WAC 135

Commercial Fishing Guide

Extractor.

Commercial or industrial use.

Tax upon extractors.

Tax on retailers.

Tax on manufacturers and processors of various foods and by-products -- Research and development organizations -- Travel agents -- Certain international activities -- Stevedoring and associated activities -- Low-level waste disposers -- Insurance agents, brokers, and solicitors--Hospitals -- Commercial airplane activities -- Timber product activities -- Canned salmon processors.

Tax on wholesalers, distributors.

Tax on printers, publishers, highway contractors, extracting or processing for hire, cold storage warehouse or storage warehouse operation, insurance general agents, radio and television broadcasting, consumer as defined in RCW 82.04.190(6)--Cold storage warehouse defined--Storage warehouse defined--Periodical or magazine defined.

Tax on selected business services, financial businesses, or other business or service activities.

Persons taxable on multiple activities--Credits.

Tax imposed---Retail sales--Retail car rental.

Exemptions--Sales of machinery and equipment for manufacturing, research and development, or a testing operation--Labor and services for installation--Exemption certificate--Rules.

Definitions

Use Tax -- Imposed.

Exemptions--Machinery and equipment used for manufacturing, research and development, or a testing operation.

Public utility tax imposed--Additional tax imposed--Deposit of moneys.

Extracting Natural Products is amended to add new language from SB 6505 (Chapter 140, Laws of 2014) regarding persons producing marijuana and adds clarifying and updated language regarding wholesale sales. Rule 135 is amended at: Subsection (2)(a) by adding the language: “; or (iii) Persons producing marijuana.”; and Subsection (3) by adding new language clarifying and updating the procedures extractors making wholesale sales must follow regarding resale certificates for sales made before January 1.

Extracting natural products.Updated 6/17/00.

These rules all refer to resale certificates. Proposed action is to add standard language to recognize reseller permits for sales made on or after January 1, 2010.

A statement of purpose and intent with respect to issues involving the forestry products industry

Processing meat by-products

RETAIL SALES TAX: LOGGING PERFORMED AS AN INCIDENT TO CONSTRUCTION OF PRIVATELY OWNED ROADS - Repealed 7/16/2001

OYSTER STRING PRODUCTION - These documents all identify specific activities that are considered manufacturing activities. A number of these activities have been incorporated as examples of manufacturing activities in the revised WAC 458-20-135 (Extracting natural products) or 458-20-136 (Manufacturing, processing for hire, fabricating) as adopted on May 17, 2000. These examples and the information provided elsewhere in the revised rules provide sufficient guidance to allow the repeal of all of the listed ETAs. Cancelled by ETA 2003 -1s 6/17/00.

PROCESSING MEAT BY-PRODUCTS Revised 2/2/09 See ETA 3059.2009

SEEDLINGS USED IN REFORESTATION PROGRAMS - This document explains that the retail sales and use taxes apply to seedlings used in reforestation programs. This document is no longer needed because the taxability of seedlings is addressed in WAC 458-20-13501. Cancelled by ETA 2003-3s 07/16/2001

TAX LIABILITIES ON FOREST LANDOWNERS AND HARVESTERS: SALE OF STANDING TIMBER VS. SALE OF LOGS - This document explains tax-reporting responsibilities associated with two different types of timber sales. This document is no longer needed because the information was incorporated into WAC 458-20-13501. Cancelled by ETA 2003-3s 07/16/2001

EXTRACTING TAX CLASSIFICATION IN REGARD TO LOGGING OPERATIONS - This document addresses the taxability of unloading logs onto flat cars. It is no longer needed. WAC 458-20-13501 (Timber harvest operations) addresses this issue. Cancelled by ETA 2003-3s 07/16/2001

The Tax Application for Tree and/or Stump Removal from Existing Orchards

Harvested Mushrooms and Other Forest Products Sales

Manufacturer's Sales and Use Tax Exemption - Logging Equipment

Timber Activities - Reduced Business and Occupation Tax Rate

Taxability of Selling Harvested Mushrooms and Other Forest Products

Taxability of Sales of Explosives

BUSINESS AND OCCUPATION TAX - AGRICULTURAL EXEMPTION - SHELLFISH EXTRACTING.The raising and harvesting of shellfish is not an agricultural activity for excise tax purposes and is not exempt from business and occupation tax.

