Director's Rule 5-068

Pool purchases

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Pool purchases                                                                 

(1) Introduction. This rule explains Seattle's business license tax exemption requirements with regard to pool purchases.

(2) Definitions.

(a) The term "pool purchase" means the joint purchase by two or more persons engaging in independent business activities, of commodities in carload or truck load quantities for the purpose of obtaining a purchase price or freight rate which is less than when purchased or delivered in smaller quantities.

(b) The term "principal member" means that member of the pool to whom the goods are charged by the vendor of the commodities purchased,

(3) Deduction. In computing tax liability of the principal member under Seattle Municipal Code chapter 5.45, there may be deducted from gross proceeds of sales the amount received by the principal member from other members of the pool of their proportionate share of the cost thereof of the commodities purchased.

(a) This deduction is allowed only when all of the following conditions are met:

(i) The amount received is included in gross proceeds of sales;

(ii) The pool purchase agreement was entered into prior to the time of placing the order for the commodities purchased;

(iii) The pool purchase agreement provides that each member shall accept a specific portion of the shipment; and

(iv) Division of the shipment is made prior to warehousing of the commodities by a member of the pool.

(b) In no event will a "pool purchase" deduction be allowed when an agreement relative to the amount of the share to be distributed to any member is made after the date of the purchase order, or where one member of a pool pays an amount for its portion in excess of the proportionate amount paid by another member.

Effective: May 15, 2007

I, Dwight D. Dively, Director of the Department of Finance of the City of Seattle, do hereby certify under penalty of perjury of law, that the within and foregoing is a true and correct copy as adopted by the City of Seattle, Department of Finance.

City Finance

Jamie Carnell, Interim Director
Address: 700 Fifth Ave., 4th Floor, Seattle, WA, 98104
Mailing Address: P.O. Box 34214, Seattle, WA, 98124-4214
Phone: (206) 684-8484
Hours: 8:30 a.m.-4 p.m.

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