PROPOSED RULES
Original Notice.
Preproposal statement of inquiry was filed as WSR 00-08-62 [00-08-062].
Title of Rule: Chapter 308-77 WAC, Special fuel tax rules and regulations.
Purpose: 1. To meet the criteria set forth in Governor Locke's Executive Order 97-02.
2. To clarify rules and help make them more comprehensible.
Statutory Authority for Adoption: RCW 82.38.260.
Summary: New WAC 308-77-005 Definitions, 308-77-015 Incidental use/exemptions, 308-77-025 Issuance of license, 308-77-035 Cancellation or revocation of special fuel license(s), 308-77-075 Payment due dates for special fuel taxes, 308-77-085 Minimum tax payment/refund, 308-77-092 Refund for bad debt loss (other than a special fuel supplier), [no further information supplied by agency].
Reasons Supporting Proposal: Meet criteria supporting Governor Locke's Executive Order 97-02.
Name of Agency Personnel Responsible for Drafting: Art Farley, 2424 Bristol Court S.W., Olympia, (360) 664-1820; Implementation and Enforcement: Jeff Beach, 2424 Bristol Court S.W., Olympia, (360) 664-1844.
Name of Proponent: , governmental.
Rule is not necessitated by federal law, federal or state court decision.
Explanation of Rule, its Purpose, and Anticipated Effects: The anticipated effects will be a clarification of current special fuel tax rules and a new format to enhance readability and understanding.
Proposal Changes the Following Existing Rules: Rules were repealed, clarified, consolidated and changed to a question and answer format for ease in understanding and centralization of subject matter.
No small business economic impact statement has been prepared under chapter 19.85 RCW. A small business economic impact statement is not required pursuant to RCW 19.85.030 (1)(a). The proposed rule making does not impose more than a minor cost on businesses in an industry.
RCW 34.05.328 does not apply to this rule adoption. The contents of the proposed rules are explicitly and specifically dictated by statute.
Hearing Location: Prorate and Fuel Tax Services, 3rd Floor Conference Room, 2424 Bristol court S.W., Olympia, WA 98507, on September 26, 2001, at 9:00 a.m.
Assistance for Persons with Disabilities: Contact Art Farley by September 25, 2001, TTY (360) 664-8885, or (360) 664-1820.
Submit Written Comments to: Art Farley, Prorate and Fuel Tax Services, P.O. Box 9036, Olympia, WA 98507-9036, fax (360) 664-2365, e-mail afarley@dol.wa.gov, by September 19, 2001.
Date of Intended Adoption: October 30, 2001.
July 31, 2001
Thao Manikhoth, Administrator
Prorate and Fuel Tax Services
OTS-5035.1
NEW SECTION
WAC 308-77-005
Definitions.
(1) "Special fuel" as defined
in RCW 82.38.020(23) includes diesel fuel, propane, natural gas,
kerosene and any other combustible liquid or gas by whatever name
the liquid or gas may be known or sold for the generation of
power to propel a motor vehicle on the highways except fuel that
is subject to the tax imposed by chapter 82.36 RCW.
(2) "Publicly owned fire fighting equipment" means equipment owned and used exclusively for fire fighting by any agency or political subdivision of the state of Washington.
(3) "Farmer" means any person engaged in the cultivation and tillage of the soil, dairying, the production, cultivation, growing, and harvesting of any agricultural or horticultural commodities (except forestry or forestry operations), the raising of livestock, bees, fur-bearing animals, or poultry, and any practices performed on a farm as an incident to or in conjunction with such farming operations.
(4) "Logging company" means any person engaged in the business of cutting timber.
(5) "Construction company" means any person, firm, partnership or corporation who or which is engaged in the business of a contractor.
(6) "Contractor" means any person in the pursuit of an independent business that undertakes to, or offers to undertake, or submits a bid to, construct, alter, repair, add to, subtract from, improve, move, wreck or demolish, for another, any building, highway, road, railroad, excavation or other structure, project, development, improvement attached to real estate, including the installation of carpeting and/or floor covering, the erection of scaffolding, roofing and siding.
(7) "Export" means to obtain special fuel in this state for sale or distribution outside this state. To be considered an "export" and qualify for exemption from the special fuel tax, special fuel obtained outside the bulk transfer terminal system must be physically off-loaded in the destination state, province, or foreign country and the exporter must be licensed or registered, if required, in the state, province, or country of destination.
(8) "Special fuel supplier" means a person who is licensed as a supplier under chapter 82.38 RCW and must hold a federal certificate of registry issued under the Internal Revenue Code authorizing the person to enter into federal tax free transactions on special fuel in the bulk transfer-terminal system.
