PERMANENT RULES
Date of Adoption: June 9, 1999.
Purpose: To explain the circumstances under which taxes may be deducted or excluded from the measure of tax under the business and occupation (B&O) tax, retail sales tax, and public utility tax. The rule also provides nonexclusive lists of specific taxes that are deductible, and those which are not deductible. The rule is being revised to incorporate the amendment of RCW 82.04.4285 by chapter 176, Laws of 1998, and to remove repealed state and federal taxes that were cited in the rule.
Citation of Existing Rules Affected by this Order: Amending WAC 458-20-195 Taxes, deductibility.
Statutory Authority for Adoption: RCW 82.32.300.
Adopted under notice filed as WSR 99-08-022 on March 29, 1999.
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 1, Repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 1, Repealed 0.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.
Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 1, Repealed 0. Effective Date of Rule: Thirty-one days after filing.
June 9, 1999
Russell W. Brubaker
Assistant Director
OTS-2943.1
AMENDATORY SECTION(Amending Order ET 83-1, filed 3/30/83)
WAC 458-20-195
Taxes, deductibility.
(((A))) (1) Introduction. This rule explains
the circumstances under which taxes may be deducted from the gross amount reported as the
measure of tax under the business and occupation tax, retail sales tax, and public utility tax. It
also lists deductible and nondeductible taxes.
(2) Deductibility((, generally)) of taxes. In computing tax liability, the amount of
certain taxes may be excluded or deducted from the gross amount reported as the measure of tax
under the business and occupation (BO) tax, the retail sales tax, and the public utility tax. ((Such)) These taxes may be deducted provided they (((1))) have been included in the gross
amount reported under the classification with respect to which the deduction is sought, and
(((2))) have not been otherwise deducted through inclusion in the amount of an allowable
deduction taken under such classification for another reason, ((i.e.)) e.g., interstate commerce((,
etc)).
The amount of taxes which are not allowable as deductions or exclusions must in every case be included in the gross amount reported. License and regulatory fees are not deductible. Questions regarding the deductibility or exclusion of a tax that is not specifically identified in this rule should be submitted to the department of revenue for determination.
(((B))) (3) Motor vehicle fuel taxes. ((So much of the sale price of motor vehicle fuel
as constitutes the amount of tax imposed by the state of Washington or the United States
government upon the sale thereof may be deducted by every seller thereof from the gross
proceeds of sales reported under the business and occupation tax.
(C) Other taxes)) RCW 82.04.4285 provides a B&O tax deduction for certain state and federal motor vehicle fuel taxes when the taxes are included in the sales price. These taxes include:
| State motor vehicle fuel tax . . . . . . . . . . . . |
chapter 82.36 RCW; |
| State special fuel tax . . . . . . . . . . . . | chapter 82.38 RCW; |
| Federal tax on diesel and special motor fuels . . . . . . . . . . . . | 26 U.S.C.A. Sec. 4041; |
| Federal tax on inland waterway commercial fuel . . . . . . . . . . . . | 26 U.S.C.A. Sec. 4042; |
| Federal tax on gasoline and diesel fuel . . . . . . . . . . . . | 26 U.S.C.A. Sec. 4081. |
This deduction applies only where the amount of such taxes is received by the taxpayer
as collecting agent and is paid by the agent directly to the state, its political subdivisions, or to
the federal government. When the taxpayer is the person upon whom a tax is primarily imposed,
