PERMANENT RULES
Date of Adoption: October 26, 2001.
Purpose: WAC 458-20-17802 Collection of use tax by county auditors and department of licensing -- Measure of tax, explains that when a person applies to transfer the certificate of ownership of a motor vehicle acquired without payment of retail sales tax, the Department of Licensing, county auditors, and their subagents will collect use tax based on the value of the article used. The rule explains that the value of the article used is generally the purchase price. However, if the purchase price does not represent the true value, the value of the article used must be determined as nearly as possible by the retail-selling price of similar vehicles in the same area.
The rule explains that for the purpose of determining the measure of the use tax, the Department of Licensing, county auditors, and their subagents will compare the purchase price of the motor vehicle to the average retail-selling price of comparable vehicles using an automated valuing system. The rule further describes the circumstances under which the purchase price will be presumed to represent true value. For those circumstances that the purchase price is not presumed to represent true value, the rule explains the methods a person applying to transfer the certificate of ownership may use to substantiate a true value other than the value provided by the automated valuing system.
Statutory Authority for Adoption: RCW 82.32.300.
Other Authority: RCW 82.12.045.
Adopted under notice filed as WSR 01-09-040 on April 12, 2001.
Changes Other than Editing from Proposed to Adopted Version: Replacing the term "automated system" with "automated valuing system." We have replaced the term "automated system" with "automated valuing system" throughout the rule.
Subsection (2) What is a motor vehicle? The proposed rule provides a definition of the term "motor vehicle." We have eliminated the definition in its entirety and have renumbered the following subsections of the rule accordingly.
Subsection (4) Use of automated system to verify measure of tax (renumbered as subsection (3)). We revised the following proposed language as noted to more accurately identify the period for which the automated valuing system does not provide values.
For example, the automated system's database does not
provide average retail value information for collectible vehicles
or vehicles manufactured between 1970 and 1980 that are over
twenty years of age.
We also corrected a grammatical error contained in the proposed rule as follows:
In the absence of an average retail value, county auditors,
their subagents, or the department of licensing will determine
the true value as closely as nearly as possible according to the
retail selling price at place of use of similar vehicles of like
character and quality.
Subsection (6)(b) Declaration of buyer and seller (renumbered as subsection (5)(b)). Subsections (6)(b), (c), and (e) of the proposed rule explain that a person may appeal any assessment of additional taxes, interest, and penalties resulting from the Department of Revenue's review of documentation. In addition to adding the title of Rule 100 to subsection (6)(b), which was provided in other sections, we have made the following change to subsections (6)(b), (c), and (e) to clarify that this appeal must be made to the Department of Revenue.
A person may appeal an assessment to the department of revenue as provided in WAC 458-20-100 (Appeals, small claims and settlements).
Subsection (6)(c) Written appraisal and (6)(e) Repair estimate (renumbered as subsection (5)(c) and (5)(e)). Subsections (6)(c) and (e) explain that the written appraisal and the repair estimate documentation must include the "vehicle description." We have made the following change to clarify what the description must include.
...include the vehicle description, including the vehicle make, model, and identification number (VIN).
For subsection (6)(c), we also made the following change to correct erroneous terminology.
The written estimate appraisal must appear on company
stationery or have the business card attached and include the
vehicle description...
Subsection (6)(e) Repair estimate (renumbered as subsection (5)(e)). We have made the following changes to the example provided in subsection (6)(e) of the proposed rule for clarification purposes.
The purchase price is presumed to represent the true value if the total of the purchase price and the repair estimate is not more than $2,000 below the average retail value. For example, a person purchases a vehicle with extensive bumper damage for $1,700. The automated system indicates that the vehicle's average retail value is $6,000. An estimate from an auto body repair business indicates a cost of $2,500 to repair the bumper damage. The purchase price is presumed to represent the vehicle's true value because when the total of the purchase price and the repair estimate ($1,700 + $2,500 = $4,200) is compared to the average retail value, the total is not more than $2,000 below the average retail value ($6,000).
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 0, 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 1, Amended 0, Repealed 0.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 1, 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 1,
Amended 0,
Repealed 0.
