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State Incentives | Clean
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Washington State
Incentives for Biodiesel and Ethanol Fuels
Washington State provides
various tax incentives to encourage the development of in-state
production facilities, distribution services and retail sales
facilities for biodiesel and ethanol fuels.
Definitions:
- “Alcohol
fuel” means any alcohol made from a product other than
petroleum or natural gas, which is used alone or in combination
with gasoline or other petroleum products for use as a fuel for
motor vehicles, farm implements and machines or implements of
husbandry.
- “Biodiesel
fuel” means a mono alkyl ester of long chain fatty acids
derived from vegetable oils or animal fats for use in
compression-ignition engines and that meets the requirements of
the American Society of Testing and Materials (ASTM)
specification D6751 in effect as of January 1, 2003.
- “Biodiesel
feedstock” means oil that is produced from an agricultural
crop for the sole purpose of ultimately producing biodiesel
fuel.
House
Bill 1240 – Tax incentives for biodiesel and alcohol fuel
production.
Sales
and Use Tax Deferral/Exemption
Summary: Certain investments
in buildings, equipment and labor are eligible for the deferral of
state and local sales and use taxes. Deferred taxes need not be
repaid (a tax exemption is granted) if the recipient meets all
requirements for seven calendar years.
Eligibility:
-
Type
of Project: Eligible projects are the manufacturing of
biodiesel, biodiesel feedstock or alcohol fuel.
-
Type
of Investment: Investments
eligible for sales and use tax deferral/exemption are:
-
Investments in the
construction of new structures, and expansion or renovation of
existing structure for the purpose of increasing floor space or
production capacity, including plant offices and warehouses or
other facilities for the storage of raw materials or finished
goods.
-
Investment in new
industrial and research fixtures, equipment and support
facilities that are integral to the manufacturing.
-
Includes labor and
services rendered in the planning, installation, and
construction of the project.
-
Location:
Project must be located in:
- a designated
community empowerment zone approved under RCW 43.31C.020 or a
county containing a community empowerment zone;
-
a county with fewer than one hundred persons per square
mile; or
-
a county that has a population of less than two hundred
twenty-five thousand and has an area greater than two hundred
twenty-five square miles.
Note: The only counties in which a project is not currently eligible are
Clark
,
Island
and Snohomish.
-
Other
Requirements: Projects located in a designated community
empowerment zone or in a county containing a community
empowerment zone must also meet the following requirements:
-
The project will employ at least one permanent
full-time employee for each $750,000 of investment on which the
deferral is requested; and
-
The positions will be filled by persons who at the
time of hire are residents of the community empowerment zone;
and
-
The position must be filled by the end of the
calendar year following the year in which the project is
certified as operationally complete.
Process:
References:
RCW 82.08, 82.12, and 82.14; RCW 82.32
Effective Date:
July 1, 2003
Expiration Date:
July 1, 2015 (expiration date was extended from original 2009
deadline in the 2007 legislative session)
Property
and Leasehold Tax Exemption
Summary:
Qualifying buildings, equipment and land used in the manufacturing
of alcohol fuel, biodiesel, or biodiesel feedstocks are exempt from
state and local property and leasehold taxes for a period of 6
years.
Eligibility:
-
All
buildings, machinery, equipment, and other personal property
which is used primarily for the manufacturing of alcohol fuel,
biodiesel fuel, or biodiesel feedstock, the land upon which this
property is located, and land that is reasonably necessary in
the manufacturing process, but not land necessary for growing of
crops.
- New
manufacturing facilities or additions to existing manufacturing
facilities.
- For
facilities that produce products in addition to alcohol fuel,
biodiesel fuel, or biodiesel feedstock, the amount of the tax
exemption shall be based upon the annual percentage of the total
value of all products manufactured that is the value of the
alcohol fuel, biodiesel fuel or biodiesel feedstock
manufactured.
