A Buyer’s Sales and Use Tax Preference Addendum is a Washington State reporting form that buyers complete inside the Department of Revenue’s e-file system when they claim certain new sales or use tax exemptions or deferrals. Despite the name, it has nothing to do with real estate purchase agreements. It’s a tax reporting attachment to your excise return, most often filed by manufacturers and R&D operations using Washington’s deferral program in qualifying counties.
Why the Addendum Exists
Washington law requires every new tax preference the legislature enacts to come with a stated purpose and measurable goals, so the state can tell whether a given tax break is doing what it was designed to do. RCW 82.32.808 puts part of that measurement burden on the buyer.1Washington State Legislature. RCW 82.32.808 – Tax Preferences Performance Statement Requirement
If you claim a new sales or use tax exemption, you already file excise tax returns with the DOR monthly or quarterly, and you’re also required to give the seller an exemption certificate or similar documentation, you have to report the total purchase price or value of the exempt products or services on an addendum to your return. That addendum is the Buyer’s Sales and Use Tax Preference Addendum.1Washington State Legislature. RCW 82.32.808 – Tax Preferences Performance Statement Requirement
Where to Find and File It
The addendum lives in the DOR’s e-file system under the Tax Preference section of the main menu. You don’t attach a paper form to a contract; you complete it electronically as part of your normal excise tax filing cycle.2Washington Department of Revenue. Manufacturer’s Application for Sales and Use Tax Deferral for Lessor
The Most Common Trigger: The Manufacturing and R&D Deferral
The situation that puts most buyers in front of this addendum is the sales and use tax deferral program under RCW 82.60 for manufacturing and research and development in qualifying counties. If you’re investing in a new or expanded manufacturing facility in an eligible part of the state, the program lets you defer the sales and use tax you would otherwise owe on construction and equipment. Buyers using the deferral complete the addendum when filing their excise tax returns.3Washington Department of Revenue. Sales and Use Tax Deferral for Manufacturing and Research and Development in Qualifying Counties
What Qualifies
The deferral covers two categories of investment, capped at a combined $400,000 per person.3Washington Department of Revenue. Sales and Use Tax Deferral for Manufacturing and Research and Development in Qualifying Counties
- Qualified buildings, meaning new construction and expansions or renovations that increase floor space or production capacity for manufacturing or R&D. Plant offices, warehouses, and storage facilities count when they are an essential part of the operation.
- Qualified machinery and equipment, including new industrial and research fixtures, equipment, and support facilities integral to the operation. Computers, software, lab equipment, molds, tools, dies, and control systems all qualify.
Labor and services for planning, installing, and constructing the project count toward the deferral as well.3Washington Department of Revenue. Sales and Use Tax Deferral for Manufacturing and Research and Development in Qualifying Counties
Where It Applies
Only projects in “qualifying counties” are eligible. The statute defines these as counties with an unemployment rate at least 20 percent above the state average across the three calendar years before the list is set or updated, and the deferral is available for projects in counties with a population under 650,000 at the time of application.4Washington State Legislature. RCW 82.60.020 – Definitions Check the DOR’s current list before committing to a project site.3Washington Department of Revenue. Sales and Use Tax Deferral for Manufacturing and Research and Development in Qualifying Counties
What Claiming It Commits You To
Filing the addendum is not the end of your obligations. Each recipient of the deferral has to file a complete annual tax performance report with the DOR under RCW 82.32.534, so the state can track whether the project is meeting its goals for job creation and regional competitiveness.5Washington State Legislature. RCW 82.60.070 – Annual Tax Performance Report
If everything goes according to plan, the deferred tax is never repaid and no interest accrues during the deferral period. Repayment is triggered in two situations: the project is not operationally complete within five years of the deferral certificate’s issue date, or the project is used for non-qualifying purposes at any point during the deferral period.3Washington Department of Revenue. Sales and Use Tax Deferral for Manufacturing and Research and Development in Qualifying Counties If repayment is required, it runs on an escalating five-year schedule that starts in the third calendar year after the DOR certifies the project as operationally complete, with each installment due December 31. Standard delinquency penalties and interest apply to missed installments.6Washington State Legislature. RCW 82.60.060 – Repayment Schedule
Who This Actually Applies To
The addendum is relevant to a narrow group: Washington businesses that claim a sales or use tax exemption or deferral and already file excise tax returns with the DOR on a monthly or quarterly basis. Manufacturers and R&D operations using the qualifying-county deferral are the typical filers. If you landed here because you’re buying a house or working through a standard real estate purchase, this form does not apply to your transaction.