Effective Date of Rule:
Thirty-one days after filing.
October 26, 2001
Claire Hesselholt
Rules Manager
Legislation and Policy Division
OTS-4761.5
NEW SECTION
WAC 458-20-17802
Collection of use tax by county auditors
and department of licensing -- Measure of tax.
(1) Introduction.
The department of revenue has authorized county auditors and the
department of licensing to collect the use tax imposed by chapter 82.12 RCW when a person applies to transfer the certificate of
ownership of a motor vehicle acquired without the payment of
sales tax. See RCW 82.12.045. This rule explains how county
auditors, their subagents, and the department of licensing
determine the measure of the use tax. This rule does not relieve
a seller registered with the department of revenue of the
statutory requirement to collect sales tax when selling tangible
personal property, including motor vehicles. RCW 82.08.020 and
82.08.0251. The use tax reporting responsibilities of Washington
residents in other situations and the general nature of the use
tax are addressed in WAC 458-20-178 (Use tax). The various use
tax exemptions provided by chapter 82.12 RCW are discussed in WAC 458-20-17801 (Use tax exemptions). The application of tax to
vehicles acquired by Indians and Indian tribes is discussed in
WAC 458-20-192 (Indians -- Indian country).
Vehicle licensing locations and information about vehicle titles and registration are available from the department of licensing on the Internet at: http://www.wa.gov/dol/, under "vehicles list." This information is also available by contacting the local county auditor's office listed in the government pages of the telephone directory.
(2) What is use tax based on? For purposes of computing the amount of use tax due, the value of the article used is the measure of tax. The value of the article used is generally the purchase price. If the purchase price does not represent the true value of the article used, the value must be determined as nearly as possible according to the retail selling price at place of use of similar vehicles of like quality and character. RCW 82.12.010.
(3) Use of automated system to verify measure of tax. When a person applies to transfer the certificate of ownership of a motor vehicle, county auditors, their subagents, or the department of licensing must verify that the purchase price represents the true value. In doing so, county auditors, their subagents, or the department of licensing compare the vehicle's purchase price to the average retail value of comparable vehicles using an automated valuing system. The automated valuing system identifies the average retail value using a data base that is provided by a regional industry standard source specializing in providing valuation services to local, state, and federal governments, and the private sector.
In limited situations, the automated valuing system's data base may not provide the average retail value for a motor vehicle. For example, the automated valuing system's data base does not provide average retail value information for collectible vehicles or vehicles that are over twenty years of age. In the absence of an average retail value, county auditors, their subagents, or the department of licensing will determine the true value as nearly as possible according to the retail selling price at place of use of similar vehicles of like character and quality. To assist in this process, the department of revenue and the department of licensing may approve the use of alternative valuing authorities as necessary.
(4) What happens when the purchase price is presumed to represent the true value? County auditors, their subagents, or the department of licensing will use the purchase price to compute the amount of use tax due when the purchase price represents the vehicle's true value. County auditors, their subagents, or department of licensing will presume the purchase price represents the vehicle's true value if one of the following conditions is met:
(a) The vehicle's average retail value, as provided by the automated valuing system, is less than $3,000.
For example, a person buys a motor vehicle for $800. The automated valuing system indicates that the vehicle's average retail value is $2,900. The purchase price is presumed to represent the vehicle's true value because the average retail value is less than $3,000.
(b) The vehicle's purchase price is not more than $2,000 below the average retail value as provided by the automated valuing system.
For example, a person buys a used motor vehicle for $4,500. The automated valuing system indicates the vehicle's average retail value is $6,000. When compared to the average retail value, the purchase price is not more than $2,000 below the average retail value. Consequently, the purchase price is presumed to represent the vehicle's true value.
(5) What happens when the purchase price is not presumed to represent the true value? If the vehicle's purchase price is not presumed to be the true value as explained in subsection (4) of this rule, a person may remit use tax based on the average retail value as indicated by the automated valuing system or substantiate the true value of the vehicle using any one of the following methods.
