In general, the activity of hauling for hire is not subject to the business and occupation (B&O) tax. However vendors selling to truckers are subject to tax as follows:
Retailing of interstate transportation equipment
This B&O tax classification applies to persons who sell items to businesses that perform interstate hauling-for-hire. In order for this B&O tax classification to apply, the purchaser must be operating under an ICC or MC permit. The following sales are subject to the Retailing of Interstate Transportation Equipment B&O tax classification, when purchased by the holder of an ICC or MC permit:
- Sales of motor vehicles, trailers, and component parts;
- The lease of motor vehicles and trailers without operator; and
- Charges for labor and services rendered in respect to constructing, cleaning, repairing, altering or improving vehicles and trailers or component parts.
The term “component parts” means any tangible personal property which is attached to and becomes an integral part of the motor vehicle or trailer. It includes such items as motors, motor and body parts, batteries, paint, permanently affixed decals, tires and includes the axle and wheels, sometimes referred to as converter gear or dollies, used to connect a trailer behind a tractor and trailer. Component parts can include tangible personal property which is attached to the vehicle and used as an integral part of the motor carrier’s operation of the vehicle, even if the item is not required mechanically for the operation of the vehicle. It includes cellular telephones, communication equipment, fire extinguishers, and other items, whether they are permanently attached to the vehicle or held by brackets which are permanently attached. If held by brackets, the brackets must be permanently attached to the vehicle in a definite and secure manner with these items attached to the bracket when not in use and intended to remain with that vehicle.
Component parts does not include antifreeze, oil, grease, and other lubricants which are considered as consumed at the time they are placed into the vehicle, even though required for operation of the vehicle. It does include items such as spark plugs, oil filters, air filters, hoses and belts.
Retailing B&O Tax applies to the following:
- Sales and services as described above which do not qualify as retailing of interstate transportation equipment (sold to someone who is not an ICC or MC permit holder).
- Sales of equipment, tools, parts and accessories which do not become a component part of a motor vehicle or trailer used in transporting persons or property;
- Sales of consumable supplies, such as oil, antifreeze, grease, other lubricants, cleaning solvents and ice; and
- Towing charges.
Collection of retail sales tax
Businesses making retail sales must collect and remit the retail sales tax to the state of Washington unless a specific exemption applies. (See Chapter on Retail Sales Tax – Carrier Property.) The tax rate is based upon the location of the sale. In the case of a long-term lease with periodic payments, the retail sales tax is based on the location of the lessee.
TIP: To determine sales tax rates for a specific location use our Tax Rate Lookup Tool.