Did a Washington goods-in-transit tax exemption require a specific out-of-state customer order in 1965?

Plain-English summary

In 1965, the Washington Attorney General said the goods-in-transit property tax exemption did not require an existing customer order or fixed out-of-state destination when goods entered Washington or when the exemption affidavit was filed. The goods had to be brought in for eventual out-of-state transport or sale, identified in the affidavit, and actually shipped out of state within the year required by the statute. (Official opinion)

The AG also said products covered by a separate limited exemption could qualify under the transit provision. The specific goods claimed had to be the identical goods later shipped. For fungible goods, such as bulk grain or flour, the opinion said goods intended for out-of-state shipment had to be kept separate from goods to be sold within Washington so their identity could be established.

Currency note

This opinion was issued in 1965. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Was an actual out-of-state order needed before the goods arrived?
No. The AG said the goods did not have to be committed to a particular buyer or destination at that point.

Could a seller use replacement goods to satisfy the affidavit?
No. The AG required the specific goods identified in the affidavit to be the ones later shipped out of state.

How did the opinion treat bulk goods?
It said transit goods such as grain or flour had to be kept separate from goods for in-state sale so they could be identified.

Background and statutory framework

Franklin County’s prosecutor asked how the transit exemption applied to listed agricultural and fish products and to goods lacking a specific order. The AG read RCW 84.36.171’s in-transit definition together with RCW 84.36.172’s affidavit and shipment requirement. Its answer depended on actual identification and later shipment of the same property.

Citations and references

• The opinion says it was “not necessary that the property be actually consigned or committed to a definite out-of-state destination” when received or when the affidavit was filed.
• It requires proof that “the specific goods listed in the affidavit were the identical goods which were later shipped out-of-state.”

Subject

TAXATION - ASSESSMENT OF PROPERTY ‑- PERSONAL PROPERTY TAX EXEMPTION ‑- GOODS IN TRANSIT

Source

• Landing page: https://www.atg.wa.gov/ago-opinions/taxation-assessment-property-personal-property-tax-exemption-goods-transit-0

Original opinion text

Attorney General John J. O'Connell

TAXATION ‑- ASSESSMENT OF PROPERTY ‑- PERSONAL PROPERTY TAX EXEMPTION ‑- GOODS IN TRANSIT.

(1) Grains, flours, fruit, fruit products, vegetables, vegetable products, fish and fish products which are specifically granted a limited property exemption by RCW 84.36.140-84.36.162, may also be exempt under the provisions of RCW 84.36.171-84.36.174. AGO 63-64 No. 99.

(2) A taxpayer need not have actual orders for specific goods with a determined out-of-state destination at the time the property is brought into this state or when the affidavit for exemption is filed in order to obtain the exemption accorded by RCW 84.36.171, et seq.

(3) The exemptions of goods provided by RCW 84.36.171 will apply only when it is shown that the specific goods listed in the affidavit were the identical goods which were later shipped out of state by the date required.

June 16, 1965

Honorable C. J. Rabideau
Prosecuting Attorney
Franklin County
P.O. Box 951
Pasco, Washington

Cite as: AGO 65-66 No. 25

Dear Sir:

By a previously acknowledged letter you have requested our opinion on three questions which we paraphrase as follows:

1. Can the grains, flour, fruit, fruit products, vegetables, vegetable products, fish and fish products which are specifically granted a limited property tax exemption by RCW 84.36.140-84.36.162 also be exempt under the provision of RCW 84.36.171-84.36.174?

2. Must the taxpayer have actual orders for specific goods with a determined out-of-state destination at the time the property is brought into this state or when the affidavit for exemption is filed in order to obtain the exemption accorded by RCW 84.36.171,et seq?

[[Orig. Op. Page 2]]

3. If the answer to the second question is in the affirmative will the exemption apply only to those specific goods being held to fill such orders?

We answer the first question in the affirmative, the second in the negative and the third as set forth in the analysis.

ANALYSIS

1. The answer to your first question is contained in a prior opinion of this office, AGO 63-64 No. 99 [[to Steve Kipper, State Representative on April 9, 1964]], in which we held that canned salmon, (one of the products enumerated in RCW 84.36.140) manufactured or produced in states, territories or possessions of the United States outside the boundaries of the state of Washington may qualify for the exemption contained in RCW 84.36.171, et seq. See, also, AGO 63-64 No. 89, to the effect that the 1963 amendments to RCW 84.36.171-84.36.174 did not impliedly repeal RCW 84.36.140, et seq.

2. RCW 84.36.171 provides:

"Goods, wares, raw furs and merchandise manufactured or produced in any of the states, territories, or possessions of the United States or foreign countries and brought into this state for the purpose of transportation or sale through and to points without the state, and identified at the time the affidavit is filed as property ultimately destined for out-of-state shipment, while being so transported, or while held in storage in a public or private warehouse awaiting such transportation, shall be considered and held to be property in transit and nontaxable if actually shipped to points outside the state. The county assessor shall list and assess all such goods, wares and merchandise as of January 1st of each year, without regard to any average inventory, but shall cancel any such assessment in whole or in proportionate part upon receipt of the affidavit of exemption as set forth in RCW 84.36.172. A sale of or transfer of title [[Orig. Op. Page 3]] to any such property, while being so transported or held in storage, shall not operate to defeat the intent or purpose of this section."

RCW 84.36.172 reads:

"Any owner or agent claiming property in transit as defined in RCW 84.36.171 as of January 1st of any year shall file with his listing of property as provided by RCW 84.40.040 an affidavit of exemption in such form and manner as prescribed by the state tax commission which shall adequately describe the nature and amount of such property. Such property for which an exemption is sought must be shipped to an out-of-state destination not later than December 31st of the year for which the exemption is claimed."

To qualify for the exemption, the property described in RCW 84.36.171 must have been manufactured or produced outside the state of Washington and brought into the state ". . . for the purpose of transportation or sale through and to points without the state . . ." The affidavit required by RCW 84.36.172 must identify the property as "ultimately destined for out-of-state shipment . . ."

While it is the intent of the act that the exemption will apply only to such property as is brought into the state for the purpose of being shipped out, it is not necessary that the property be actually consigned or committed to a definite out-of-state destination when it comes into the state or when the affidavit is filed. The exemption is granted not only to property being transported through the state but also to property which enters the state for the purpose of being sold while here to out-of-state buyers, and RCW 84.36.172 simply requires such property to ". . . be shipped to an out-of-state destination not later than December 31st of the year for which the exemption is claimed."

3. While we have answered the second question in the negative, it should be pointed out that the exemption [[Orig. Op. Page 4]] will apply only when it is shown that the specific goods listed in the affidavit were the identical goods which were later shipped out-of-state. Under RCW 84.36.171 the property must be ". . . identified at the time the affidavit is filed as property ultimately destined for out-of-state shipment . . ." and RCW 84.36.172 provides that ". . . Such property for which an exemption is sought must be shipped to an out-of-state destination . . ." "Such property," in our opinion, means such specific property or identical property.

It becomes apparent that the exemption can only apply to fungible goods such as bulk oil, grain or flour when such goods coming into the state and destined for out-of-state shipment are kept separate and apart from goods to be sold within the state. Only in this way can they be identified as property in transit under the terms of the act.

We trust the foregoing will be of assistance to you.

Very truly yours,

JOHN J. O'CONNELL
Attorney General

HENRY W. WAGER
Assistant Attorney General