A chapter 82.82 deferral certificate covers state and local sales and use tax on building or expanding a corporate headquarters in a community empowerment zone: a capital investment of at least $30 million with at least 300 qualified jobs paying at least the state average wage. Applications closed after December 31, 2020, and DOR could approve only two projects per biennium. The seller keeps a copy of the DOR certificate.
Who qualifies
- A business holding a deferral certificate DOR issued under RCW 82.82.030 for an eligible investment project.
- The project is a new or expanded building used for a corporate headquarters, where corporate staff work and most of the company's management services are handled regionally or nationally. A facility used for manufacturing, wholesaling or warehousing is not a corporate headquarters.
- It is in a community empowerment zone, involves at least $30 million of capital investment, and will employ at least 300 people in qualified full-time positions, each earning at least the state average annual wage.
- A lessor qualifies only if it owns the building outright or passes the full economic benefit to the lessee by written contract.
What qualifies
- Construction of the qualified building or buildings, including goods and fixtures incorporated into them during construction.
- Labor and services for planning, installing and constructing the project.
- If a building is used partly for headquarters and partly for other purposes, the deferral is apportioned by construction cost.
Not covered
- Manufacturing, wholesale or warehouse space.
- Projects that already received a deferral under chapter 82.60, chapter 82.63 or chapter 82.82, except an added pilot-scale manufacturing adaptation of a research and development project.
- Tax incurred before DOR received the application.
- New applications: RCW 82.82.020(2) says none may be made after December 31, 2020.
What the buyer gives
A copy of the sales and use tax deferral certificate DOR issued for the project. The business applied to DOR before construction was complete; DOR ruled within 60 days and issued the certificate. There is no buyer-completed form.
What the seller keeps
Chapter 82.82 RCW has no seller-specific documentation rule. Keep a copy of the certificate with the sale records as proper records of a non-taxable sale (RCW 82.08.050(4)) for five years (RCW 82.32.070(1)), and confirm the purchase is for the project on the certificate.
Common mistakes
- Using the certificate for furniture or equipment that does not become part of the building. The investment project is the qualified building, including property incorporated into it during construction.
- Exempting work on warehouse or production space in the same complex.
- Treating the deferral as a reseller permit. The sale is still a retail sale for B&O purposes.
Common questions
- Can a company still apply for the Washington corporate headquarters deferral?
- No. RCW 82.82.020(2) says applications may not be made after December 31, 2020.
- Does the company ever repay the deferred tax?
- Not if the project stays eligible. RCW 82.82.040 requires repayment of 100 percent down to 12.5 percent, depending on the year, if the project stops qualifying within the year it is certified complete or the next seven years, plus interest but not penalties.
- What does the seller keep?
- A copy of the DOR-issued deferral certificate, kept with the sale records for five years.
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