Dock Doors and Levelers Not "Material-Handling Equipment" for Warehouse Tax Incentive

Wednesday, December 11th, 2013


The Washington Department of Revenue ("DOR") recently released a ruling that a warehouse's ammonia system, dock leveler, and dock doors and seals were not "material-handling equipment" for purposes of the warehouse tax incentive.

The warehouse tax incentive provides a refund for all or part of sales tax paid on the repair, installation, servicing, or cleaning of "material-handling" and racking equipment in a warehouse. "Material-handling" and racking equipment is equipment used in a warehouse primarily to handle, store, organize, convey, package, or repackage finished goods. It includes conveyers, carousels, lifts, positioners, cranes, hoists, mechanical arms, robots, forklifts that cannot be operated on roads and streets, and mechanized systems whose purpose is to lift or move tangible personal property. Property that is a component of the warehouse building or structure is not material-handling or racking equipment.

The taxpayer owned a grocery warehouse. It sought a refund of tax paid on repairs to the ammonia system, the dock leveler, and dock doors and seals. The ammonia system cooled the air in the warehouse to keep food cold. The taxpayer argued that it qualified as material-handling equipment because it was used to store goods that had to be kept cold. The dock doors were doors that opened to the loading dock, and the dock seals were attached to those doors. The dock leveler was a ramp attached to the warehouse that bridged the gap between the warehouse floor and the trailer while loading or unloading goods.

The DOR ruled that these were not material-handling and racking equipment. The ammonia system was not material-handling equipment because it did not physically store goods. The kinds of equipment listed in the statute physically lifted, moved, or held goods. The DOR ruled that equipment that did not lift, move, or hold goods could not qualify as material-handling equipment. The ammonia system therefore did not qualify. The dock doors, seals, and dock leveler were not material-handling equipment because they were attached to the warehouse building. These were therefore components of the building and could not qualify as material-handling equipment. The taxpayer could not get a refund for tax paid on the repair and maintenance of these items.

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