Goods for use by air, rail or water carriers in interstate/foreign commerce

Carriers by air, rail or water in interstate or foreign commerce pay no Washington sales tax on goods (other than the vehicles and their parts) bought for use in that business. The catch is use tax: anything actually used in Washington is taxed when it is used. Durable goods used aboard in interstate runs escape use tax, but fuel, ice, lubricants and food consumed in Washington do not.

Who qualifies

• A business operating as a private or common carrier by air, rail or water in interstate or foreign commerce.
• A private carrier is any carrier, other than a common carrier, in the business of transporting persons or property for hire.
• Registered carriers may pay use tax directly to DOR instead of to the seller. Unregistered carriers handle use tax through the seller (see below).

What qualifies

• Tangible personal property other than airplanes, locomotives, railroad cars, watercraft and their component parts, bought for use in connection with the carrier business.
• Durable goods for use aboard carrier property operating partly inside and partly outside Washington. No use tax applies to them. The rule names bedding, table linen and wares, kitchen equipment, tables and chairs, hand tools, hawsers, life preservers and parachutes.
• Consumable goods placed aboard, such as ice, fuel, lubricants, food supplies and catered meals. They are exempt from sales tax, but use tax applies to the portion consumed in Washington.
• Installing or improving property before the carrier first uses it counts as part of its initial cost. The rule gives the example of treating railroad ties before first use.

Not covered

• Any actual use of the property in Washington. RCW 82.08.0261(1): it "is, at the time of such actual use, subject to the tax imposed by chapter 82.12 RCW."
• Labor and services on property that is not carrier property, such as repairing switches, frogs or office equipment, and laundering linen and bedding.
• Constructing, repairing, decorating or improving buildings such as depots, wharves and hangars.
• Motor carriers. Trucks, trailers and parts for interstate motor carriers fall under a different statute (RCW 82.08.0263) and form line 4a.
• Liquefied natural gas for waterborne carriers. It has its own partial (90 percent) exemption on form line 4f, and that exemption does not apply to LNG for marine vessel fuel sold on or after July 1, 2028.

What the buyer gives

The Buyer's Retail Sales Tax Exemption Certificate, form REV 27 0032 (6/17/25), line 4d: "Items for use connected with private or common carriers engaged in air, rail or water in interstate or foreign commerce. (Note: Items consumed in the state are subject to use tax.)" The buyer ticks single use or blanket (blanket works while buyer and seller have at least one sale within 12 months), enters the seller's name, mailing address and the date, checks the line named below, lists the items purchased, and completes the certification block: type of entity, type of business, Account ID, buyer name and title, street address, and signature. The form says it is not for resale purchases. The certificate must identify the carrier by name and DOR registration number, or by address if not registered (WAC 458-20-175). Per the form, unregistered businesses must attach a list of the description and quantity of items that will be consumed in Washington and pay use tax to the seller. For consumables delivered aboard for an unregistered carrier, the rule provides a certificate by the master or chief engineer stating the amounts (barrels of fuel oil, gallons of lubricants, pounds of grease, other consumables) to be consumed within Washington.

What the seller keeps

WAC 458-20-175 requires sellers to "obtain from the purchaser, or his authorized agent, a certificate evidencing the exempt nature of the transaction." For registered carriers, the registration number on the certificate is ordinarily enough to show the carrier pays use tax directly, and the seller is relieved of collecting it. For unregistered carriers, a seller of durable goods must either collect use tax or take a further certificate that none of the goods is for actual use in Washington. For consumables, the seller collects use tax on the portion consumed in Washington, and the entire amount is presumed consumed here unless the buyer certifies the amount. Form REV 27 0032 says: "Seller must retain the original of this certificate for their records. Do not send a copy of this certificate to the Department of Revenue." RCW 82.32.070(1) requires taxpayers to "keep and preserve, for a period of five years, suitable records as may be necessary to determine the amount of any tax for which the taxpayer may be liable." Under RCW 82.08.050(4) a seller is not relieved of the tax unless it keeps proper records of exempt sales and provides them when asked; (7)(a) relieves a seller that obtains a fully completed certificate within 90 days after the sale, and (7)(b) allows 120 days after a department request to prove the sale was not taxable or obtain a fully completed certificate taken in good faith. RCW 82.04.470 governs reseller permits and wholesale sales; it is not the documentation rule for this exempt retail sale.

Common mistakes

• Treating the exemption as tax-free use. Exempt from sales tax is not exempt from use tax: anything consumed or actually used in Washington owes use tax at that time.
• Selling fuel or ice to an unregistered carrier with no use tax and no certificate of the in-state amount. The whole amount is then presumed consumed in Washington.
• Using line 4d for repair labor. The form says line 4d does not apply to labor or services for installing, repairing, cleaning or altering the property.
• Using line 4d for a trucking company. Motor carriers use line 4a under a different statute.

Common questions

Does a ferry or barge line pay use tax on life jackets bought tax-free?

Not when they are used aboard carrier property operating partly inside and partly outside Washington. The rule lists life preservers among durable goods whose use aboard in interstate or foreign commerce is not "actual use within this state."

We are a registered railroad. Who pays the use tax on fuel used in Washington?

The railroad may pay it directly to DOR, and the seller is relieved of collecting it. The registration number on the certificate is ordinarily enough evidence of registration.

Can line 4d cover catered meals placed aboard a flight in Washington?

They are exempt from sales tax, but use tax applies to food and catered meals placed aboard in Washington and served here when included in the fare.

Is repair labor on our galley equipment exempt?

No. The exemption for labor covers carrier property only. Labor on other property, such as office equipment, is taxable, and line 4d does not apply to labor.

Sources

• RCW 82.08.0261 (1), (2)(a), (3)
• WAC 458-20-175 Definitions; Retail sales tax (4); Exemption certificates required; Use tax
• DOR form REV 27 0032 (6/17/25), Buyer's Retail Sales Tax Exemption Certificate Page 1 single use/blanket; page 2 lines 4a, 4d, 4f; page 5 line 4d instructions; page 6 line 4f instructions; page 4 certification and retention
• RCW 82.08.050 (4), (7)(a)-(c) seller records and certificate timing
• RCW 82.32.070 (1) five-year record retention
• RCW 82.04.470 (1), (7) reseller permits and wholesale sales