What Services Are Exempt from Sales Tax in Washington State
Washington is a goal-oriented state. This means that you are responsible for applying the VAT rate determined by the delivery address to all taxable sales. If the answer to all three questions is yes, you will need to register with the state tax authority, collect the correct amount of sales tax per sale, file returns, and remit them to the state. Physical store: Do you have a physical store? Physical POS solutions allow users to set the VAT rate associated with the store location. New tax groups can then be created to reflect specific tax rules on products. Some individual transit districts have higher maximum rates, and Kitsap Transit has an additional sales tax authorization of up to 0.4% for passenger ferries (RCW 82.14.440). For more information, see the State Goals-Based Sales Tax Overview. Avalara TrustFile offers a quick and easy way to prepare and file VAT returns electronically. Users can register and use the service to prepare returns for free for a limited time. Sales tax exemption and resale certificates in Washington are worth much more than the paper they are written on. If you are audited and fail to validate an exempt transaction, Washington DOR may hold you responsible for uncollected sales tax.
In some cases, late fees and interest are charged, which can result in large and unexpected bills. Only counties, but revenues are shared with cities and municipalities. Each county may impose a 0.1 percent sales tax for criminal purposes (RCW 82.14.340). Cities do not have the power to collect this tax, but revenue must be shared with cities in the county per capita (population). The measure may be imposed by the legislator and does not require the consent of the electors. Most counties have already collected this sales tax. Retail services are services subject to VAT. Below is a list of the categories of services subject to VAT when they are made available to consumers.
The list also includes examples and links to additional resources. We encourage companies to check the laws and regulations of the Washington DOR to keep abreast of which products are taxable and which are exempt and under what conditions. The requirements for this VAT are quite detailed. Although the legal wording is not entirely clear, we believe that a county and a city in that county cannot collect this sales tax at the same time. Doing business does not require the collection of retail sales tax You must register with the Washington Department of Revenue if you are buying an existing business in Washington. The state requires all registered businesses to have the name and contact information of the current owner of the business on file. The sales tax link in all states was previously limited to physical presence: a state could require a business to register, collect, and remit sales tax only if it had a physical presence in the state, such as employees or an office, retail store, or warehouse. Clickable Link: An agreement to reward one or more persons in the State for directly or indirectly negotiating potential purchasers of goods through an Internet link, website or otherwise if the cumulative gross revenue from such sales exceeds $10,000 in the preceding calendar year. The link with clicks came into effect in Washington on September 1, 2015 and was eliminated on March 15, 2019. I hope you don`t have to worry about this section, as you will file and remit sales tax in Washington on time and without incident. In the real world, however, mistakes do occur. Counties only.
Each county may charge a sales tax of up to 0.2% on emergency communication systems and facilities (911 or E-911 improved) (RCW 82.14.420). Previously, the maximum rate was 0.1%, but was increased to 0.2% with effect from 28 July 2019 (see ESSB 5272). The measure requires the approval of the electorate; Any county that has already levied a 0.1% sales tax under this authority and wants to raise its tax rate above 0.1% must submit a proposal to voters. There are exceptions to almost every rule with sales tax, and the same goes for shipping and handling charges. Specific questions about Washington shipping and sales tax should be directed to a tax advisor who is familiar with Washington`s tax laws. In some states, sales tax rates, rules, and regulations are based on the location of the seller and the origin of the sale (source-based sourcing). In other cases, VAT is based on the location of the buyer and the destination of the sale (destination-based sourcing). The DOR assigns you a logon frequency. Typically, this is determined by the size or volume of sales of your business.
State governments generally encourage large companies to file their returns more frequently. For more information, see Registration deadlines. Marketplace sales: Make sales through a marketplace. As of October 1, 2018, market intermediaries are responsible for collecting and remitting sales tax on behalf of market vendors in Washington. Additional reporting requirements for market intermediaries will enter into force on 1 July 2019. If you are in the process of acquiring a business, it is highly recommended that you contact Washington DOR and inquire about the current status of the potential acquisition. Once you buy the company, you are responsible for all ongoing sales in Washington. Marketplaces: Marketplaces such as Amazon and Etsy offer built-in VAT rate determination and collection, usually for a fee. As with hosted stores, you can set things up through your seller dashboard and let your marketplace provider do the heavy lifting. Eligible transit districts may also impose an additional sales tax of up to 1.0% to provide high-capacity transit services operating primarily on exclusive rights-of-way (RCW 81.104.170). This measure also requires voter approval, and Sound Transit is currently the only organization to have implemented the sales tax on high-capacity transit. After determining that you have a connection to sales tax in Washington, you must register with the appropriate state agency and collect, deposit, and remit sales tax to the state.
We get a lot of questions about this and we realize that this can be the most difficult obstacle for businesses. Avalara Licensing can help you get your business license in Washington and your sales tax registration. Non-collector sellers use tax reports: From January 1, 2018 to June 30, 2019, non-collecting market intermediaries, distance sellers, and advertisers who sell their own products and have gross sales between $10,000 and $100,000 in Washington in the current calendar year or the previous calendar year must provide customers with an annual purchase summary. and provide a customer information report to the Crown. The exact nature of these requirements varies from State to State; For more state-specific information, see Washington`s Use Tax Notice and Reporting Requirements.