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Washington State: Tax Applies to Sales of Used Electric Vehicles


 Would this car be exempt or subject to sales tax in Washington State?

 

Washington State allows a temporary exemption from sales tax for certain vehicles using the following clean alternative fuels: electricity, hydrogen, natural gas and propane (RCW 82.08.809). The exemption, which expires July 1, 2015, has applied to qualifying new vehicles since January 1, 2009 and qualifying used vehicles since July 12, 2010.

An auto dealer questioned why the exemption did not apply to certain used electric motor vehicles and took the case to the Washington State Department of Revenue Appeals Division. The Department of Revenue responded with a determination that explains why the exemption does not apply to purchases of used all-electric vehicles.

Used vehicles

The following used passenger cars, light duty trucks, and medium duty passenger vehicles are eligible for the temporary exemption:

  • Vehicles that are part of a fleet of at least five vehicles, all owned by the same person;
  • Vehicles that have an odometer reading of less than thirty thousand miles;
  • Vehicles that are re less than two years past their original date of manufacture; and
  • Vehicles being sold for the first time after modification.

WAC 458-20-279 clarifies: “Purchases of previously owned clean alternative fuel or high gas mileage vehicles. The exemptions do not apply to purchases of used vehicles unless they are qualifying used passenger cars, light duty vehicles, or medium passenger vehicles, which were modified after their initial purchase, with an EPA certified conversion to be exclusively powered by clean alternative fuel.”

The following examples are provided:

  1. “Mike purchases a used 2009 model year hybrid vehicle from a dealer or private party in July 2011. The purchase would not qualify for the exemptions. The exemption for vehicles using hybrid technology only applies to new vehicles.”
  2. Nicole purchases a new 20008 model year hybrid vehicle in July 2009 from a dealer. This purchase would be exempt (assuming it meets other requirements). A new vehicle could be any model year as long as it has not been previously titled to a retail purchaser or lessee.
  3. Joe purchases a new 2009 model year hybrid vehicle on August 5, 2009, from a dealer. This purchase is not exempt from all retail sales taxes but, assuming it meets the other requirements, is exempt from the 0.3 percent retail sales tax on retail sales of motor vehicles.”

Used vehicles that have been converted to satisfy the requirements of the exemption will qualify for the exemption provided that the conversion is performed “prior to or as part of the retail sale to the purchaser.” The exemption does not apply if the conversion takes place after the retail sale.

How do you keep track of sales and use tax exemptions, for green cars and everything else?

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.