Construction of new buildings for commercial airplane manufacturers

Construction of new buildings used primarily to manufacture commercial airplanes, or their fuselages or wings, is exempt from Washington sales and use tax: the construction labor, the materials built into the building, and the labor to install building fixtures. It is open to the manufacturer, or to a port district or local government building to lease to one. It requires an annual report and expires July 1, 2040.

Who qualifies

• A manufacturer engaged in manufacturing commercial airplanes or the fuselages or wings of commercial airplanes.
• A port district, political subdivision or municipal corporation building to lease to such a manufacturer. It must have an agreement with the manufacturer to build the facility before construction starts.
• A "commercial airplane" is an airplane certified by the FAA to carry persons or property, and any military derivative of one.

What qualifies

• Charges for labor and services to construct new buildings.
• Tangible personal property incorporated as an ingredient or component of those buildings during construction.
• Labor and services to install, during construction, building fixtures that are not eligible for the manufacturing M&E exemption (the fixtures RCW 82.08.02565(2)(b) excludes, such as heating, ventilation, air conditioning, plumbing and electrical systems).
• Buildings or parts of buildings used primarily to manufacture commercial airplanes, fuselages or wings, including space used to store raw materials or finished product. DOR also names new additions to buildings.

Not covered

• Buildings used primarily for anything other than manufacturing commercial airplanes, fuselages or wings.
• Manufacturers of other airplane components only. The statute names commercial airplanes, fuselages and wings.
• Work on existing buildings other than new construction or new additions.
• New buildings for airplane repair and maintenance. That is a different exemption, paid as a refund, under RCW 82.08.025661.
• Purchases after the section expires on July 1, 2040.

What the buyer gives

The Buyer's Retail Sales Tax Exemption Certificate, form REV 27 0032 (6/17/25), line 5g: "Labor, services and tangible personal property related to the constructing of new buildings by a manufacturer of commercial airplanes, fuselages, or wings of a commercial airplane, or by a port district, political subdivision, or municipal corporation to be leased to such a manufacturer." 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 form adds: "Buyers must complete the Buyers Sales and Use Preference Addendum with their excise tax return." No application is required, but the claimant is subject to chapter 82.32 RCW and must file a complete Annual Tax Performance Report with DOR (RCW 82.32.534) by May 31 of the following year. DOR says electronic filing is required.

What the seller keeps

RCW 82.08.980(2): "The exemption is available only when the buyer provides the seller with an exemption certificate in a form and manner prescribed by the department. The seller must retain a copy of the certificate for the seller's files." 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

• A port district starting construction before signing its agreement with the manufacturer. RCW 82.08.980(3) requires the agreement first.
• Missing the annual report. Failure makes 35 percent of the preference claimed for the previous year immediately due (50 percent for a repeat).
• Applying it to a building whose primary use is not making airplanes, fuselages or wings.
• Confusing it with the airplane repair facility exemption, which is a refund program with its own application.

Common questions

Does the exemption cover the warehouse where finished wings are stored?

Yes, if it is part of the qualifying use. RCW 82.08.980(4) includes buildings used for the storage of raw materials or finished product, if the buildings are used primarily in manufacturing commercial airplanes, fuselages or wings.

Is HVAC and electrical installation labor exempt?

Yes, during construction. The exemption covers labor to install building fixtures not otherwise eligible for the M&E exemption, which excludes building utility systems.

Is the statute in effect? It refers to a contingency.

Yes. RCW 82.32.850 made the 2013 law contingent on a significant commercial airplane manufacturing program being sited in Washington. The code reviser notes DOR found the contingency met and the law took effect July 9, 2014.

Does the contractor apply to DOR?

No application is necessary. The buyer gives the seller the certificate and files the annual report and the addendum.

Sources

• RCW 82.08.980 (1)(a)-(c), (2)-(6)
• RCW 82.12.980 (1)-(3) use tax
• RCW 82.32.850 (1), (3); reviser's note (effective July 9, 2014)
• RCW 82.32.550 (1) commercial airplane
• RCW 82.08.02565 (2)(b) building fixtures excluded from M&E
• RCW 82.32.534 (1)(a), (4)(a) annual tax performance report and penalty
• DOR form REV 27 0032 (6/17/25), Buyer's Retail Sales Tax Exemption Certificate Page 1 single use/blanket; page 3 line 5g; pages 6-7 line 5g instructions; page 4 certification and retention
• DOR Tax incentive programs Aerospace Industry: construction of new facilities used to manufacture commercial airplanes, fuselages or wings; construction of new facilities used for airplane repair and maintenance
• 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