Washington Tax Changes - October 2024
Week Of 09.30.2024
Washington Tax Updates:
- Watercraft Excise Tax: The Washington Department of Revenue has updated its depreciation schedule for watercraft excise taxes. The new schedule, effective January 1, 2025, is based on current watercraft valuation, sales, and registration data.
- Commute Trip Reduction Incentives: The Washington Department of Revenue has updated its rules regarding commute trip reduction incentives for employers and property managers.
- Credit Eligibility: Employers and property managers can earn tax credits for providing financial incentives to employees who use ride-sharing or public transportation. These credits are available through December 31, 2024 for employers and December 31, 2023 for property managers.
- Credit Usage: Credits must be used for tax reporting periods within the calendar year they are approved and claimed before July 1, 2025.
These updates apply to the following taxes:
- Business and Occupation Tax
- Public Utilities Tax
- Sales and Use Taxes
Washington Business and Occupation Tax Updates:
- Commute Trip Reduction Incentives: The Washington Department of Revenue has updated its rules regarding commute trip reduction incentives. Employers and property managers in Washington can earn tax credits for providing financial incentives to employees who use ride-sharing or public transportation.
- Credit Eligibility: These credits are available through December 31, 2024 for employers and December 31, 2023 for property managers.
- Credit Usage: Credits must be used for tax reporting periods within the calendar year they are approved and claimed before July 1, 2025.
- Terminated Distribution Rights Payments: The Washington Board of Tax Appeals has ruled that payments received for terminated distribution rights by wholesale distributors of alcoholic beverages are considered taxable gross income for the Business and Occupation (B&O) tax.
- Taxable Income: The BTA determined that these payments are considered value accrued from business activities and are therefore subject to the B&O tax.
- Franchise Act: The ruling clarifies that the Washington Wholesale Distributor/Supplier Equity Agreement Act (Franchise Act) does not exempt these payments from the B&O tax.
Washington Self-Produced Fuel Tax:
- Self-produced fuels used in a manufacturing plant that produces the fuel are subject to state use tax but exempt from local use tax.
- Types of self-produced fuels:
- Diesel
- Biodiesel
- Hydrogen
- Catalyst coke
- Green coke
- Refinery fuel gas
- Self-produced biomass fuel is exempt from both state and local use tax.
- Refinery fuel gas use tax value:
- $3.99 per million Btu for the 2024 fourth quarter (October 1 - December 31).
- Calculated based on the "three-year average spot price of natural gas."
- State use tax rate for self-produced refinery fuel gas: 3.852%.
- Additional taxes that may apply to self-produced fuel production:
- Manufacturing B&O tax
- Wood biomass fuel manufacturing B&O tax
- Petroleum products tax
- Hazardous substance tax
Week Of 09.30.2024
Washington Cigarette, Alcohol & Miscellaneous Taxes—Regulation amended—Washington watercraft excise tax depreciation values.
The Washington Department of Revenue has amended Wash. Admin. Code § 458-20-23801 (Watercraft excise tax—Watercraft depreciation schedule) effective January 1, 2025. The regulation has been updated to adopt watercraft excise tax depreciation values for the 2025 calendar year based on watercraft valuation, sales, and registration data.
Washington Public Utilities Tax—Regulation amended—Washington commute trip reduction incentives.
The Washington Department of Revenue has amended Wash. Admin. Code 458-20-261 (Commute trip reduction incentives) effective October 26, 2024. The amendments incorporate changes enacted in L. 2024, H2134, and provide that employers in the state that give financial incentives to employees for ride sharing or public transportation are eligible to earn credits through December 31, 2024. Property managers that manage worksites in the state that give financial incentives to employees for ride sharing or public transportation are eligible to earn credits through December 31, 2023. Both of the foregoing credits must be used for tax reporting periods within the calendar year for which they are approved and must be claimed before July 1, 2025.
Washington Sales & Use Taxes—Regulation amended—Washington commute trip reduction incentives.
