A chapter 82.60 deferral certificate let a manufacturer or research and development business defer state and local sales and use tax on building a plant or buying machinery and equipment in a qualifying high unemployment county or a community empowerment zone. DOR stopped accepting applications after June 30, 2020, so a seller will only see existing certificates. The seller keeps a copy and does not collect sales tax on qualifying purchases for the project.
Who qualifies
- A business holding a deferral certificate DOR issued under chapter 82.60 RCW for a specific investment project. DOR: "This program expired July 1, 2020. We will not accept applications."
- The project was manufacturing, research and development or commercial testing in qualified buildings or with qualified machinery and equipment, in a qualifying county (unemployment at least 20 percent above the state average) or, under RCW 82.60.049, a community empowerment zone.
- CEZ projects had to create at least one qualified job for each $750,000 of deferred investment, filled by residents of the zone or its county hired after the application.
What qualifies
- Purchases for the investment project named on the certificate: construction, expansion or renovation of qualified buildings (including plant offices and storage warehouses integral to the plant), and new qualified machinery and equipment, such as computers, software, lab equipment, molds, tools and dies, and equipment that controls the machinery.
- Labor and services for planning, installing and constructing the project.
- DOR states on each certificate the amount of tax deferral the recipient may take.
Not covered
- Items that do not become part of the qualified buildings, machinery or equipment.
- Purchases by the certificate holder's contractors, vendors or employees for their own use: WAC 458-20-24001(9) says the deferral "is not to be used to defer the taxes of the persons with whom the recipient does business, persons the recipient hires, or employees of the recipient."
- Replacement machinery for equipment already deferred, and renovation of a building that already received a deferral while the original project is still open.
- Use of a certificate after construction has not begun within one year of the application (or no active program within two years), unless DOR extended it.
- DOR's newer deferral for manufacturing in qualifying counties (applications from July 1, 2022) is a different program with its own certificate; do not treat it as a chapter 82.60 certificate.
What the buyer gives
A copy of the sales and use tax deferral certificate DOR issued for the project. There is no buyer-completed form: the business applied to DOR, DOR issued the certificate, and the holder gives the seller a copy at the time of purchase. A blanket certificate may be given and accepted for all purchases for the eligible project (WAC 458-20-24001(9)).
What the seller keeps
WAC 458-20-24001(9): "The certificate holder must provide a copy of the tax deferral certificate to the seller at the time goods or services are purchased. The seller will be relieved of the responsibility for collecting sales or use tax upon presentation of the certificate. The seller must retain a copy of the certificate as part of its permanent records for a period of at least five years." The seller still owes B&O tax: "The seller is liable for business and occupation tax on all tax deferral sales." Check that the purchase is for the project and address on the certificate.
Common mistakes
- Accepting a deferral certificate for the contractor's own tools or supplies. The deferral covers the holder's project, not the taxes of the people it hires.
- Treating a deferral like a reseller permit and reporting the sale as wholesale. WAC 458-20-24001(9) says the seller owes B&O tax on deferral sales.
- Expecting new chapter 82.60 certificates. DOR has accepted no applications since June 30, 2020.
- Mixing up this certificate with the 2022 qualifying counties deferral, which DOR runs separately.
Common questions
- Does a seller collect sales tax from a customer with a Washington tax deferral certificate?
- No, for qualifying purchases for the project. WAC 458-20-24001(9) relieves the seller of collecting sales or use tax when the holder presents a copy of the certificate, which the seller keeps for at least five years.
- Can I still apply for the high unemployment county deferral under chapter 82.60?
- No. DOR says the program expired July 1, 2020 and it will not accept applications.
- Does the business have to repay the deferred tax?
- For projects granted after June 30, 1994, repayment is not required as long as the project keeps meeting the requirements (RCW 82.60.065). If DOR finds the project ineligible, the outstanding deferred tax becomes due (RCW 82.60.070).
- Is there a separate form for each purchase?
- No. WAC 458-20-24001(9) allows a blanket certificate covering all purchases for the eligible project.
Sources
- RCW 82.60.049 (1)-(4) community empowerment zone projects; certificates until July 1, 2020
- RCW 82.60.020 (3), (4), (6), (9), (11), (12) definitions
- RCW 82.60.065 (2) repayment not required
- RCW 82.60.070 (2) deferred taxes due if ineligible
- Chapter 82.60 RCW dispositions 82.60.030 and 82.60.040 expired July 1, 2020
- WAC 458-20-24001 (1)(a), (7)(b), (8), (9), (10), (14), (15)
- DOR Tax incentive programs High Unemployment County/CEZ: sales and use tax deferral for manufacturing facilities (expired July 1, 2020)
- DOR Special Notice (June 30, 2022): Sales and use tax deferral for manufacturing and research and development in qualifying counties Whole notice (shows the newer, separate program)
- RCW 82.32.070 (1) five-year record retention