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Washington State: New Exemption for Vessel Deconstruction Services

  • Jun 2, 2014 | Gail Cole

 Sunken vessel being removed from Washington State waters.

Washington State has 3,026 miles of tidal shoreline and a maritime industry worth $30 billion. More than 57,000 people are directly employed in the maritime industry, and another 90,000 + jobs are indirectly associated with it. Fishing and ferries, building boats and repairing them … all are part of this massive industry. The economic impact is huge.

Sales tax exemptions ripple through the maritime industry like the wake of a Washington State ferry. A new retail sales tax exemption takes effect on October 1 of this year, for certain vessel deconstruction services.

Vessel deconstruction is defined as permanently dismantling a vessel. It does not include vessel modification or repair. It does include:

  • Abatement and removal of hazardous materials (including asbestos, fuel, lead; oils and polychlorinated biphenyls);
  • Removal of mechanical, hydraulic, or electronic components or other vessel machinery and equipment; and
  • Cutting apart or disposal, or both, of vessel infrastructure.

Qualifying deconstruction services

  • Must be performed at a qualified vessel deconstruction facility; or
  • Must be performed at an area over water which has a National Pollutant Discharge Elimination System (NPDES) permit for vessel deconstruction.

A qualified vessel deconstruction facility is defined as a structure, including floating structures, with a NPDES permit for vessel deconstruction.

Exemption certificate required

The buyer must give the seller a properly completed Buyer’s Retail Sales Tax Exemption Certificate, which the seller must keep for five years.

In addition, taxpayers who take advantage of this exemption must submit a Buyer’s Sales and Use Tax Preference Addendum with the next filed excise tax return.

Want to know more? Read the Washington State Department of Revenue website.

How does your business manage sales tax exemptions?

photo credit: Washington State Department of Natural Resources via photopin cc

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.