no deduction or exclusion is allowed, since in such case the tax is a part of the cost of doing
business. The mere fact that the amount of tax is added by the taxpayer as a separate item to the
price of goods ((he sells)) sold, or to the charge for services ((he renders)) rendered, does not in
itself, make such taxpayer a collecting agent for the purpose of this deduction. Examples of
deductible taxes include:
| FEDERAL-- |
|
| Tax on telegraph, telephone, radio and cable messages . . . . . . . . . . . . | 26 U.S.C.A. Sec. 4251; |
| Tax on transportation of persons . . . . . . . . . . . . | 26 U.S.C.A. Sec. 4261; |
| Tax on transportation of property . . . . . . . . . . . . | 26 U.S.C.A. Sec. 4271; |
| STATE-- |
|
| Leasehold excise tax collected from lessees . . . . . . . . . . . . | chapter 82.29A RCW; |
| Retail sales tax collected
from buyers . . . . . . . . . . . . |
chapter 82.08 RCW; |
| Use tax collected from buyers . . . . . . . . . . . . |
chapter 82.12 RCW. |
26 U.S.C.A. Sec. 4251; |
|
| County admissions and recreations tax (imposed by county ordinance pursuant to chapter 36.38 RCW).)) | |
in firearms . . . . . . . . . . . . |
||
foreign insurers . . . . . . . . . . . . |
||
taxes . . . . . . . . . . . . |
chapter 66.24 RCW; |
|
state . . . . . . . . . . . . |
chapter 82.12 RCW.)) | |
| FEDERAL-- |
|
| A.A.A. compensating tax . . . . . . . . . . . . | 7 U.S.C.A. Sec. 615(e); |
| A.A.A. processing tax . . . . . . . . . . . . | 7 U.S.C.A. Sec. 609; |
| Aviation fuel . . . . . . . . . . . . | 26 U.S.C.A. Sec. 4161; |
| Employment taxes . . . . . . . . . . . . | 26 U.S.C.A. chapter 21-25; |
| Estate taxes . . . . . . . . . . . . | 6 U.S.C.A. chapter 11; |
| Firearms, shells and cartridges . . . . . . . . . . . . | 26 U.S.C.A. Sec. 4181; |
| Gift taxes . . . . . . . . . . . . | 26 U.S.C.A. chapter 12; |
| Importers, manufacturers and dealers in firearms . . . . . . . . . . . . | 6 U.S.C.A. Sec. 5801; |
| Income taxes . . . . . . . . . . . . | 26 U.S.C.A. Subtitle A; |
| Insurance policies issued by foreign insurers . . . . . . . . . . . . | 26 U.S.C.A. Sec. 4371; |
| Liquor taxes . . . . . . . . . . . . | 6 U.S.C.A. chapter 51; |
| Sale and transfer of firearms tax . . . . . . . . . . . . |
26 U.S.C.A. Sec. 5811; |
| Sporting goods . . . . . . . . . . . . | 26 U.S.C.A. Sec. 4161; |
| Superfund tax . . . . . . . . . . . . | 26 U.S.C.A. Sec. 4611; |
| Tires . . . . . . . . . . . . | 26 U.S.C.A. Sec. 4071; |
| Tobacco excise taxes . . . . . . . . . . . . | 26 U.S.C.A. chapter 52; |
| Wagering taxes . . . . . . . . . . . . | 26 U.S.C.A. chapter 35; |
| STATE AND MUNICIPAL-- |
|
| Ad valorem property taxes . . . . . . . . . . . . | Title 84 RCW; |
| Alcoholic beverages licenses and stamp taxes (Breweries, distillers, distributors and wineries) . . . . . . . . . . . . | chapter 66.24 RCW; |
| Boxing, sparring and wrestling tax . . . . . . . . . . . . |
chapter 67.08 RCW; |
| Business and occupation tax . . . . . . . . . . . . | chapter 82.04 RCW; |
| Cigarette tax . . . . . . . . . . . . | chapter 82.24 RCW; |
| Gift and inheritance taxes . . . . . . . . . . . . | Title 83 RCW; |
| Insurance premiums tax . . . . . . . . . . . . | chapter 48.14 RCW; |
| Municipal utility taxes . . . . . . . . . . . . | chapter 54.18 RCW; |
| Parimutuel tax . . . . . . . . . . . . | RCW 67.16.100; |
| Public utility tax . . . . . . . . . . . . | chapter 82.16 RCW; |
| Real estate excise tax . . . . . . . . . . . . | chapter 82.45 RCW; |
| Tobacco products tax . . . . . . . . . . . . | chapter 82.26 RCW; |
| Use tax when not collected as agent for state . . . . . . . . . . . . | chapter 82.12 RCW. |
[Statutory Authority: RCW 82.32.300. 83-08-026 (Order ET 83-1), § 458-20-195, filed 3/30/83; Order ET 70-3, § 458-20-195 (Rule 195), filed 5/29/70, effective 7/1/70.]