WAC 180

Washington State Tax Guide - Trucking

Taxicabs and Limousines

Definitions

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

Deductions in computing tax

WAC 458-20-179 Public utility tax; 458-20-17901 Public utility tax-Energy conservation and cogeneration deductions; 458-20-180 Motor carriers The Department is amending WAC 458-20-179 and 180 for general updating and reorganization of the information in the rules. WAC 458-20-17901 is being repealed as no longer needed, as relevant deduction information has been incorporated into Rule 179. Information pertaining to legislation SSB 6614 (chapter 295, Laws of 2010) has been added to Rule 179.

Motor transportation, urban transportation.

Motor carriers explains the tax reporting responsibilities of persons engaged in the business of transporting by motor vehicle persons or property for hire. The Department has revised Rule 180 to add a new subsection (3) “What is a log transportation business?” and removed outdated information.

LIVERY SERVICE BUSINESSES Cancelled 1/29/09 This ETA addresses a situation where a taxpayer provides limousine and ambulance services and also occasionally rents the vehicles without drivers. The document explains that the taxpayer is responsible for paying retail sales tax on its purchase or lease of the vehicles used in providing the limousine and ambulance services. It also explains that retail sales tax must be collected on the charge for the occasional bare rental of the vehicles.

Dump truck operators

Dump Truck Operators The Department has issued ETA 3050.2013. This Excise Tax Advisory (ETA) explains the public utility (PUT), business and occupation (B&O), and retail sales tax reporting responsibilities for various services commonly provided by dump truck operators.

Dump Truck Operators This ETA explains the public utility tax (PUT), business and occupation tax (B&O), and retail sales tax reporting responsibilities for various services commonly provided by dump truck operators. This ETA previously issued on May 24, 2013, is being reissued in order to clarify how to distinguish the taxability of persons hauling for hire from persons hauling construction debris.

Urban transportation - the five-mile standard

Urban Transportation--The Five Mile Standard. ETA 3139.2009 addresses the proper interpretation of the phrase "operating entirely within five miles of the corporate limits thereof" in the definition of "urban transportation business" under RCW 82.16.010. This ETA is being cancelled because the matter it addresses is now covered by amended WAC 458-20-180 (Motor carriers), which became effective August 3, 2013. This cancellation is effective on the date the rule became effective.

AGRICULTURAL COMMODITIES HAULING CLASSIFIED WITHIN MOTOR TRANSPORTATION BUSINESS Cancelled effective 02/28/07 This document explains that a person transporting agricultural commodities by motor vehicle is subject to the public utility tax (in this case the motor transportation classification). This document is not needed.

URBAN TRANSPORTATION--THE FIVE MILE STANDARD Revised 2/2/09 See ETA 3139.2009

FEDERAL GOVERNMENT CONTRACTORS HAULING OUT-OF-STATE GOODS Cancelled effective 02/28/07 This document explains that income received by persons hauling U.S. Mail between points within the state is subject to the public utility, while income for hauling mail across Washington’s state lines is exempt. This information is both not needed and incomplete. There is nothing unique about the taxation of for-hire motor carriers hauling mail vs. any other property.

DUMP TRUCK OPERATORS Revised 2/2/09 See ETA 3050.2009

Environmental Remedial Action Sunsets

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.

PUBLIC UTILITY TAX -- TAXICABS -- URBAN TRANSPORTATION.Cab operator's income from contracting with local public transportation agencies to provide transportation services to segments of public is taxable.

PUBLIC UTILITY TAX -- TAXICABS -- URBAN TRANSPORTATION.Income received by taxi cab business from transporting elderly and physically challenged passengers is subject to public utility tax, just like income from other passengers is taxed.

PUBLIC UTILITY TAX -- TAXICABS -- URBAN TRANSPORTATION.The taxpayer's gross receipts from the taxi business are subject to the public utility tax with no deductions for compensation paid to drivers, who were under taxpayer's direction and control.

PUBLIC UTILITY TAX -- URBAN TRANSPORTATION -- B&O TAX -- WAREHOUSING -- SERVICES INCIDENTAL TO OR AS A PART OF THE TAXABLE ACTIVITY.Where taxpayer hauls freight for hire, additional services performed which are incidental to completion of the haul are taxable at the Urban Transportation rate.Where taxpayer additionally offers warehouse space for compensation, services performed as a part of that operation are taxable at the warehousing B&O tax rate.Only where services are not incidental to a haul or are not part of warehousing activities are they taxable at the higher service B&

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.

TAXI CAB RENTALS/LEASES -- INDEPENDENT DRIVERS/LESSEES.Income received by taxpayer taxi cab company for leasing/renting cabs to independent drivers is subject to retailing B& O and retail sales tax.

