In many cases, a business may perform both urban transportation and motor transportation activities. In order to report under the proper tax classification the business must segregate their income into the proper reporting classifications. Documentation, such as a log or other record, must be maintained as evidence of actual activities performed. (Failure to maintain proper records may result in the higher tax rate of motor transportation applying to all of the income.)
Use the Department's Motor & Urban Transportation Lookup Tool to determine which tax applies to a trip, based on the starting and ending address.
Tip: Keep documentation for a period of 5 years. Lack of proper documentation may result in a tax liability. See WAC 458-20-254 for recordkeeping requirements.
Certain amounts may be deducted from the gross income reported under the public utility tax if the amount is included in the gross amounts reported. Deductions are allowed for the following:
Interstate hauls – Income from transporting persons or property by motor transportation equipment where either the origin or destination of the haul is outside the state of Washington.
Example: Furniture picked up by a transportation company in Portland, Oregon to be delivered to a warehouse in Seattle, Washington is an interstate haul and may be deducted from the gross income amount.
Services jointly provided – Amounts paid by a person conducting hauling for hire to another person performing the same activity may be deducted as consideration due for services jointly furnished by both.
Example: Customer A hires ABC Transport to haul goods from Tacoma, Washington to a manufacturing facility at Bellingham. ABC Transport subcontracts part of the haul to XYZ Transport and has XYZ haul the goods from Tacoma to Everett where the goods are loaded into ABC’s truck. ABC may deduct the payments it makes to XYZ as a “jointly furnished service.”
Through freight – A deduction is allowed for income received from transportation within the state relating to imported or exported goods which have technically ceased movement in interstate commerce. Such items must have been shipped under a “through freight” billing.
Shipments to ports – A deduction for income received from shipping products produced in Washington to export facilities in the state, including docks, wharfs and elevators, if the products are then shipped outside of the state in vessels. The deduction does not apply if the shipment occurs solely within the same city.
Other deductions – Most allowable deductions are listed on the Deduction Detail page of the Excise Tax Return. However, there may be a specific deduction allowed by law that is not listed. When taking such a deduction refer to the statute governing your type of business.
Volume exemption – Persons reporting under a public utility tax classification are exempt from the tax if the taxable income does not meet the minimum threshold listed below:
- Monthly reporting basis (frequency)....... $2,000 per month
- Quarterly reporting basis (frequency) ..... $6,000 per quarter
- Annual reporting basis (frequency).........$24,000 per year