Washington – Brokered Natural Gas Use Tax Updates

SALT Report 3030 – The Washington Department of Revenue issued a sales and use tax special notice that discusses the brokered natural gas use tax to clarify a 2008 Washington Court of Appeals decision.

In this case, the Court held that, for purposes of the BNG use tax, “the place of first use is where the taxpayer initially exercises dominion and control over the gas and not the location where it is consumed by the taxpayer.”  The Court’s decision reversed the Department of Revenue’s longstanding interpretation that BNG use tax is imposed at the location where the gas is consumed, or burned, by the taxpayer.

Because of this decision, the Department has updated its guidance to reflect that for periods prior to June 10, 2010, the place of first use is where the gas is consumed by the taxpayer.  For periods after June 10, 2010, the BNG use tax is imposed at the time and location where the taxpayer burns the gas or stores the gas for later consumption.

Therefore, it is the taxpayer’s obligation to report and remit the local BNG use tax to the Department based on the location where the gas is consumed, burned, or stored.

For Further Information

Washington Department of Revenue – Special Notice