(a) Industry-accepted pricing guide. A person applying to transfer a certificate of ownership may provide the county auditor, a subagent, or the department of licensing with documentation from one of the various industry-accepted pricing guides. The value from the industry-accepted pricing guide must represent the retail value of a similarly equipped vehicle of the same make, model, and year in a comparable condition. The purchase price is presumed to represent the vehicle's true value if the purchase price is not more than $2,000 below the retail value.
For example, a person buys a vehicle for $3,500. The automated valuing system indicates that the vehicle's average retail value is $5,700. An industry-accepted pricing guide shows that the retail value of a similarly-equipped vehicle in a comparable condition of the same make, model, and year is $5,000. When compared to the retail value established by the industry-accepted pricing guide, the purchase price is not more than $2,000 below the retail value. Consequently, the purchase price is presumed to represent the vehicle's true value.
(b) Declaration of buyer and seller. A person applying to transfer a certificate of ownership may provide to the county auditor, a subagent, or the department of licensing a Declaration of Buyer and Seller Regarding Value of Used Vehicle Sale (REV 32 2501) to substantiate that the purchase price is the true value of the vehicle. The declaration must be signed by both the buyer and the seller and must certify to the purchase price and the vehicle's condition under penalty of perjury. The department of revenue may review a declaration and assess additional tax, interest, and penalties. A person may appeal an assessment to the department of revenue as provided in WAC 458-20-100 (Appeals, small claims and settlements).
The declaration is available from the department of revenue on the Internet at http://dor.wa.gov/ under "other forms and schedules." It is also available at all vehicle licensing locations, department of revenue field offices, or by writing:
Department of Revenue
Taxpayer Services
P.O. Box 47478
Olympia, WA 98504-7478
(c) Written appraisal. A person applying to transfer a certificate of ownership may present to the county auditor, a subagent, or the department of licensing a written appraisal from an automobile dealer, insurance or other vehicle appraiser to substantiate the true value of the vehicle. If an automobile dealer performs the appraisal, the dealer must be currently licensed with the department of licensing's dealer services division or be a licensed vehicle dealer in another jurisdiction.
The written appraisal must appear on company stationery or have the business card attached and include the vehicle description, including the vehicle make, model, and identification number (VIN). The person performing the appraisal must certify that the stated value represents the retail selling price of a similarly-equipped vehicle of the same make, model, and year in a comparable condition. The department of revenue may review an appraisal and assess additional tax, interest, and penalties. A person may appeal an assessment to the department of revenue as provided in WAC 458-20-100 (Appeals, small claims and settlements).
(d) Declaration of use tax. A person applying to transfer a certificate of ownership may present to the county auditor, a subagent, or the department of licensing a Declaration of Use Tax (REV 32 2486e) to substantiate the true value of the vehicle. An authorized employee of the department of revenue must complete the declaration. Determining the true value may require a visual inspection that is not available at all department of revenue locations.
(e) Repair estimate. A person applying to transfer a certificate of ownership may present to the county auditor, a subagent, or the department of licensing a written repair estimate, prepared by an auto repair or auto body repair business. This estimate will then be used to assist with determining the true value of the vehicle. The written estimate must appear on company stationery or have the business card attached. In addition, the written estimate must include the vehicle description, including the vehicle make, model, and identification number (VIN), and an itemized list of repairs. The department of revenue may review an appraisal and assess additional tax, interest, and penalties. A person may appeal an assessment to the department of revenue as provided in WAC 458-20-100 (Appeals, small claims and settlements).
The purchase price is presumed to represent the true value if the total of the purchase price and the repair estimate is not more than $2,000 below the average retail value. For example, a person purchases a vehicle with extensive bumper damage for $1,700. The automated valuing system indicates that the vehicle's average retail value is $6,000. An estimate from an auto body repair business indicates a cost of $2,500 to repair the bumper damage. The purchase price is presumed to represent the vehicle's true value because when the total of the purchase price and the repair estimate ($1,700 + $2,500 = $4,200) is compared to the average retail value, the total is not more than $2,000 below the average retail value ($6,000).
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