(9) "Invoice" means any document, paper or electronic, evidencing the transfer of ownership of special fuel.
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(2) Are there any circumstances in which off highway fuel use is considered taxable? If fuel is used in the operation of a motor vehicle in a continuous trip which is partly on and partly off the highway, the tax applies to all the fuel used including the fuel used in the operation off the highway when the total distance traveled off the highway does not exceed one mile.
A continuous trip means a vehicular movement involving the use of a highway for the transportation of persons or property from one place to another or, in the instance of a round trip, from the point of origin of the movement to the point of destination and return to the point of origin.
(3) Are sales to qualified foreign diplomatic and consular missions tax exempt? Tax exempt sales of special fuel may be made to qualified foreign diplomatic, consular missions and their qualified personnel if the diplomatic, consular missions, and qualified personnel maintain tax-exempt credit card accounts. Special fuel purchased by cash is not tax exempt.
(4) What is required for a licensee to issue a credit card to qualified foreign government personnel? Application must be accompanied by Form DSP-99A, issued by the Office of Foreign Missions, United States Department of State, and approved by that office.
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(2) When is a special fuel tax trip permit required? If you are not an International Fuel Tax Agreement licensee, a special fuel tax permit must be purchased when entering this state if the vehicle being operated has:
(a) Two axles and a gross vehicle weight or registered gross vehicle weight exceeding twenty-six thousand pounds; or
(b) Three or more axles regardless of weight; or
(c) Is a combination of vehicles, when the combined gross vehicle weight or registered gross vehicle weight exceeds twenty-six thousand pounds.
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(a) Upon written request of the licensee. The cancellation will become effective within sixty days from receipt of the written request.
(b) Upon investigation and sixty days' notice to the licensee if the department determines the licensee is no longer engaged in the sale or distribution of special fuel for a period of six consecutive months prior to the cancellation.
(c) Upon failure to file a new or additional surety bond or to make deposits in accordance with RCW 82.38.130, or when the surety bond issuer requests to be released or discharged.
(d) Upon failure to file a new or additional surety bond or to deposit additional securities within thirty days after being requested to do so by the department.
(2) How do I request to have my license canceled? A written request for cancellation and any required tax returns up to the date of cancellation must be forwarded to the department with a remittance of any tax, penalty and interest due.
(3) Under what circumstances may my license be suspended or revoked? A license suspension or revocation is initiated by the department for cause as defined in chapter 82.38 RCW.
(4) What happens when my license is canceled, suspended or revoked? The department will notify all special fuel suppliers, importers, exporters, blenders and distributors of the change in license status.
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(2) What if my payment is not made by electronic funds transfer? If you are not paying your special fuel tax by electronic funds transfer, then payment is due on the next state business day. (For example, if the payment due date falls on Saturday, you must submit payment by Monday.)
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(a) Are a licensed special fuel importer, special fuel blender, or special fuel distributor; and
(b) Paid tax on an account found to be a worthless accounts receivable; and
(c) Charged off the amount as a bad debt on your federal income tax return; and
(d) Filed the claim within five years of the date of sale.
(2) What documentation must be submitted to the department to claim a refund on a bad debt that has been charged off? The following must be submitted:
(a) The portion of the federal income tax return and a supporting schedule that lists the bad debt as being charged off; and
(b) Invoices supporting fuel sales being claimed as bad debt; and
(c) Name and address of purchaser; and
(d) Special fuel tax return; or
(e) Refund claim form.
(3) Can a tax refund be claimed for expenses related to the collection of a bad debt? No, a tax refund cannot be claimed for expenses incurred in collecting a bad debt.
(4) If special fuel tax previously declared as a worthless account receivable is collected, how is it remitted to the department?
(a) A special fuel importer or special fuel blender that collects any special fuel tax previously taken as a tax credit on a worthless account receivable must remit the special fuel tax with the tax return for the reporting period the special fuel tax was collected or on forms prescribed by the department.
(b) A special fuel distributor must remit the special fuel tax collected with a form provided by the department no later than the last state business day of the month following the month of collection.
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(a) When a licensed distributor does not pay a licensed supplier the special fuel taxes which are due, the supplier must notify the department no later than twenty calendar days from the date the fuel tax was due to the supplier. If that twentieth day falls on a Saturday, Sunday, or legal holiday, the supplier must notify the department on the next business day.
(b) The supplier must complete the form that has been developed by the department for this purpose or timely provide written notification to the department. Receipt of written notification constitutes evidence that the distributor has failed to pay the special fuel taxes owed.
