No. The exemption as stated in the law is for 'new purchases' only. M&E Exemption must be requested and approved prior to purchase. The University does not retroactively allow purchases to qualify.
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The threshold for the M&E Tax Exemption is $200. We are not required under the RCW to use the UW's capitalization threshold of $5,000. The equipment:
- Must have a useful life of more than one year
- Must be directly used more than 50% of its useful life on qualifying research; and
- Must have an acquisition cost of more than $200
Note: Add costs to existing pieces of M&E qualifying equipment can also qualify for the exemption, even if they are under $200.
Yes, but the department will need to cancel the current purchase requisition and re-enter a new purchase requisition using the correct object code(s).
No. Due to compliance issues, M&E purchases cannot be purchased using the ProCard.
Please see M&E Object Codes section.
Please start your comment in the M&E Statement box. If you can't make it fit (which is preferred), then continue it into the comments section of the individual item so we can see the whole comment while editing the line item.
If it is deemed that an equipment purchase would qualify for the M&E exemption, a statement detailing the type of research to be performed and the desired outcome, is required. Please see examples of acceptable and unacceptable statements on our M&E Statement Examples web page.
Machinery & Equipment
A pre-populated M&E Certificate is available on Equipment Inventory's Forms webpage. As long as the order has gone through one of the UWs purchasing systems as M&E (so that the appropriate audit trail is collected), it is okay to complete the pre-populated form and send to the vendor. We recommend you reference the PO number next to the vendor name.
Early in the University's adoption of the M&E Exemption, we learned that laptops and other portable computing equipment items would probably not qualify for the exemption under audit. This is due to the items being extremely portable as well as having the ability to be used for many different functions outside of research. To reduce the University's risk under audit, we simply don't allow these items to be purchased under the M&E Exemption.
Yes, Definition (15) of RCW 82.63.010 specifically includes software. It states: 'Qualified machinery and equipment' includes: Computers; software; data processing equipment...
Yes, please use object code 05-41 for the expenses.
Yes, please use object code 05-41 for the expenses.
No. The law does not extend the exemption to consumables.
No for warranties, yes for maintenance agreements. The DOR issued a special notice that specifically calls out 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.
Maintenance agreements separate from warranties qualify for tax exemption.
You can still include the first year of a warranty into the total cost of an M&E qualifying piece of equipment, just use the equivalent non-M&E object code for the warranty portion of the purchase (e.g. use 06-91 for the warranty if the equipment is being purchased as 06-93).
EIO consulted with the Tax Office on this question. Shipping on loaned equipment is okay to code as M&E tax exempt. The reason for this is that shipping or transportation services bought as a stand-alone purchase are not subject to sales tax. Since there is no underlying cost or sales price (to the University) for a loaned piece of equipment, shipping costs would be considered stand-alone and not subject to sales tax anyway. These costs should be coded 05-41.
Installation costs, on the other hand, are more ambiguous from a tax standpoint. Since the RCW and WACs related to the M&E Exemption do not specifically discuss loaned equipment, the University does not allow installation on a loaned piece of equipment to qualify for the M&E Exemption.
Yes, these items can be purchased as 05-41 due to the fabricated item qualifying for the M&E Exemption. The department will need to provide a comment stating that the items are going into a fabrication and also provide the fabrication tag number.
Yes. Allowing this is consistent with how we treat components of a fabrication that are under $200 and also aligns with the Equipment Inventory Office's System Policy.
Please include comments to this effect on the requisition.
Yes. Add costs to existing pieces of M&E qualifying equipment can qualify for the exemption, even if they are under $200.
Yes. Excise Tax Advisory 3127.2009 states, “a laboratory table…integral to an R&D operation,” as well as “a chair used in a laboratory workstation…integral to an R&D operation” both would qualify for the exemption. It specifically notes that furniture not used directly in R&D work is not considered integral and does not qualify.
Yes. The exemption applies to both "sales to" and "use by" a public research institution of machinery and equipment used primarily in a research and development operation."
No. If the welder is not going to be part of the final fabricated piece, it does not qualify. All M&E Exempt equipment must be used directly on research at least 50% of the time.