition, and repair vehicles prior to sale by the dealer. Payment for these "make-ready" services are subject to the Wholesaling B&O tax whether it is termed a "dealer discount," "holdback," "refund," or "reimbursement."


Washington Administrative Code (WAC) 458-20-108
Washington Tax Decision (WTD) 11 WTD 263 (1991)