The Washington Department of Revenue has amended Wash. Admin. Code 458-20-261 (Commute trip reduction incentives) effective October 26, 2024. The amendments incorporate changes enacted in L. 2024, H2134, and provide that employers in the state that give financial incentives to employees for ride sharing or public transportation are eligible to earn credits through December 31, 2024. Property managers that manage worksites in the state that give financial incentives to employees for ride sharing or public transportation are eligible to earn credits through December 31, 2023. Both of the foregoing credits must be used for tax reporting periods within the calendar year for which they are approved and must be claimed before July 1, 2025.
Washington Business and Occupation Tax—Regulation amended—Washington commute trip reduction incentives.
The Washington Department of Revenue has amended Wash. Admin. Code 458-20-261 (Commute trip reduction incentives) effective October 26, 2024. The amendments incorporate changes enacted in L. 2024, H2134, and provide that employers in the state that give financial incentives to employees for ride sharing or public transportation are eligible to earn credits through December 31, 2024. Property managers that manage worksites in the state that give financial incentives to employees for ride sharing or public transportation are eligible to earn credits through December 31, 2023. Both of the foregoing credits must be used for tax reporting periods within the calendar year for which they are approved and must be claimed before July 1, 2025.
Washington Business and Occupation Tax—Terminated distribution rights payments included in Washington gross income.
The Washington Board of Tax Appeals affirmed the Department of Revenue's assessment after determining that amounts received as compensation for terminated distribution rights should be included as part of the taxable gross income of a wholesale distributor of alcoholic beverages. The taxpayer entered into distributor agreements with various liquor suppliers, which authorized the taxpayer to sell the supplier's products to retailers in the state. Washington's Wholesale Distributor/Supplier Equity Agreement Act ("Franchise Act") provides several protections for wholesale distributors, including the right to receive monetary compensation from a successor distributor when distribution rights are terminated without cause. For the period 2014-2016, the taxpayer did not report or pay business and occupations (B&O) tax on the payments it received for its terminated distribution rights. Although the taxpayer contended that the payments it received for loss of distribution rights are not subject to B&O tax because they arose by operation of law as opposed to voluntary business activities, the BTA determined that the compensation received was value accrued by reason of the transaction of the business engaged in, and nothing in the Franchise Act indicated that the legislature intended to exempt monetary compensation for terminated distribution rights from the measure of the B&O tax. (Young's Market Co. of Washington v. Wash. Dept. Rev., Wash. BTA, Dkt. No. 20-140, 06/13/2024.)
Washington Business and Occupation Tax—Washington self-produced fuel rate for 2024 fourth quarter.
Self-produced fuels used directly in the operation of a manufacturing plant that produces or manufactures the fuel are subject to state use tax but are exempt from local use tax. Self-produced fuels include diesel, biodiesel, hydrogen, catalyst coke, green coke, and refinery fuel gas. Self-produced biomass fuel is exempt from state and local use tax when is used by the extractor or manufacturing plant that produced or manufactured the biomass fuel. Production of self-produced fuels may also be subject to manufacturing B&O tax, wood biomass fuel manufacturing B&O tax, petroleum products tax, and hazardous substance tax. The use tax value of refinery fuel gas, based on the "three-year average spot price of natural gas," is calculated as $3.99 per million Btu for the 2024 fourth (October 1 - December 31) quarter. Businesses that use self-produced refinery fuel gas must pay state use tax at the rate of 3.852%. (Washington Excise Tax Advisory No. 3014.2024, 09/19/2024.)
Washington Sales and Use Tax Rates—Washington self-produced fuel rate for 2024 fourth quarter.
Self-produced fuels used directly in the operation of a manufacturing plant that produces or manufactures the fuel are subject to state use tax but are exempt from local use tax. Self-produced fuels include diesel, biodiesel, hydrogen, catalyst coke, green coke, and refinery fuel gas. Self-produced biomass fuel is exempt from state and local use tax when is used by the extractor or manufacturing plant that produced or manufactured the biomass fuel. Production of self-produced fuels may also be subject to manufacturing B&O tax, wood biomass fuel manufacturing B&O tax, petroleum products tax, and hazardous substance tax. The use tax value of refinery fuel gas, based on the "three-year average spot price of natural gas," is calculated as $3.99 per million Btu for the 2024 fourth (October 1 - December 31) quarter. Businesses that use self-produced refinery fuel gas must pay state use tax at the rate of 3.852%. (Washington Excise Tax Advisory No. 3014.2024, 09/19/2024.)
