Washington – Sales Tax Exemption Legislation Enacted

SALT Report 2680 – On June 30, 2013 Washington Governor Jay Inslee, signed legislation that creates or amends the following temporary sales and use tax exemptions.  The provisions in Senate Bill 5882 are effective October 10, 2013, unless otherwise specified.

Food Flavorings Exemption

A sales and use tax exemption has been created for products sold to restaurants that impart flavor to food during the cooking process. The exemption applies to products that are consumed by combustion during the cooking process, such as charcoal, charcoal briquettes, wood chips, and grape vines.  Or, to products that are used to support food during the cooking process and are made entirely of wood, such as cedar grilling planks. This exemption expires on July 1, 2017.

Standard Financial Information Exemption

A retail sales and use tax exemption has been created for sales of standard financial information (SFI) to qualifying international investment management companies.

SFI is defined as financial data, facts or information, or financial information services that are developed for more than one single customer.  For example, SFI includes, but is not limited to, financial market data, bond ratings, credit ratings, and deposit, loan, or mortgage reports.

This exemption applies regardless of whether the information is provided in a tangible format, on a tangible storage medium, or as a digital product transferred electronically.

To qualify for the exemption the seller must obtain an exemption certificate from the buyer or maintain certain sales data as authorized by the SSUTA. This exemption expires on July 1, 2021.

Hog Fuel Exemption

The sales and use tax exemption for hog fuel used to produce electricity, steam, heat, or biofuel has been extended until June 30, 2024. Taxpayers claiming this exemption are required to file an annual survey with the DOR. The survey must include the employment and wage data for each facility owned in Washington. If a taxpayer who has claimed the exemption closes a facility, which results in job losses, the amount of the exemption claimed for the previous two calendar years will be due immediately.  This exemption is effective on July 1, 2013.

Large Airplanes Exemption

Effective January 1, 2014, sales of large private airplanes to nonresidents are exempt from sales and use tax so long as they are not required to be registered with the Department of Transportation.  This exemption also applies to charges for labor and services to repair, clean, alter, or improve the airplanes.

A “large private airplane” is defined as an airplane that:

  • Is not used in interstate commerce and not owned or leased by a government entity,
  • Weighs more than 41,000 pounds, and
  • Is assigned a category A, B, C, or D test flow management system aircraft weight class by the Federal Aviation Administration

This exemption expires on July 1, 2021.

Blood Banks Exemption

The sales and use tax exemption for sales of medical supplies, chemicals, or materials to a qualified blood bank has been amended to include those organization whose primary business is the testing or processing of blood. This exemption expires on July 1, 2016

Renewable Energy Exemption

Effective July 1, 2013, the sales and use tax exemption for machinery and equipment used in facilities that generate electricity from renewable energy is extended until January 1, 2020. Taxpayers who claim this exemption must file an annual survey with the Department of Revenue for each facility owned or operated in Washington.

Solar Energy Exemption

Effective July 1, 2013, the sales and use tax exemption for machinery and equipment used in facilities that generate electricity from solar energy has been extended until June 30, 2018. This exemption also applies to machinery and equipment used to produce thermal heat using solar energy. However, the facility using the exempt machinery cannot produce more than three million British thermal units per day.

For Further Information

Washington State Legislature – Senate Bill 5882, Laws 2013