Article
Washington state permits sales & use tax deferrals for eligible investment projects
May 11, 2022 · Authored by Adam Cline, Sarah Correia
Washington State Governor Jay Inslee signed Engrossed Senate Bill 5901 on March 31, 2022, authorizing a new sales and use tax-deferral program effective July 1, 2022.
The bill, targeting counties with a population of fewer than 650,000, permits businesses engaging in manufacturing or R&D to postpone payment of sales and use taxes due in connection to investment projects in qualifying counties. Additionally, businesses may be entitled to full or partial abatement of the sale and use taxes deferred under the program if certain requirements are met.
Overview of sales tax deferral program
Effective July 1, 2022, Washington businesses that engage in manufacturing and R&D activities may apply for a deferral of sales and use taxes.
The new sales and use tax-deferral regime allows businesses to postpone payment of sales and use taxes related to certain eligible investment projects.
Eligible investment projects
Eligible investment projects include the following.
Qualified buildings
New structures, or the expansion or renovation of existing structures to increase floor space or production capacity for manufacturing or R&D activities, could qualify.
Plant offices and warehouses could also qualify if such facilities are an essential or integral component of a factory, mill, plant, or laboratory.
Qualified machinery and equipment
Investment in new industrial and research fixtures, equipment, and support facilities that are an integral and necessary part of a manufacturing or R&D operation could qualify.
Qualifying machinery and equipment include:
- Computers
- Software
- Data processing equipment
- Laboratory equipment
- Manufacturing components, such as belts, pulleys, and moving parts
- Molds, tools, and dies
Economic Development Administration
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.