Washington Sales & Use Taxes—Washington self-produced fuel rate for 2024 fourth quarter.
Self-produced fuels used directly in the operation of a manufacturing plant that produces or manufactures the fuel are subject to state use tax but are exempt from local use tax. Self-produced fuels include diesel, biodiesel, hydrogen, catalyst coke, green coke, and refinery fuel gas. Self-produced biomass fuel is exempt from state and local use tax when is used by the extractor or manufacturing plant that produced or manufactured the biomass fuel. Production of self-produced fuels may also be subject to manufacturing B&O tax, wood biomass fuel manufacturing B&O tax, petroleum products tax, and hazardous substance tax. The use tax value of refinery fuel gas, based on the "three-year average spot price of natural gas," is calculated as $3.99 per million Btu for the 2024 fourth (October 1 - December 31) quarter. Businesses that use self-produced refinery fuel gas must pay state use tax at the rate of 3.852%. (Washington Excise Tax Advisory No. 3014.2024, 09/19/2024.)
Week Of 09.30.2024
Washington Cigarette, Alcohol & Miscellaneous Taxes—Regulation amended—Washington watercraft excise tax depreciation values.
The Washington Department of Revenue has amended Wash. Admin. Code § 458-20-23801 (Watercraft excise tax—Watercraft depreciation schedule) effective January 1, 2025. The regulation has been updated to adopt watercraft excise tax depreciation values for the 2025 calendar year based on watercraft valuation, sales, and registration data.
Washington Public Utilities Tax—Regulation amended—Washington commute trip reduction incentives.
The Washington Department of Revenue has amended Wash. Admin. Code 458-20-261 (Commute trip reduction incentives) effective October 26, 2024. The amendments incorporate changes enacted in L. 2024, H2134, and provide that employers in the state that give financial incentives to employees for ride sharing or public transportation are eligible to earn credits through December 31, 2024. Property managers that manage worksites in the state that give financial incentives to employees for ride sharing or public transportation are eligible to earn credits through December 31, 2023. Both of the foregoing credits must be used for tax reporting periods within the calendar year for which they are approved and must be claimed before July 1, 2025.
Washington Sales & Use Taxes—Regulation amended—Washington commute trip reduction incentives.
The Washington Department of Revenue has amended Wash. Admin. Code 458-20-261 (Commute trip reduction incentives) effective October 26, 2024. The amendments incorporate changes enacted in L. 2024, H2134, and provide that employers in the state that give financial incentives to employees for ride sharing or public transportation are eligible to earn credits through December 31, 2024. Property managers that manage worksites in the state that give financial incentives to employees for ride sharing or public transportation are eligible to earn credits through December 31, 2023. Both of the foregoing credits must be used for tax reporting periods within the calendar year for which they are approved and must be claimed before July 1, 2025.
Washington Business and Occupation Tax—Regulation amended—Washington commute trip reduction incentives.
The Washington Department of Revenue has amended Wash. Admin. Code 458-20-261 (Commute trip reduction incentives) effective October 26, 2024. The amendments incorporate changes enacted in L. 2024, H2134, and provide that employers in the state that give financial incentives to employees for ride sharing or public transportation are eligible to earn credits through December 31, 2024. Property managers that manage worksites in the state that give financial incentives to employees for ride sharing or public transportation are eligible to earn credits through December 31, 2023. Both of the foregoing credits must be used for tax reporting periods within the calendar year for which they are approved and must be claimed before July 1, 2025.
Washington Business and Occupation Tax—Terminated distribution rights payments included in Washington gross income.
