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Hello,The most relevant appellate case law on this issue is: TESORO REFINING v. Dept. of Revenue, 135 Wash.App. 411, 144 P. 3d 368 (2006). In Tesoro, the Wa. Court of Appeals writes: "RCW 82.21.030(1) is plain on its face. It imposes a tax 'on the privilege of possession of hazardous substances' within this state. RCW 82.21.030(1). And RCW 82.21.020(3) says that a taxpayer possesses the hazardous substance if it has the power to control it."
Also, in TESORO REFINING & MARKETING v. STATE, DOR, 190 P. 3d 28 (2008), the Wa Supreme Court writes: "`Possession'" means "control of a hazardous substance" within Washington, including "both actual and constructive possession." RCW 32*32 82.21.020(3). The essence of possession revolves around the idea of "`[c]ontrol,'" which is defined as "the power to sell or use a hazardous substance or to authorize the sale or use by another." Id.The Tesoro courts expressly declined to interpret the statutes in a manner other than as described in the statutory language. On your facts, the issue is not where the hazardous substance comes from or where it is destined, but only whether or not the person has the ability to control the substance while it is located within Washington territorial boundaries. If yes, then that person owes the tax -- otherwise not. If you are trying to argue that the substance was at all times, under control of a third party carrier or storage facility, while in the state, then that could be a reasonable argument. By example, if your carrier was paid to move the substance from Oregon to Idaho, through Washington, and during the time it was located in Washington, you had no control over its disposition, but that you were merely awaiting final delivery, then you may have grounds for an appeal. The presence of a bill of lading, in my view, is not controlling. The statute says nothing about the legal or physical mechanics of the shipment process. It speaks only of control. If the substance was not under your control, then you don't owe the tax -- assuming that we accept the appellate case law as precedent. Please let me know if my answer is helpful. And, thanks for using justanswer.com!
Thank you. I'm familiar with the case mentioned.
We, being the public warehouse, are acting as the regional distribution center for the manufacturer. Therefore, the WA State DOR is requiring the manufacturer (our customer in N. Carolina) to pay this tax, even though the tax specifical exempts interstate movement of products "temporarily stored" with points of origina and destination outside the state. The manufacturer ships its products to the regional distribution center (our public warehouse in WA State), and later sells the product to points in the Pacific Northwest, 40% of sales are outside the state.
Given the spedific exemption for products moving within interstate commerce, it appears the interpretation of this exemption is taking "control" into consideration. Can you comment? I understand the issue of control, but the exemption is clearly defining interstate commerce where at such times when product passes through a public warehouse, control is maintained.
The HST in WA State actually does have the below interstate commerce exemption:
(iv) However, the tax will not apply with respect to possessions of substances which are only temporarily stored or possessed in this state in connection with through, interstate movement of the substances from points of origin to points of destination both of which are outside of this state.
The question then becomes the definition of interstate commerce. I understand the tax is applied to possession and control, but an exemption is an exemption. It clearly exempts interstate commerce, which should trump possession and control within the definition of interstate commerce. Obviously, the case law overrules us, but avoids the interstate commerce exemption as it is written. Therefore, we seek a legislative fix, but our lobbyist was hoping we could get our hands on the definition of interstate commerce. Do you know of any such federal definition? ICC no long exists.
Thanks for all your consult. Very imformative and helpful.
The most frequently used definition of interstate commerce is provided by 18 U.S.C. 921(a)(2).Hope this helps.