HB 1769
In CommitteeHouse
Abandoned vehicle auctions
Concerning abandoned vehicles sold at auctions conducted by registered tow truck operators.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill changes how sales of abandoned vehicles by registered tow truck operators are taxed in Washington. Instead of being treated as exempt services (towing and storage), such sales are now taxed as sales of tangible personal property, requiring tow operators to collect sales tax and allowing them to deduct required surplus payments to the Department of Licensing.
- Abandoned vehicle auction proceeds are now taxed as sales of tangible personal property, not as exempt towing or storage services.
- Registered tow truck operators must collect sales tax on abandoned vehicle sales at public auctions or to licensed vehicle wreckers, hulk haulers, or scrap processors.
- Tow operators may deduct surplus proceeds they are legally required to send to the Department of Licensing from taxable gross proceeds.
- Buyers of abandoned vehicles (including at auction) must pay applicable sales tax, unless a specific exemption applies.
- Repeals two 2023 and two 2019 uncodified laws that previously governed tax treatment of abandoned vehicle auctions.
Who is affected
- Registered tow truck operators — Registered tow truck operators who auction off abandoned vehicles will now be required to collect and remit sales tax on the sale of those vehicles, and can deduct certain surplus payments they must send to the Department of Licensing.
- Buyers of abandoned vehicles — Buyers at public auctions or direct purchasers (e.g., licensed vehicle wreckers, hulk haulers, scrap processors) of abandoned vehicles will now be responsible for paying sales tax on the purchase, unless an exemption applies.
- Washington Department of Licensing — The Washington Department of Licensing will continue to receive surplus proceeds from abandoned vehicle auctions, but the tax treatment of those proceeds changes under this bill.
- Auto wreckers, scrap processors, and hulk haulers — Auto wreckers, scrap processors, and hulk haulers who buy abandoned vehicles wholesale from tow operators will not see a change in how their purchases are taxed under this bill.
Pro/Con Analysis
Potential Benefits (5)
The state may realize modest additional sales tax revenue by taxing abandoned vehicle sales as tangible personal property rather than exempt services, improving equity in the tax code by aligning treatment with other retail sales of vehicles.
FinancialRef: NEW SECTION. Sec. 2(1); NEW SECTION. Sec. 3(1)Tow operators can deduct surplus proceeds remitted to the Department of Licensing, reducing their taxable base and mitigating the financial impact of the new tax obligation—though this benefit is limited to operators who actually generate surplus proceeds (i.e., where auction proceeds exceed towing/storage costs and fees).
FinancialLean peopleRef: NEW SECTION. Sec. 2(2)The bill clarifies that wholesale purchases by auto wreckers, scrap processors, and hulk haulers remain exempt from sales tax, preserving existing business models and avoiding unintended tax cascading in the vehicle recycling chain.
Business & EmploymentRef: NEW SECTION. Sec. 4By repealing conflicting uncodified laws and harmonizing the tax treatment under RCW 82.04.040 and 82.08, the bill reduces legal uncertainty and administrative inconsistency for tow operators and buyers—though the net effect is a modest increase in compliance complexity.
Business & EmploymentRef: Sec. 1 amending RCW 82.04.040(1)(b); NEW SECTION. Sec. 4The bill clarifies that auction agents acting on behalf of tow operators are also responsible for collecting sales tax, strengthening enforcement and reducing potential tax leakage at public auctions.
Local GovernmentRef: NEW SECTION. Sec. 3(2)
Potential Concerns (5)
Buyers of abandoned vehicles (e.g., at public auctions or from tow operators) will now pay sales tax on those purchases, increasing their out-of-pocket costs for vehicles that may be low-value or intended for parts/scrap. This disproportionately affects low-income individuals who rely on used vehicles for transportation and may not qualify for exemptions.
FinancialPeopleRef: NEW SECTION. Sec. 2(1); NEW SECTION. Sec. 3(1)While tow operators may deduct surplus proceeds sent to the Department of Licensing, the administrative burden of collecting, reporting, and remitting sales tax may fall disproportionately on small tow operators—many of whom are sole proprietors or micro-businesses—with limited resources for tax compliance.
FinancialLean peopleRef: NEW SECTION. Sec. 2(2); RCW 46.55.130The bill explicitly preserves the existing tax-exempt status of wholesale purchases by auto wreckers, scrap processors, and hulk haulers, meaning downstream businesses face no change in tax liability—neutral for this group but limiting the overall revenue gain.
FinancialRef: NEW SECTION. Sec. 4Local governments that receive sales tax revenue will see a modest increase in collections from abandoned vehicle auctions, but the fiscal impact is limited because the tax base is narrow and wholesale transactions remain exempt.
Local GovernmentRef: NEW SECTION. Sec. 2(1); NEW SECTION. Sec. 3(1)If the added complexity or cost of sales tax compliance discourages some registered tow operators from participating in the abandoned vehicle program—or leads them to skip auctions or bypass legal channels—this could reduce accountability and transparency in vehicle disposal, potentially increasing illegal dumping or untracked vehicle storage.
Public SafetyPeopleRef: NEW SECTION. Sec. 3(1)
Who Is Most Affected
Low-income individuals who buy abandoned vehicles for transportation or parts will now pay sales tax on those purchases, increasing their costs for essential mobility. This may reduce access to affordable transportation, especially in rural or transit-poor areas.
Small tow operators—many of whom are sole proprietors or micro-businesses—will face new sales tax collection and reporting obligations, adding administrative burden and potential compliance costs. While they can deduct surplus payments, the net effect may strain operations with thin margins.
Auto wreckers, scrap processors, and hulk haulers face no change in tax liability, as their wholesale purchases remain exempt. This preserves their current cost structure and business model, but they do not directly benefit from the bill’s revenue-generating provisions.
The state and local governments gain modest new sales tax revenue, but the impact is limited by the narrow scope (only retail sales at auction or to licensed buyers) and the exemption of wholesale transactions.
Buyers who qualify for existing sales tax exemptions (e.g., government agencies, certain nonprofits) are unaffected, but most private buyers—including individuals and small businesses—will pay tax where they previously did not.