(2) What action will the department take when notified by the supplier of the distributor's failure to pay? The department will suspend the distributor's license for nonpayment of special fuel tax due the supplier and notify all suppliers of the suspension in the following ways:
(a) Posting notification of the suspension on the department's website;
(b) Transmission of the notification via electronic mail or facsimile; and
(c) Mailing of the notification via U.S. mail.
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(2) What information must appear on each invoice? Each invoice must include the following information:
(a) The name and address of the seller;
(b) The name, address, and special fuel tax license number, if applicable, of the purchaser;
(c) The date of delivery (month, day and year);
(d) The location of the point of shipment. Alphanumeric codes are allowed if the definitions of the alphanumeric codes are provided to the department;
(e) The physical address of the fuel delivery or exchange, if different than the purchaser address, including the name of the state, Canadian Province, or foreign country. Alphanumeric codes are allowed if the definitions of the alphanumeric codes are provided to the department;
(f) In the case of a delivery onto a federally recognized Indian reservation or onto Indian country, the invoice must identify the state within the contiguous United States, Hawaii, Alaska, District of Columbia, U.S. possession, or Canadian Province in which the delivery took place;
(g) Name of carrier transporting fuel;
(h) Name of product sold;
(i) The number of U.S. gallons of product sold (must indicate net or gross gallons);
(j) The price per gallon and total amount charged;
(k) A statement on the invoice indicating whether the fuel has been sold without the Washington state fuel tax.
(3) What happens if a purchaser's invoice is lost or destroyed? If an invoice is lost or destroyed, the seller shall issue a duplicate or copy containing all information that appeared on the original invoice, if requested by the purchaser. The copies shall be plainly marked "copy" or "duplicate."
(4) What happens if an incorrect invoice is issued to the purchaser? The seller must issue a corrected invoice to the purchaser. The invoice must clearly indicate that it is a corrected invoice and reference the original invoice.
(5) What documentation does a licensed supplier, importer or blender need in order to support taxable special fuel consumed for their own use? Fuel used in motor vehicles or for other taxable purposes by a licensed supplier, importer or blender shall be supported by records covering the total fuel used during the reporting period.
(6) What documentation does a distributor need in order to claim a refund for nontaxable use of special fuel? If special fuel is used for a purpose subject to tax refund, the distributor must have supporting invoices or records indicating the use of the special fuel and the type(s) of equipment it is used in.
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(1) Tax exempt sales shall be reported and supported by Schedule 10, Uniform Fuel Tax Multiple Schedule of Disbursements (Form FT 441-841). A separate schedule for each category of exempt sales must be submitted with the tax return. For export sales, a separate Schedule 10 must be submitted for each state or foreign jurisdiction of destination. The department shall furnish the government agency of the state or foreign jurisdiction of destination a copy of this Schedule 10 to give information on the movement of untaxed fuel across state lines.
(2) In the case of a delivery onto a federally recognized Indian reservation or onto Indian country, the invoice must identify the state within the contiguous United States, Hawaii, Alaska, District of Columbia, U.S. possession, or Canadian Province in which the delivery took place.
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(2) What happens after the department receives the petition for an informal hearing? Upon receipt of a petition for an informal hearing, the department will establish the time and place for the hearing and notify you by mail at least ten days prior to the scheduled date. If you are unable to attend the hearing on the date or time scheduled, you may request the department to reschedule the hearing.
(3) What happens if I fail to appear for my informal hearing without prior notification? Failure to appear may result in the loss of your informal administrative appeal rights.
(4) What happens following my informal hearing? The department will make a determination in accordance with the Revised Code of Washington, administrative rules, and policies established by the department.
(5) What if I do not agree with the department's informal hearing determination? You may, within thirty days after the date of mailing of the determination, appeal in writing and request a formal hearing by an administrative law judge. The appeal shall indicate the portions of the determination you feel are in error and set forth the reasons for believing the decision should be amended. The department will establish a time and place for a formal hearing and give you at least ten days' notice.
(6) When does my reassessment become final? The decision of the department upon a petition for reassessment shall become final, due and payable thirty days after service upon you unless you appeal further.
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(2) How will the department determine whether fees, penalties and/or interest should be mitigated? The department may review records, account history or other information in arriving at its decision to mitigate.
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(2) When can I file a refund claim? A refund claim may be filed at any time not to exceed a thirteen-month time limit from the date of purchase. If you claim a refund for fuel purchased in any month of a claimed period, you may not claim additional purchases for that month on another claim. The department will use the postmark date to determine the eligibility of the claim.
