Your nonresident business may owe use tax on vehicles that are temporarily in Washington.
How do I know if my nonresident (out-of-state) business owes use tax on vehicles?
Your nonresident business may owe use tax when it drives vehicles into Washington for business purposes, even if those vehicles are registered and primarily located outside of Washington. Your nonresident business does not owe use tax if your company has already paid Washington sales or use tax on the vehicle’s full value.
Use tax is due when you are engaged in nontransitory business activities in Washington. Nontransitory business activities include:
- Printing and publishing.
- Selling tangible personal property.
- Constructing or improving real or tangible personal property.
The use tax due is based on how many days your company brings the vehicle into Washington.
- If the vehicle is brought into Washington for 180 days or less – in any period of 365 consecutive days – then your company owes use tax on the fair rental value of the vehicle for the time period it was in Washington.
- If the vehicle is brought into Washington for more than 180 days – in any period of 365 consecutive days – then your company owes use tax on the fair market value of the vehicle.
Example: An Idaho electrical company is hired to wire an office building in Spokane, Washington. The electrical company takes three months to finish the job. During that time, the company drives its company truck between Idaho and Washington five days each week. The company’s vehicle stays in Washington for less than 180 days (5 days x 12 weeks = 60 days). The company owes use tax based on the fair rental value for the 60 days that the vehicle was in Washington.
How can I qualify for a tax exemption?
Vehicles used in interstate commerce by your nonresident business may be exempt from use tax. The vehicle must be used exclusively in transporting persons or property across the boundaries of Washington. The exemption includes the use of the vehicle while in Washington as part of the transportation across Washington’s boundaries.
To qualify, your company must meet both of theses additional conditions:
- The vehicle is registered in another state.
- The vehicle is not used in Washington more than 15 days in a row.
For this exemption, "nonresident" includes a user who has one or more places of business in Washington as well as in one or more other states. However, the exemption for nonresidents applies only to those vehicles that are most frequently dispatched, garaged, serviced, maintained, and operated from the user's place of business in a state other than Washington.
Example: A building supply company located in Oregon uses its Oregon registered trucks to deliver material to its Washington customers. The trucks travel from Vancouver to Spokane, and then back to Oregon. The truck returns to its Oregon location within two days. The company does not owe use tax because the vehicle is being used exclusively to transport property into Washington, and is not in Washington for more than 15 days in a row.