SALT Report 2556 – The Washington Department of Revenue issued a tax advisory that explains the application of public utility taxes, business and occupation taxes, and retail sales tax to services that are commonly provided by dump truck operators.
1) Sales of fill dirt and top soil are subject to the retailing B&O tax and the retail sales tax if the sale is to a consumer. The wholesaling B&O tax will apply if the sale is for resale, provided the seller obtains a copy of the buyer’s reseller permit.
2) Income received from contracts for earthmoving services are taxable as follows:
- Retailing B&O tax and retail sales tax apply to general construction projects and to state owned road projects when done as a prime contractor,
- Wholesaling B&O tax applies to general construction projects and to state-owned road projects when done as a subcontractor and the subcontractor has a reseller permit,
- Public road construction B&O tax when done on public road jobs, and
- Extracting for hire B&O tax when done for logging roads
3) Hauling for hire contracts are those in which the contractor is limited to transporting another’s property from one place to another, and does not include any hauling for disposal purposes. Hauling for hire is subject to either the motor or urban transportation classification of the public utility tax.
4) Collection and disposal of construction, demolition, and land clearing debris. The taxability for collecting and hauling away construction, demolition, and land clearing debris (CDL), such as concrete, wood, fixtures, roofing, excess dirt, and vegetation, depends on whether the CDL is recycled or simply disposed. If the CDL is recycled, the income is subject to service and other activities B&O tax. If the CDL is disposed of, the income is subject to the service and other activities B&O tax and the collection service provider must collect the solid waste collection tax.
5) If the operator contracts for a combination of the above services, income from the entire contract is taxed based on the predominant activity, regardless of whether the services are separately stated.
6) Bare truck rentals are subject to the retailing B&O and retail sales taxes as follows:
The rental of a dump truck to a contractor for use by the contractor is a retail transaction.
Wholesaling B&O tax applies only when the lessee re-rents the equipment, without an operator, to another person and the lessee provides a reseller permit.
7) The rental of a truck with an operator is not taxed as a bare rental of equipment. Instead it is taxed based on the activity that will be performed. In this situation, the operator is performing contract services, rather than renting equipment.
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