(3) Do I need to send in my invoices with the refund claim request? If your refund claim request is one hundred dollars or less, you do not have to send your purchase invoices with your refund claim unless required by the department. If your refund claim request is more than one hundred dollars, purchase invoices are required. If electronic invoices were issued to the claimant, paper copies of the invoices or other documentation containing required information must be submitted with the refund claim.
(4) How shall I account for my inventory on my refund claim form? Any fuel on hand (by physical measurement) at the end of the claim period should be indicated on the claim as ending inventory and should be reported as a beginning inventory on the next refund claim form. Credit for the inventory will be allowed on the next claim if it is filed within thirteen months from the filing date of the claim that established the inventory. All invoices for the total fuel purchased must be submitted with each claim unless the amount of the claim is one hundred dollars or less.
(5) As a licensed distributor do I need to send in supporting summary schedules and invoices with my refund claim request? Yes. Summary schedules must be provided by the distributor. Invoices may be requested by the department.
(6) Who may sign a refund claim form? The following persons may sign a refund claim form:
(a) Individuals - permit holder;
(b) Partnership - any one of the partners;
(c) Business firm or corporation - owner, corporate officer or other authorized agent.
(7) Can invoices be in a different name than what is on the claim form? No, invoices made out in other names will not be accepted.
(8) Can I request that my refund be assigned to another person? Yes, if a letter of assignment is attached, signed by the person to whom the invoice was issued, designating the payee.
(9) How long will it take until I receive my refund? Properly completed refund claims will be processed and mailed within thirty business days of date of receipt.
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(2) How is use tax computed? The claimant may calculate the use tax amount using the actual use tax rate(s) and actual cost per gallon or the department will calculate the use tax amount using an average use tax rate and average price per gallon. Either method chosen by the claimant must be used for each refund claim submitted during a calendar year, unless there has been a change in the department's estimated average fuel cost during that period. If computed by the department, the department will use an estimate of the statewide average fuel cost and an estimated use tax rate. The statewide average cost and use tax rate will be reviewed every six months and adjusted as necessary. If there is any dispute over the method of calculation, the taxpayer will be required to use actual cost of the fuel and use tax rate(s).
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(2) What information must be included on the invoice? Each invoice must contain the following information:
(a) Name and address of the seller;
(b) Kind or type of fuel and number of gallons purchased;
(c) Complete date of sale (month, day and year);
(d) Price per gallon; and
(e) Total amount of sale.
(3) Will the department accept invoices with altered, corrected or erased information? Invoices which indicate alterations, corrections or erasures shall be voided and will not be accepted. Any person who alters any part of an invoice that will tend to give the claimant an illegal gain may have the entire claim invalidated and the director may suspend any further claims for refund for a period of one year. If an electronic invoice was issued, then a paper copy of the electronic invoice or other documentation containing required information must be submitted.
(4) What happens if an invoice is lost or destroyed? If an invoice is lost or destroyed, the seller may issue a duplicate or copy containing the invoice number, date of sale, gallonage, price and amount, and any information that appeared on the first invoice. The copies shall be plainly marked "copy" or "duplicate."
(5) What happens if I issued an incorrect invoice to the purchaser? Sellers of fuel must issue a corrected invoice to the purchaser. The invoice must clearly indicate that it is a corrected invoice and reference the original invoice. Only one invoice shall be issued for any one delivery.
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(2) What is not considered auxiliary equipment? Equipment that is considered an integral part of the operation of the vehicle, such as air conditioning, power steering, generator, etc.
(3) What formula does the department use in determining power take-off usage? For special fuel used in operating a power take-off unit on any of the vehicles listed herein when direct measurement is not feasible, the tax exemption is calculated at the rate specified as a percentage of the total Washington taxable fuel used by the vehicles:
| Cement mixer | 25% |
| Fire trucks (private) | 25% |
| Mobile cranes | 25% |
| Garbage trucks (with load compactor) | 25% |
| Sewer cleaning truck/jet vactor |
25% |
| Super suckers | 25% |
| Line truck with digger/derrick or aerial lift | 20% |
| Log truck with self loader | 20% |
| Refrigeration trucks | 20% |
| Sweeper trucks (must be motor vehicle) | 20% |
| Boom truck/block boom | 15% |
| Bulk feed truck | 15% |
| Dump trailers | 15% |
| Dump trucks | 15% |
| Hot asphalt distribution truck | 15% |
| Leaf truck | 15% |
| Lime spreader | 15% |
| Pneumatic tank truck | 15% |
| Salt spreader on dump truck | 15% |
| Seeder truck | 15% |
| Semiwrecker | 15% |
| Service truck with jack hammer/drill | 15% |
| Snow plow | 15% |
| Spray truck | 15% |
| Tank transport | 15% |
| Tank trucks | 15% |
| Truck with PTO hydraulic winch | 15% |
| Wrecker | 15% |
| Car carrier with hydraulic winch | 10% |
| Carpet cleaning van | 10% |
| Others | 7.5% |
(4) What if my fuel consumption is greater than the percentages indicated? If a claimant can provide satisfactory documentation and records to show that the fuel consumed by the power take-off is greater than the percentages indicated, the department may grant the higher percentage on a case-by-case basis.