USE TAX - ROAD CONSTRUCTION - EXTRACTED MATERIALS - LOGGING ROADS - SALES TAX COLLECTED FROM CUSTOMER.Use tax will not be asserted on the use of extracted materials by persons building logging roads where those persons held a reasonable and good faith belief that they were performing a retail sale and they collected sales tax from their customers on the total charge.

USE TAX - ROAD CONSTRUCTION - EXTRACTED MATERIALS.The extraction and application upon the roadway of materials by a road builder is a use of those materials for use tax purposes.

USE TAX - VALUE OF ARTICLE USED - ROAD CONSTRUCTION - MATERIALS EXTRACTED BUT NOT PROCESSED.Prior to December 28, 1982, under the terms of Excise Tax Bulletin (ETB) 4.8.12.171, use tax is not applied to materials extracted by road builders and used in building roads if the materials are not processed or manufactured.As of that date, under the terms of the ETB as revised, use tax is applicable.Under the ETB it is measured by the cost of extraction.Where cost figures are not available the tax is measured by the retail selling price, as nearly as possible, of similar products.

B&O TAXES -- CONSTRUCTION OF LOGGING ROAD -- EXTRACTING VS. MOTOR TRANSPORTATION -- BILLED ON PER YARD BASIS.The tax consequences of a contract to construct a logging road in connection with a timber harvesting operation do not change solely because the taxpayer computes and bills the contract on a per yard of rock transported basis and/or stockpiles the rock at an intermediate location prior to the actual road construction.

EXTRACTING B&O TAX -- MOTOR TRANSPORTATION PUT TAX -- LOG HAULING ACTIVITY -- LOG LOADING ACTIVITY -- DELIVERY CONTRACT WITH BOTH ACTIVITIES.Where the taxpayer has a delivery contract to transport logs and the contract necessitates that the taxpayer perform logging and loading activities, the income from the contract is proportionately subject to Extracting B&O tax and Motor Transportation Public Utility Tax.

LANDOWNER--SALES OF LOGS--B&O TAX--EXTRACTOR--AMOUNT SUBJECT TO TAX.When a landowner retains ownership of timber until it is scaled, the landowner is the extractor and the wholesaler of the timber, and subject to B&O tax on its gross proceeds for the timber.It is allowed a credit for the lesser of the wholesaling or extracting tax under Rule 19301.Accord: ETB 541.

RETAIL SALES TAX -- EXTRACTOR FOR HIRE -- MOVING OF EARTH -- OPEN-PIT MINE -- REMOVAL OF ORE, WASTE AND OVERBURDEN.The "moving of earth" is a sales taxable activity.However, where a person contracts with the owner to remove ore, waste, and overburden in connection with an open-pit mining operation, the person is performing as an extractor for hire and does not charge sales tax on its charges for performing the extractive services.

EXTRACTORS -- EXTRACTORS FOR HIRE -- TIMBER -- LOGGING -- DISTINGUISHED.A person is an extractor if he has title to standing timber before the timber is severed from the land, regardless of who actually cuts the timber. A person is an "extractor for hire" where that person (or another person engaged on his behalf) cuts timber and does not take title to the logs until after the timber is severed from the land.

USE TAX -- ROCK USED IN LOGGING ROAD CONSTRUCTION.When a taxpayer severs rock from the ground, the rock becomes tangible personal property.If the taxpayer is the consumer of the rock, the taxpayer will owe use tax on the value of the rock.

USE TAX -- ROCK USED IN LOGGING ROAD CONSTRUCTION.The measure of the use tax for the use of rock extracted by a road builder is the total cost of extraction, not merely the taxpayer's costs.

