Persons engaged in the business of operating as a private or common carrier by water in interstate or foreign commerce are eligible for an exemption from sales tax on the vessel and component parts when transporting property or persons for hire.
As defined for this exemption, watercraft includes every type of floating equipment which is designed for the purpose of carrying persons or cargo. It includes tow boats, but not floating dry docks, dredges or pile drivers or any similar equipment.
Component parts include all tangible personal property that is attached to and a part of the carrier property. It also includes spare parts designed for ultimate attachment to the carrier property.
Exemption certificate required
Persons selling vessels and parts, or performing services within this exemption, are required to obtain from the purchaser, or his authorized agent, a Buyers’ Retail Sales Tax Exemption Certificate to document the exempt nature of the transaction (WAC 458-20-175). Income from selling vessels, component parts or making repairs to persons engaged in interstate commerce is reported under the retailing of interstate transportation classification of the business and occupation (B&O) tax.