The Washington Board of Tax Appeals affirmed the Department of Revenue's assessment after determining that amounts received as compensation for terminated distribution rights should be included as part of the taxable gross income of a wholesale distributor of alcoholic beverages. The taxpayer entered into distributor agreements with various liquor suppliers, which authorized the taxpayer to sell the supplier's products to retailers in the state. Washington's Wholesale Distributor/Supplier Equity Agreement Act ("Franchise Act") provides several protections for wholesale distributors, including the right to receive monetary compensation from a successor distributor when distribution rights are terminated without cause. For the period 2014-2016, the taxpayer did not report or pay business and occupations (B&O) tax on the payments it received for its terminated distribution rights. Although the taxpayer contended that the payments it received for loss of distribution rights are not subject to B&O tax because they arose by operation of law as opposed to voluntary business activities, the BTA determined that the compensation received was value accrued by reason of the transaction of the business engaged in, and nothing in the Franchise Act indicated that the legislature intended to exempt monetary compensation for terminated distribution rights from the measure of the B&O tax. (Young's Market Co. of Washington v. Wash. Dept. Rev., Wash. BTA, Dkt. No. 20-140, 06/13/2024.)
Washington Business and Occupation Tax—Washington self-produced fuel rate for 2024 fourth quarter.
Self-produced fuels used directly in the operation of a manufacturing plant that produces or manufactures the fuel are subject to state use tax but are exempt from local use tax. Self-produced fuels include diesel, biodiesel, hydrogen, catalyst coke, green coke, and refinery fuel gas. Self-produced biomass fuel is exempt from state and local use tax when is used by the extractor or manufacturing plant that produced or manufactured the biomass fuel. Production of self-produced fuels may also be subject to manufacturing B&O tax, wood biomass fuel manufacturing B&O tax, petroleum products tax, and hazardous substance tax. The use tax value of refinery fuel gas, based on the "three-year average spot price of natural gas," is calculated as $3.99 per million Btu for the 2024 fourth (October 1 - December 31) quarter. Businesses that use self-produced refinery fuel gas must pay state use tax at the rate of 3.852%. (Washington Excise Tax Advisory No. 3014.2024, 09/19/2024.)
Washington Sales and Use Tax Rates—Washington self-produced fuel rate for 2024 fourth quarter.
Self-produced fuels used directly in the operation of a manufacturing plant that produces or manufactures the fuel are subject to state use tax but are exempt from local use tax. Self-produced fuels include diesel, biodiesel, hydrogen, catalyst coke, green coke, and refinery fuel gas. Self-produced biomass fuel is exempt from state and local use tax when is used by the extractor or manufacturing plant that produced or manufactured the biomass fuel. Production of self-produced fuels may also be subject to manufacturing B&O tax, wood biomass fuel manufacturing B&O tax, petroleum products tax, and hazardous substance tax. The use tax value of refinery fuel gas, based on the "three-year average spot price of natural gas," is calculated as $3.99 per million Btu for the 2024 fourth (October 1 - December 31) quarter. Businesses that use self-produced refinery fuel gas must pay state use tax at the rate of 3.852%. (Washington Excise Tax Advisory No. 3014.2024, 09/19/2024.)
Washington Sales & Use Taxes—Washington self-produced fuel rate for 2024 fourth quarter.
Self-produced fuels used directly in the operation of a manufacturing plant that produces or manufactures the fuel are subject to state use tax but are exempt from local use tax. Self-produced fuels include diesel, biodiesel, hydrogen, catalyst coke, green coke, and refinery fuel gas. Self-produced biomass fuel is exempt from state and local use tax when is used by the extractor or manufacturing plant that produced or manufactured the biomass fuel. Production of self-produced fuels may also be subject to manufacturing B&O tax, wood biomass fuel manufacturing B&O tax, petroleum products tax, and hazardous substance tax. The use tax value of refinery fuel gas, based on the "three-year average spot price of natural gas," is calculated as $3.99 per million Btu for the 2024 fourth (October 1 - December 31) quarter. Businesses that use self-produced refinery fuel gas must pay state use tax at the rate of 3.852%. (Washington Excise Tax Advisory No. 3014.2024, 09/19/2024.)