Machinery and Equipment (M&E) Sales Tax Exemption
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Effective October 1, 2004
New! EIO has produced a new video, Machinery & Tax (M&E) Exemption for PIs. This video provides information to researchers on what the purpose is of the M&E Tax Exemption as far as the State of Washington is concerned, what kinds of research - and the work that you're doing in that field - may or may not qualify for the Exemption, and what EIO requires for M&E purchases to be approved. Feel free to share this video with PIs and administrators in your department!
Best Practices for M&E Purchases
Since M&E purchases require pre-approval, the only systems in which M&E purchases are allowed are the eProcurement or Non-Catalog modules of Ariba or, as a last resort, PAS. NOTE: PAS will be no longer be available as of January 1, 2015.
A vendor should not allow an M&E purchase to be made without the M&E Certificate presented up front. The Procurement Card and both the Non-PO Invoice and eReimbursement modules of Ariba are "post purchase" payment methods and therefore pre-approval is not available.
Effective 5/1/2009, equipment purchases are not allowed using the Procurement Card.
Effective 11/1/2013, equipment purchases are not allowed using the Non-PO Invoice or eReimbursement modules of Ariba. M&E object codes will still be visible in these modules, but they should not be selected. If M&E codes are used, the order will be rejected to the department. Eventually, the M&E codes will be completely removed from these two modules of Ariba to eliminate confusion. However, due to programming efforts and competing priorities, this will be a future phase.
To qualify for the M&E Exemption, equipment must:
- Have a useful life of more than one year;
- Be used more than 50% annually on qualifying research; and
- Have an acquisition cost of $200 or more
- Note: Federally titled items purchased by the University also qualify for the exemption.
- Note: Add costs to existing pieces of M&E qualifying equipment can also qualify for the exemption, even if they are under $200.
Non-equipment costs that can also qualify for the M&E Exemption include:
- Ancillary costs (use the relevant 06-XX M&E object code)
- Labor costs (use object code 05-41)
- Repair and maintenance costs performed outside of any maintenance contract (use object code 05-41)
- Replacement parts (use object code 05-41)
Non-equipment costs that do not qualify for the M&E Exemption include:
- Extended warranties and maintenance agreements
- Consumable supplies
This provides guidance as to what each of the below departments are responsible related to M&E process:
- Principal Investigator and Department
- Equipment Inventory
- Procurement Services
- Tax Office
This provides detailed guidance for completing an M&E order under each purchasing method:
This gives examples of both acceptable and unacceptable statements.
Our video, The Machinery & Equipment Tax Exemption for PIs, may help investigators understand what we are looking for in an M&E Statement, and why.
This describes programs that will often qualify for the M&E Exemption as well as those that do not qualify for the M&E Exemption.
This gives examples of equipment that has and has not qualified for the M&E Exemption.
This lists and describes the various M&E Object Codes.
This provides guidance specific to recharge centers who purchase equipment under the M&E Exemption.
eProcurement - Required Manufacturer's Sales and Use Tax Exemption Certificate
PAS - None, unless the vendor requests an official certificate after the purchase. PAS collects M&E purchase data and sends a mini-M&E certificate to the vendor with the purchase orders and on the check remittances. If this mini-certificate is not sufficient documentation for the vendor, please complete the Manufacturer's Sales and Use Tax Exemption Certificate.
Optional - Some departments choose to collect supporting data related to M&E purchases. The format for this varies by department and is for internal use only.
RCW 82.08.02565 Exemptions - Sales of machinery and equipment for manufacturing, research and development, or a testing operation - Labor and services for installation - Exemption certificate - Rules.
RCW 82.63.010 Definitions
WAC 458-20-13601 Manufacturers and processors for hire—Sales and use tax exemption for machinery and equipment.
Excise Tax Advisory 3127.2009 Manuracturers' Machinery and Equipment Exemption - Research and Development