(5) What documents must accompany the refund claims? All claims must be accompanied by valid purchase invoices to cover the total gallons of special fuel purchased, except that invoices for special fuel used in fuel oil delivery trucks or when measured by a metering device need only be equal to or greater than the gallons claimed as refundable. A support schedule for Washington power take-off and power pumping credits shall accompany each claim for refund.
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(2) Who may the department assess a penalty for unlawful use of dyed diesel? The department may assess:
(a) The operator of the vehicle; and/or
(b) The registered owner(s) of the vehicle; and/or
(c) Any other person or entity responsible for the operation, maintenance or fueling of the vehicle.
(3) If dyed diesel is discovered in the fuel supply tank(s) of vehicles, when must the fuel be removed from the involved vehicle(s)? The dyed diesel fuel must be removed from the vehicle(s) within twenty-four hours from the time of discovery. Additional violations on the same vehicle(s) detected after the twenty-four-hour period will be considered as separate violations.
(4) May the department assess dyed diesel penalties on the fuel in bulk storage tank(s)? Yes, if the department determines that any dyed diesel fuel from the bulk storage tank(s) has been used for unlawful purposes in any vehicle(s). Fuel remaining in the bulk storage fuel tank(s) will be considered for on highway use.
(5) How is the dyed diesel fuel in bulk storage tank(s) assessed? Once dyed diesel fuel from bulk storage has been used for unlawful purposes, an assessment will be based on the capacity or estimated quantity of dyed diesel fuel in the bulk storage tank(s) without regard to how this fuel will be used.
(6) What if the department or authorized representative is denied access to inspect the fuel in diesel vehicle(s) or bulk storage tank(s)? The penalty in RCW 82.38.170(13) will be applied to the capacity of the bulk storage tank(s) and/or to the vehicles subject to the refusal. All licenses issued under this chapter may be subject to cancellation and/or revocation under RCW 82.38.120(9) and 82.38.130.
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(a) Physical inventories of bulk storage plants taken at the close of each calendar month.
(b) Meter readings taken at the close of each calendar month for pumps through which fuel is dispensed.
(c) A record of fuel receipts together with invoices, bills of lading, transfer documents, yield reports, and other documents relative to the acquisition of fuel.
(d) A record of fuel disbursements together with invoices, bills of lading and other documents relative to the disbursement of fuel.
(2) What records must a licensed dyed special fuel user keep? The recordkeeping requirements of this section also apply to dyed special fuel:
(a) Purchased and used by licensed dyed special fuel users; and
(b) Authorized for use on the highway.
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The following sections of the Washington Administrative Code are repealed:
| WAC 308-77-010 | Definitions. |
| WAC 308-77-020 | Incidental use/exemptions. |
| WAC 308-77-040 | Issuance of license. |
| WAC 308-77-050 | Cancellation or revocation of license. |
| WAC 308-77-091 | Electronic fund transfers. |
| WAC 308-77-095 | Minimum tax payment. |
| WAC 308-77-105 | Refund for bad debt loss (other than a special fuel supplier). |
| WAC 308-77-110 | Allowance of credit or refund of tax paid. |
| WAC 308-77-115 | Delinquent account notification process. |
| WAC 308-77-150 | Records, receipts and invoices. |
| WAC 308-77-160 | Sales invoices. |
| WAC 308-77-165 | Export sales. |
| WAC 308-77-190 | Audit appeal procedure. |
| WAC 308-77-215 | Mitigation of penalties and interest. |
| WAC 308-77-220 | Filing of refund claim. |
| WAC 308-77-225 | Interest assessment on refund claims. |
| WAC 308-77-230 | Invoice requirements for refund purposes. |
| WAC 308-77-250 | Power take-off use. |
| WAC 308-77-260 | Auxiliary engines. |