TAXI CABS -- INDEPENDENT DRIVERS/LESSEES -- ADMINISTRATIVE AND DISPATCH SERVICES -- SERVICE B&O -- RETAILING B&O-- SALES TAX.Dispatching and administrative services provided to independent taxi drivers/lessees for a fee are not incidental to urban transportation business because the taxi company/dispatcher itself is not hauling for hire in these instances.Rather, income from dispatching when it is an optional service to the drivers and separately charged is taxable under Service B&O.

CABULANCES -- URBAN OR MOTOR TRANSPORTATION BUSINESS.Cabulances which are not equipped or staffed to perform medical services should be classified as either Urban or Motor Transportation Business and not under Service B&O.

TAXI CABS -- FOR PROFIT CORPORATION -- ELDERLY OR PHYSICALLY-CHALLENGED PASSENGERS.The taxpayer/taxi cab company is a for profit corporation.Its income from fares paid by or for elderly or physically-challenged passengers is not exempt from the public utility tax.Taxpayer must be a public social agency or a private, nonprofit entity providing ride sharing for the elderly or handicapped to qualify for such an exemption.

PUBLIC UTILITY TAX -- URBAN TRANSPORTATION -- NO DEDUCTIONS.Where the taxpayer, a taxi cab company, does not jointly furnish urban transportation services with another person taxable under the same chapter and report gross income, it is liable for the public utility tax on the gross income without any deduction for labor costs or any other expense whatsoever paid or accrued.

PUBLIC UTILITY TAX -- URBAN TRANSPORTATION-- MOTOR TRANSPORTATION-- CABULANCES.Merely because cabulances are equipped with wheelchair lifts to transport physically challenged persons does not convert the vehicles into ambulances or their operations into ambulance services.State and local governments strictly regulate ambulances and ambulance operations regarding their medical equipment/supplies, drug contents and personnel with paramedic training.

TRANSPORTATION -- PUBLIC UTILITY TAX -- COMMERCE EXPORTS -- LOGS.The taxation of local transportation services does not violate the Commerce Clause or the Import and Export Clause even if the transportation services are used in getting exports to a port.

PUBLIC UTILITY TAX -- MOTOR TRANSPORTATION -- PLACE OF SERVICE -- INTERSTATE COMMERCE INTERSTATE BILL OF LADING -- ABSENCE THEREOF.When a taxpayer is paid for hauling entirely within Washington absent an interstate bill of lading, it is subject to Motor Transportation (or Urban Transportation) public utility tax. Proof that the property itself is the subject of an interstate or foreign transaction, absent a through bill of lading across state lines, does not qualify for deduction.

PUBLIC UTILITY TAX -- URBAN TRANSPORTATION BUSINESS -- MOTOR TRANSPORTATION BUSINESS -- ORIGINS AND DESTINATIONS.When determining whether a for-hire haul is subject to the urban transportation rate or the motor transportation rate, the trip is measured from the point of origin to the point of destination without regard to the actual route taken.

PUBLIC UTILITY TAX -- URBAN TRANSPORTATION BUSINESS -- STATUTORY CONSTRUCTION:Urban transportation business pertains to operating a motor vehicle carrying persons or property for-hire within the corporate limits of a city, or within five miles of the corporate limits thereof, or operating entirely within and between two cities whose corporate limits are not more than five miles apart or within five miles of the corporate limits of either city.Three or more neighboring cities may not be linked together to create an urban commercial zone for purposes of applying the urban transportation tax c

USE TAX -- EXEMPTION -- MOTOR CARRIER TRAILER -- RENTAL OR LEASE.Persons buyingtrailers solely for the purpose of renting or leasing the same without an operator are making purchases for resale and are not required to pay retail sales tax to their vendors, and use tax is not applicable against the purchasers unless there is evidence of intervening use of the trailers by them.Cf. Det. Nos.

PUBLIC UTILITY TAX -- B&O TAX -- HOUSEHOLD GOODS -- INTERSTATE TRANSPORTATION OF -- STORAGE AND ACCESSORIAL SERVICES.A common carrier that transports household goods for at least part of distance between an in-state and an out-of-state military base, pursuant to a through bill of lading, and who also temporarily stores such goods and/or provides other "accessorial" services related to such transportation, is exempt of public utility and B&O tax.The accessorial services are considered part of the exempt interstate transportation services.

PUBLIC UTILITY TAXDETENTION OR DEMURRAGE CHARGESINCIDENTAL SERVICES.Detention or demurrage charges have a double purpose; one is to secure compensation for use of containers beyond the expected transportation period and the other is to provide a penalty or deterrent against undue detention.Rather than being a rental charge, a demurrage or detention charge is an incidental part of the transportation service.

USE TAX TRUCKERS PALLETS USED IN TRANSPORTING CARGO OR EXCHANGE.Where a trucker purchases pallets in order to carry cargo owned by others, it is purchasing the pallets for its own use and fully subject to retail sales tax.Where a trucker purchases pallets for immediate exchange to manufacturers without intervening use, it is purchasing the pallets for resale.

