(1) All heavy equipment rental property owned by a heavy equipment rental property dealer is exempt from taxation.

(2) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.

(a)(i) "Heavy equipment rental property" means any equipment that is rented by a heavy equipment rental property dealer that:

(A) Is mobile. For purposes of this subsection, "mobile" means that the heavy equipment property is not permanently affixed to real property and may be moved among worksites as needed;

(B) Is customarily used for construction, earthmoving, or industrial applications. For the purposes of this subsection, "construction, earthmoving, or industrial applications" means the constructing of new buildings or other structures, or the repairing, remodeling, or expansion of existing buildings or other structures, under, upon, or above real property; the repositioning of terrain using vehicles or self-propelled equipment; and manufacturing or processing raw materials or other ingredients or components into new articles of tangible personal property for sale; and

(C) Is rented without an operator.

(ii) Subject to the provisions of (a)(i) of this subsection, "heavy equipment rental property" includes, but is not limited to the following:

(A) Earthmoving equipment, including but not limited to backhoes, loaders, rollers, excavators, bulldozers, and dump trucks;

(B) Self-propelled vehicles that are not designed to be driven on the highway;

(C) Industrial electrical generation equipment;

(D) Industrial lift equipment;

(E) Industrial material handling equipment;

(F) Equipment used in shoring, shielding, and ground trenching;

(G) Portable power and HVAC generation equipment;

(H) Attachments to heavy equipment rental property, including but not limited to buckets, augers, hammers for backhoes, hoses, fittings, piping, chains, tools (such as jackhammers and cement chippers), and portable power connections;

(I) Ancillary equipment, including but not limited to generators, ground thawing equipment, fluid transfer equipment, pumping equipment, portable storage, portable fuel and water tanks, and light towers; and

(J) Equipment or vehicles not subject to vehicle license fees and not required to be registered with the department of licensing.

(iii) "Heavy equipment rental property" does not include small hand tools, chainsaws, or lawnmowers.

(b) "Heavy equipment rental property dealer" means a person principally engaged in the business of renting heavy equipment rental property. For purposes of this subsection, "principally" means that the heavy equipment rental property dealer receives more than fifty percent of the dealer's annual total revenue from the rental of heavy equipment rental property.

(3)(a) The exemption in subsection (1) of this section does not apply in any tax year to heavy equipment rental property that the heavy equipment rental property dealer rented or leased at any time during the immediately preceding tax year to a person with whom the heavy equipment rental property dealer is affiliated.

(b) For purposes of this subsection, "affiliated" means:

(i) One person has an ownership interest of more than five percent, whether direct or indirect, in the other person; or

(ii) Persons who are related to each other because a third person, or group of third persons who are affiliated with respect to each other, holds an ownership interest of more than five percent, whether direct or indirect, in the related persons.

(4)(a) A claim for exemption under this section must be filed with the county assessor together with the statement required under RCW 84.40.190, for exemption from taxes payable the following year.

(b) The claim must be made solely upon forms as prescribed and approved by the department.

(c) If the assessor finds that the applicant does not meet the requirements for exemption under this section, the exemption must be denied but such denial is subject to appeal under the provisions of RCW 84.48.010 and 84.40.038.

(5) If a heavy equipment rental property dealer received an exemption under this section based on erroneous information provided by the heavy equipment rental property dealer to the county assessor, the taxes must be collected for a period not to exceed five years, subject to penalties as follows:

(a) Twenty-five percent of the total tax due;

(b) Fifty percent of the total tax due if the heavy equipment rental property dealer was previously assessed a penalty under this subsection, unless the penalty was overturned by a court or administrative tribunal in a final decision that is no longer subject to appeal; or

(c) A penalty as provided in RCW 84.40.130(2), if the heavy equipment rental property dealer, with intent to defraud, submitted a false or materially misleading claim for exemption.

(6) The department may adopt rules as it deems necessary to administer this section.

Application—2020 c 301 s 1: "Section 1 of this act applies to taxes levied for collection in 2022 and thereafter." [ 2020 c 301 s 8.]

Automatic expiration date and tax preference performance statement exemption—2020 c 301: See RCW 82.51.900.