Washington Tax Decisions

A consumer of natural gas appeals a Taxpayer Information and Education letter ruling that brokered natural gas use tax is due on amounts paid to an interstate pipeline for reserving pipeline capacity (demand/reservation charge).We rule that the demand/reservation charge is part of the amount paid to Pipeline for gas transportation services and must be included in the measure of the brokered natural gas use tax in accordance with WAC 458-20-17902 (Rule 17902).

A manufacturer of an electronic product protests the assessment of retail sales tax on chemicals used in its manufacturing process based on its belief that the chemicals qualify as “chemicals used in processing” and contain the necessary attributes for exemption detailed in RCW 82.04.050(1)(c) [and] WAC 458-20-113. We conclude that the Taxpayer has not established that the primary purpose of the chemicals at issue is to create a chemical reaction directly through contact with an ingredient of a new article being produced for sale. Accordingly, we affirm the denial of the exemption for the resist chemicals, the developer, and the strip chemicals.

A seller of petroleum products protests an assessment of Petroleum Products Tax (PPT), and Hazardous Substance Tax (HST) on its production of oxygenated gasoline in this state claiming that denatured ethanol is a hazardous substance subject to PPT and HST, and, therefore, that the subsequent blending of denatured ethanol with gasoline to create oxygenated gasoline is not a hazardous substance subject to PPT and HST. We hold that denatured ethanol is not a hazardous substance, whereas oxygenated gasoline is a hazardous substance.