PUBLIC UTILITY TAX -- MOTOR TRANSPORTATION and URBAN TRANSPORTATION DISTINGUISHED.Income from transporting logs within the area defined as "urban transportation business" in RCW 82.16.010(8) is subject to the urban transportation tax rather than the motor transportation tax.

PUBLIC UTILITY TAX -- TRANSPORTATION --COMMERCE -- EXPORTS -- LOGS. The taxation of local transportation services does not violate the Commerce Clause or the Import and Export Clause even if the transportation services are used in getting exports to a port.(Canton Railroad Co. v. Rogan, cited)

RCW 82.16.047, RCW 82.04.355: PUBLIC UTILITY TAX B&O TAX -- EXEMPTIONS RIDE SHARING SPECIAL TRANSPORTATION NEEDS.Income from operating a transit agencys paratransit service is not exempt from PUT or B&O tax, because the exemption for companies transporting persons with special transportation needs applies only to public social service agencies or private nonprofit transporters.

RCW 82.16.050: PUBLIC UTILITY TAX DEDUCTIONS JOINTLY PROVIDED SERVICES.A taxpayer can not deduct from its gross income amounts paid to another service provider for jointly provided services when the taxpayer reports no income from the jointly provided services.

WAREHOUSING B&O TAX PUBLIC UTILITY TAX STORAGE MOTOR TRANSPORTATION.Gross income from the taxpayers primary activity of operating a storage warehouse holding documents is subject to warehousing B&O tax, but separate charges to deliver those documents to and from the warehouse is subject to motor transportation PUT because motor transportation services are not incidental to the storage warehouse business.

RULE 180; RCW 82.16.020; 49 U.S.C. 14505:MOTOR TRANSPORTATION PUT -- URBAN TRANSPORTATION PUT -- INTERSTATE COMMERCE COMMISSION TERMINATION ACT OF 1995 - TRANSPORTING RAILROAD CREWS WITHIN WASHINGTON BY MOTOR VEHICLES.The Department of Revenue is not preempted by federal law (49 U.S.C. 14505) from assessing public utility tax on the taxpayers gross receipts earned from transporting railroad crews by motor vehicles between points within the state of Washington.

PUBLIC UTILITY TAX -- EXEMPTION -- MOTOR TRANSPORTATION --INTERSTATE COMMERCE. A trucker who is hired and paid by a broker to haul goods from shipside in one city in Washington, to another city here, is not entitled to a deduction for interstate hauling, where there is no through bill of lading.

RULE 180; RCW 82.16.020(1)(f): PUBLIC UTILITY TAX – MOTOR CONTRACT CARRIER – INTRASTATE HAULS: Gross income earned by a motor contract carrier for the intrastate hauling of recyclable materials for an affiliated, but separately registered LLC is subject to motor transportation business PUT.

RULE 180; RCW 82.04.220: RETAIL SALES TAX – PACKING MATERIALS – MOVING COMPANY. Boxes and other items sold by a moving company to its customers that are separately itemized on a bill of lading are subject to the retail sales tax and retailing B&O tax. Materials re-used by the moving company in the course of doing business (e.g. ropes, pads, and dollies) are subject to use tax as the moving company is the consumer of those materials.

PUBLIC UTILITY TAX -- URBAN TRANSPORTATION BUSINESS -- CONSTRUCTION OF STATUTES. Where statute defines urban transportation business as operation "between" cities and towns less thanfive miles apart or within five miles of "either" thereof, only two cities or towns are contemplated. Otherwise, the legislature would have specified "among" and "any".

PUBLIC UTILITY TAX -- MOTOR TRANSPORTATION -- PLACE OF SERVICE -- INTERSTATE COMMERCE INTERSTATE BILL OF LADING -- ABSENCE THEREOF. When a motor carrier is paid for hauling which takes place entirely outside of Washington or for hauling across Washington's boundaries, it is not taxable. When it is paid for hauling entirely within Washington absent an interstate bill of lading, it is subject to Motor Transportation (or Urban Transportation) public utility tax.It may, however, deduct amounts paid to other motor carriers subject to tax.

USE AND/OR DEFERRED SALES TAX -- AUTOMOBILE TOWING AND SIMILAR AUTOMOTIVE TRANSPORTATION SERVICES -- TOWING OF AN OFFICE TRAILER. The towing of an office trailer from jobsite to jobsite is not "automobile towing or similar automotive transportation services" within the meaning of RCW 82.04.050 and therefore not subject to use and/or deferred sales 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.

PUBLIC UTILITY TAX -- MOTOR TRANSPORTATION -- VAN TRANSPORTATION OF PASSENGERS TO/FROM AIRPORT -- INTRASTATE -- INTERSTATE AIRLINE TRAVELERS.Any transportation of passengers, in this case by van, performed within the state prior to the point of origin of the interstate movement by airline or subsequent to the point of arrival in this state after interstate travel by airline are wholly intrastate and within the taxing jurisdiction of this state.