Maintenance is the upkeep of property or equipment to preserve from failure and decline.
A Maintenance Agreement, sometimes referred to as a service contract, a maintenance agreement is an agreement which requires the specific performance of repairing, cleaning, altering, or improving of tangible personal property on a regular or irregular basis to ensure its continued satisfactory operation. (WAC 458-20-257)
A Warranty, sometimes referred to as a guarantee, is an agreement which calls for the replacement or repair of tangible personal property with no additional charge for parts or labor, or both, based upon the happening of some unforseen occurrence, e.g., the property needs repair within the warranty period. (WAC 458-20-257)
Maintenance Agreements and Warranties
The first year cost of a maintenance agreement and/or warranty can be included in the cost of a piece of equipment (coded as the appropriate taxable 06-XX object code) as an Ancillary Cost. Future years of these items should be coded 03-60 Outside Services--Repair, Maintenance, and Alterations or 03-64 Outside Services--Maintenance Contracts.
The DOR issued a special notice that specifically calls out extended warranties as being taxable even if the property is exempt. If the warranty is included in the cost of the total sales price and can't be broken out separately, then it won't be subject to tax because it is considered part of the underlying price. If it is broken out separately, then it is taxable.
The department is responsible for the maintenance of all equipment in their custody. For equipment acquired under grants and contracts, the principal investigator shares the responsibility with the department chair or dean. Principal investigators should be aware of any specific equipment care and maintenance requirements defined by their grants or contracts. It is the equipment custodian's responsibility to care for equipment entrusted to his or her possession or supervision, and to keep it safe.
Specific responsibilities include:
- Providing the maintenance necessary to obtain a high quality of production and the most useful service life of the equipment.
- Keeping detailed maintenance records for all equipment. This includes but is not limited to:
- Recording the date and the details of the completed service,
- Noting any deficiencies discovered,
- Documenting the results of the inspection,
- Documenting any action(s) performed, and
- Maintaining a data file of certification documents.
- Maintaining the property according to current technical standards. Refer to service procedures, processes, or manuals for the required service specifications and details of items to be serviced.
- Scheduling and completing periodic maintenance according to industry standards. This includes:
- Coordinating and arranging for service to be performed by outside agencies or internal service groups such as Facilities Services Maintenance & Alterations.
- Performing any unscheduled maintenance in an expeditious manner. When unscheduled calibration, maintenance, or repair service is performed, document the service.
- Establishing and performing periodic reviews of the calibration/preventive maintenance system.
Note: While it is important to be diligent for maintenance of all equipment, it is extremely critical for government furnished equipment that has been entrusted to the University. If government furnished equipment is not properly maintained, severe consequences can occur such as direct reimbursement, replacement, or lack of opportunity for future acquisitions.