MANUFACTURING EQUIPMENT AND MACHINERY EXEMPTION - EXTRACTING.Machinery and equipment used for the crushing, and/or blending of rock, sand, stone, gravel, or ore is machinery and equipment used in a manufacturing operation.See RCW 82.04.100.Machinery and equipment used in a manufacturing operation is exempt from retail sales tax if it meets the "used directly" and "majority use" requirements.

RETAIL SALES TAX -- MANUFACTURING EQUIPMENT AND MACHINERY (M&E) EXEMPTION --EXTRACTING -- MANUFACTURING OPERATION -- WHERE MANUFACTURING OPERATION BEGINS.The use of a loader at a manufacturing site by a producer and seller of ready-mix concrete and sand and gravel products, limited to moving previously quarried but unprocessed materials from stockpiles to the sorting and washing area, is not use in a manufacturing operation.Only those activities that take place after the first screen are considered part of the manufacturing operation.

USE TAX DEFERRAL - QUALIFYING ACTIVITIES.Mining and transportation activities do not qualify as manufacturing activities.Rock crushing and smelting activities qualify as a manufacturing activity.

EXTRACTING TAX - SELLING PRICE - VALUE - TIMBER - ETB 302.The value of products extracted is determined by the gross proceeds of sales, not the price paid for similar logs.

RCW 82.04.320: B&O TAX - EXEMPTIONS - RENTALS - LICENSES - MINERAL LEASES.In general, royalties received under a mineral lease are for the grant of the right to extract natural products and are treated as a license, a profit a prendre, or an incorporeal heriditament, not as the rental of real property.

RCW 82.04.320: B&O TAX - EXEMPTIONS - RENTALS - LICENSES.The labeling of payments as royalties or rents is not controlling in determining whether the payments are for the rental of real property or for a license or other right involving the use of real property.

B&O TAX: VALUE OF PRODUCTS.All costs, including certain period costs, must be included in the calculation of "value or products."

B&O TAX -- VALUE OF PRODUCTS.All costs, including certain period costs, must be included in the calculation of "value or products."

WAC 458-20-135, WAC 458-20-118; B&O TAX - RENTALS - LICENSES - MINERAL LEASES. Royalties received under a mineral lease are for the grant of the right to extract natural products and are treated as a license or a profit a prendre, not as the rental of real property.

Rule 135; Rule 13501; RCW 82.08.02565; RCW 82.12.02565; RCW 82.04.100. EXTRACTING VERSUS MANUFACTURING - MACHINERY & EQUIPMENT EXEMPTION. Taxpayer’s purchase of a feller buncher was not exempt from deferred sales tax and/or use tax, since taxpayer did not use it directly in a manufacturing operation. Taxpayer only used the feller buncher to fell, cut and take trees, by definition an extracting activity, and not part of the manufacturing operation of cutting, delimbing, and measuring of trees already felled, cut, or taken

RULE 135; RCW 82.04.2907, RCW 82.04.290: SOURCING THE SALE OF INTANGIBLE PROPERTY – ROYALTIES. Income from the sale of Alaska individual fishing quotas (IFQs) is subject to the service and other activities B&O tax classification, and as an intangible, is sourced to the domicile of the seller under the doctrine of mobilia sequuntur personam.

B&O TAX - EXTRACTING - FOREST EXCISE TAX.The legislature has expressly stated that tax due under Forest Excise Tax statutes of chapter 84.33 RCW is in addition to B&O tax.

PUBLIC UTILITY TAX -- MOTOR TRANSPORTATION -- HAULING LOGS -- EXTRACTOR FOR HIRE. Persons performing logging activities for others under a logging contract are extractors for hire.A portion of the income of an extractor for hire from logging contracts attributable to hauling logs is subject to the Motor Transportation Public Utility Tax.

B&O TAX -- EXTRACTING -- LOGGING ROAD CONSTRUCTION -- CONSTRUCTION CREDITS.Where taxpayer/extractor has purchased a timber contract and builds logging roads, amounts received by the taxpayer as "road building credits" are not credits against the purchase price of the timber contract, but B&O taxable payments for building the logging roads benefiting the seller of the timber contract.