Are there regulatory alternatives or new technologies that could more effectively or efficiently achieve the same objectives?
Please explain answer(s): The rule as written generally achieves its purpose and intent. However, the rule is still open to wide interpretation by the department, taxpayers, and their representatives. The rule should be revised to include additional detail or examples which state the taxability of various ingredients or components purchased to produce a new article of tangible personal property for sale, or chemicals purchased for use in processing and producing a new article for sale. The result will be a more effective rule that eliminates a good deal of the confusion in this area that now exists. Rule 113 should also be revised to add information found in 13 WTD 75 (1993), which explains that an item will not lose its “ingredients or components” sales or use tax “exclusion” under RCW 82.04.050 (1)(c) merely because it is first put to some other intervening use. It then goes on to identify the specific criteria to be met for the exclusion to be valid.
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