Learn more about keeping your business compliant with sales tax requirements.
In Washington a tax is imposed on all retail sales, including successive retail sales of the same property. Retail sale includes all sales of tangible personal property except sales for resale, materials becoming a component of property through installation, construction, etc., and material for manufacturing products.
Retail sales include the following items:
Leases. In Washington, rentals (including rentals of equipment with an operator), leases, and leases with option to purchase are taxable as retail sales. The sales or use tax is collected on the amount of the rental as each payment falls due.
Sales and use tax rate. The Washington sales and use tax rate is generally 6.5 percent. An additional tax of 0.3 percent is imposed on retail sales of new and used motor vehicles, for a total rate on motor vehicle sales of 6.8 percent. Retail car rentals are subject to an additional tax of 5.9 percent, for a total tax of 12.4 percent. Also, various sales tax rates are charged on the retail sale of spirits or strong beer. (In addition, make sure you contact your local governments in Washington because they are allowed to assess a local sales and use tax.)
In Washington the sales tax is imposed on the buyer and is generally collected by the seller from the buyer. The sales tax is a debt from the buyer to the seller until paid. However, the state may collect the sales tax directly from the buyer when the buyer has failed to pay the seller.
Absorbing the tax. It is against the law to refund, remit, or rebate to the purchaser all or any part of the tax. However, you may advertise that the price includes the tax or that you as the seller are paying the tax as long as the words "tax included":
In Washington every person engaging in any taxable business is required to register with the Department of Revenue. No fee is required. A separate permit is required for each place of business. Registration with the Department of Revenue is not required, if you meet all the following requirements:
Washington has many specific items that are exempt from sales tax — for example, certain prescription medications are exempt from Washington sales tax. Resale exemptions and blanket exemptions are two of the most important exceptions to sale tax liability. You'll want to check and see if you are exempt from the sales tax.
Tax exemption certificates. An exemption certificate may be issued by a purchaser of a nontaxable item. The exemption certificate may be based on the type of transaction (such as a resale exemption) or on the item itself.
In Washington property sales for resale in the regular course of business without intervening use are not subject to sales tax. Unless the seller's records clearly show that a transaction was a sale at wholesale, the burden of proving that a sale was not a sale at retail is on the seller. A resale certificate provided by you, the purchaser, to the seller stating that the purchase is for resale in the regular course of business is needed.
The resale exemption certificate must contain the following information:
Sellers may accept blanket certificates from you as a purchaser if you repeatedly purchase the same type of property or service for processing or resale. However, blanket certificates may not be used to purchase property or services not covered by a blanket certificate. A resale certificate that includes the description of the product or services to be purchased as the term "all products and/or services" (or makes a similar designation) is considered a blanket certificate in Washington.
Washington has a statute that specifically taxes out-of-state mail order and catalogue sellers. However, you will be responsible for paying this tax only if you have physical presence within Washington. To determine if you have physical presence, ask yourself the following:
The bracket system may be followed by sellers in computing the sales tax. The 6.5 percent state tax is computed on each dollar and/or fraction of a dollar according to the following table:
|Amount of Sale||Tax|
|$0.06 to $0.23||$0.01|
|0.24 to 0.38||0.02|
|0.39 to 0.53||0.03|
|0.54 to 0.69||0.04|
|0.70 to 0.84||0.05|
|0.85 to 0.99||0.06|
|1.00 to 1.15||0.07|
|and so forth|
The use tax supplements the sales tax by taxing the use in the state of every service considered a retail sale and every article of tangible personal property on which sales tax has not been paid. The use tax is imposed on every person who consumes an article of tangible personal property in the state acquired in one of the following ways:
Property brought into Washington on which a sales or use tax has been paid in another state equal to or in excess of the Washington tax is not subject to tax in Washington.
The use tax is imposed on every person who consumes a taxable article of tangible personal property or uses a taxable service in the state.
When the purchaser returns the property purchased, and the selling price is refunded, you may deduct an amount equal to the selling price in computing your sales tax liability. The state will also credit or refund amounts to you for customer bad debts. The Department of Revenue will not refund taxes paid more than four years prior to the beginning of the calendar year in which the refund application is made or examination of records is completed.