![]() ![]() Similarly, local governments should be aware that DOR also audits local governments on a regular schedule to ensure that all use taxes are being paid. ![]() However, the implementation of the Marketplace Fairness Act in 2018, which required remote sellers to collect sales taxes on purchases delivered to Washington, should eliminate the vast majority of use tax noncompliance issues for Internet and catalog orders.īusinesses typically do pay use taxes because they are audited by the state Department of Revenue (DOR). Practically speaking, few consumers pay a use tax, unless the purchase is of a car or truck where a use tax must be paid before the vehicle can be licensed. Likewise, if you buy camera equipment in Idaho, where the sales tax rate is 6%, and your local sales tax rate is 8.2%, you owe a 2.2% use tax. If a taxable purchase is made out-of-state by a Washington resident, business, or governmental entity for use in Washington, and the sales tax paid is less than the rate being levied within the local jurisdiction, state law requires that a “use tax” be calculated and paid to make up the difference (see chapter 82.12 RCW and WAC 458-20-178).įor example, if you buy furniture in Oregon (where there is no sales tax) and bring it back to Washington, and the sales tax rate in your city is 8.2%, you owe a use tax of 8.2% on the purchase price. See RCW 82.08.010(3), which defines “buyer,” “purchaser,” and “consumer” to include local government entities, and WAC 458-20-189 which discusses sales tax applicability to local governments and exemptions. Local governments must pay and collect sales tax on all taxable purchases, just like any business or consumer, unless there is a specific exemption written into state law. are subject to the retail sales tax, as are physical fitness activities. For example, lodging and all other services provided by a hotel, motel, etc. However, some services are subject to sales tax, as listed in RCW 82.04.050. – are not “personal property,” and most services are not subject to sales tax. Services to individuals and businesses – things like haircuts, medical bills, consultant fees, etc. ![]() In addition, the Marketplace Fairness Act requires all “remote sellers” without a physical presence in the state (such as Internet or mail-order retailers) to collect and remit sales taxes on all purchases. Sales taxes apply to most retail sales of “tangible personal property” within Washington, as defined in RCW 82.04.050. But if you take possession of merchandise at a retail business location in Auburn, you will pay the local sales tax rate applicable in the City of Auburn. For instance, if you buy a piece of furniture that is shipped from a warehouse in Auburn and have it delivered to Seattle, you will pay the local sales tax rate applicable in the City of Seattle. In other words, the tax rate that is owed depends on the location of the sale/delivery, not the location of the business or shipping warehouse. Since 2008, Washington has used the destination-based sales tax system, also known as the “streamlined sales tax.” Under this system, the point of sale (the location where sales tax is calculated) is considered to be the point of delivery or where the buyer receives or takes possession of the merchandise (i.e. For simplicity’s sake, we will refer to “retail sales and use” taxes as “sales taxes” unless otherwise noted. (There are many other types of special purpose districts that do not have sales tax authority and must rely on other revenue sources such as property taxes or user fees and charges.)įor those local government entities with sales tax authority, sales taxes are typically the largest or second-largest source of revenue (the other usually being property taxes). Retail sales taxes ( chapter 82.08 RCW) and use taxes ( chapter 82.12 RCW) are an important revenue source for many local governments in Washington – specifically cities, towns, counties, transit districts, and public facilities districts. ![]()
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