Process:
-
Claims
for exemptions shall be filed with the county assessor on forms
prescribed by the Department of Revenue and furnished by the
Assessor.
-
Once
filed, the exemption is valid for 6 years.
- No
claims may be filed after
December 31, 2009
.
References:
RCW 84.36 and 82.29A.135
Effective Date:
July 1, 2003
– Applies to taxes levied for collection in 2004 and later.
Expiration Date:
December 31,
2015 (expiration date was
extended from original 2009 deadline in the 2007 legislative
session)
Business & Occupation Tax Reduced Rate
Summary:
All persons engage in business in
Washington
State
pay a Business & Occupation Tax. A
reduced tax rate of .138% applies to persons engaged in
manufacturing of alcohol fuel, biodiesel fuel, or biodiesel
feedstock. The typical rate for manufacturing businesses is .484%.
Eligibility:
Any person engaged in the business of manufacturing alcohol fuel,
biodiesel fuel, or biodiesel feedstock.
Process:
The value of alcohol fuel,
biodiesel fuel, or biodiesel feedstock manufactured shall be
multiplied by the rate of 0.138%.
References:
RCW 82.04.260
Effective Date:
July 1, 2003
Expiration Date:
July 1, 2015 (expiration date was extended from original 2009
deadline in the 2007 legislative session)
House
Bill 1241 – Tax incentives for the distribution and retail sale of
biodiesel and alcohol fuels.
Business
& Occupation Tax Exemption
Summary:
All persons engage in business in
Washington
State
pay Business & Occupation Taxes.
Amounts received from the retail sale or distribution of alcohol or
biodiesel fuel are exempt from the Business & Occupation Tax.
Eligibility:
Any person engaged in the
business of retail sale or distribution of biodiesel fuel or alcohol
fuel, if the alcohol fuel is at least 85% of the volume of the fuel
being sold or distributed.
Additional
Definitions:
References:
RCW 82.04
Effective Date:
July 1, 2003
Expiration Date:
July 1, 2015 (expiration date was extended from original 2009
deadline in the 2007 legislative session)
Sales and Use Tax Exemption
Summary:
Certain investments in equipment and
labor are eligible for an exemption from state and local sales and
use taxes.
Eligibility:
Sales
and use taxes do not apply with respect to:
-
Machinery and equipment, or to services rendered in respect
to constructing structures or installing repairing, cleaning,
altering, or improving structures or machinery and equipment
used directly for the retail sale of a biodiesel or alcohol fuel
blends. Structures and machinery and equipment that are also
used for purposes other than the retail sale of biodiesel and
alcohol fuel blends are exempt only on the portion directly
associated with the retail sale of biodiesel or alcohol fuel
blends.
-
Fuel
delivery vehicles or to sales of or charges made for labor and
services rendered in respect to installing, repairing, cleaning,
altering, or improving the vehicles including repair parts and
replacement parts if at least 75% of the fuel distributed by the
vehicles is a biodiesel or alcohol fuel blend.
Additional
Definitions:
-
“Alcohol
fuel blend” means fuel that contains at least 85% alcohol fuel
by volume.
-
“Biodiesel
fuel blend” means fuel that contains at least 20% biodiesel
fuel by volume.
-
“Machinery
and equipment” means industrial fixtures, devices, and support
facilities and tangible personal property that becomes an
ingredient or component thereof, including repair parts and
replacement parts that are integral and necessary for the
delivery of biodiesel or alcohol fuel blends into the fuel tank
of a motor vehicle.
Other
Requirements:
-
A
person taking the exemption must keep records necessary for
verification of eligibility.
-
The
exemption is available only when the buyer provides the seller
with an exemption certificate in a form and manner prescribed by
the state.
-
The
seller shall retain a copy of the certificate for the seller’s
files.
References:
RCW 82.08 and 82.12
Effective Date:
July 1, 2003
Expiration Date: July 1, 2015 (expiration date was extended from
original 2009 deadline in the 2007 legislative session)
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