Washington State Sales Tax Law

[ra24man]

I field this question multiple times a week, so I thought maybe I could offer a little education on the subject of WA State sales tax law. I've had some people that don't understand why I need to charge them sales tax on an out of state purchase. Because of this, I figured I could try to set the matter straight by first posting a copy of the WA State Sales tax law...

RCW 82.083.027

Exemptions — Sales to nonresidents of tangible personal property for use outside the state — Proof of nonresident status — Penalties.



*** CHANGE IN 2007 *** (SEE 2158-S.SL) ***

(1) The tax levied by RCW 82.08.020 shall not apply to sales to nonresidents of this state of tangible personal property for use outside this state when the purchaser (a) is a bona fide resident of a state or possession or Province of Canada other than the state of Washington and such state, possession, or Province of Canada does not impose a retail sales tax or use tax of three percent or more or, if imposing such a tax, permits Washington residents exemption from otherwise taxable sales by reason of their residence, and (b) agrees, when requested, to grant the department of revenue access to such records and other forms of verification at his or her place of residence to assure that such purchases are not first used substantially in the state of Washington.

(2)(a) Any person claiming exemption from retail sales tax under the provisions of this section must display proof of his or her current nonresident status as herein provided.

(b) Acceptable proof of a nonresident person's status shall include one piece of identification such as a valid driver's license from the jurisdiction in which the out-of-state residency is claimed or a valid identification card which has a photograph of the holder and is issued by the out-of-state jurisdiction. Identification under this subsection (2)(b) must show the holder's residential address and have as one of its legal purposes the establishment of residency in that out-of-state jurisdiction.

(3) Nothing in this section requires the vendor to make tax exempt retail sales to nonresidents. A vendor may choose to make sales to nonresidents, collect the sales tax, and remit the amount of sales tax collected to the state as otherwise provided by law. If the vendor chooses to make a sale to a nonresident without collecting the sales tax, the vendor shall, in good faith, examine the proof of nonresidence, determine whether the proof is acceptable under subsection (2)(b) of this section, and maintain records for each nontaxable sale which shall show the type of proof accepted, including any identification numbers where appropriate, and the expiration date, if any.

(4)(a) Any person making fraudulent statements, which includes the offer of fraudulent identification or fraudulently procured identification to a vendor, in order to purchase goods without paying retail sales tax is guilty of perjury under chapter 9A.72 RCW.

(b) Any person making tax exempt purchases under this section by displaying proof of identification not his or her own, or counterfeit identification, with intent to violate the provisions of this section, is guilty of a misdemeanor and, in addition, shall be liable for the tax and subject to a penalty equal to the greater of one hundred dollars or the tax due on such purchases.

(5)(a) Any vendor who makes sales without collecting the tax to a person who does not hold valid identification establishing out-of-state residency, and any vendor who fails to maintain records of sales to nonresidents as provided in this section, shall be personally liable for the amount of tax due.

(b) Any vendor who makes sales without collecting the retail sales tax under this section and who has actual knowledge that the purchaser's proof of identification establishing out-of-state residency is fraudulent is guilty of a misdemeanor and, in addition, shall be liable for the tax and subject to a penalty equal to the greater of one thousand dollars or the tax due on such sales. In addition, both the purchaser and the vendor shall be liable for any penalties and interest assessable under chapter 82.32 RCW.


My uneducated interpretation of this passage is this: If you do not live in Alaska, Delaware, Montana, New Hampshire, Oregon, or Canada (or any other country outside the US) you have to pay Washington State Sales tax. If anyone is caught 'flubbing' information in any way shape or form, or if I doctor something up in order to save someone a buck, I pay the tax (the boss gets angry). Ladies and Gents...it's not worth my job to save you on the tax, so please don't ask. Future tax exempt transaction verifications should work something like this...if I send parts to a tax exempt state (or country), I will be asking for an email, or fax (preferably an email) a picture or photocopy of a valid driver's license or state (Providence) issued identification card when the order is initiated. If I need correcting, please feel free to let me know. Even for us here in the state, find this difficult to understand. I just need to make sure I dot all my 'i's and cross my t's. My thanks goes out to everyone on the forum...I'm glad I'm here with you guys!!

[CJSREDPRA]

Mark,

This I believe should work. When I'm in various stores at times & the customer says (for example) they are from Oregon, the clerk will ask for ID. They may also have to fill out some small paperwork for this (explaining why said customer did not have to pay sales tax), after which, they are on their way.

[Matt H]

HI all,

I was and am still baffled by this. I called the Washington State Department of Revenue and they stated that we should not be paying sales or use taxes if we live in a different state. They said Washington does not collect these taxes. I figure the state tax lawyers should know.

Mark and I have had exchanged a few e-mails about this and he tells me his managers tell him we need to collect taxes on the sales. I think Mark is following orders but I am going to file an inquery today and ask them to look into why McCord's Vancouver Toyota collects taxes but other washington e-commerce sites do not. The only thing I can figure is that Toyota has offices/dealerships in all 50 states and thus must collect taxes. BUT Looking back all my Jay Marks purchases are tax free so what the hell???


I'll keep you all posted as to what happens.
-Matt H.

P.S. Again I have full faith in Mark and do not believe he is pulling a fast one on us.

[SilverMk2]

Isn't amazon.com out of WA? I've never paid tax there and they are probably the biggest .com shipper around. I know in CA they have spot on the income tax form to declare out of state purchase so you can pay CA tax on them. Of course its on the honor system

[Matt H]

Ok All,

Just called the Washington State Revenue Service. They said again that we should not be paying taxes on items shipped out of state. They quoted the following:

Go to http://apps.leg.wa.gov/wac/default.aspx?cite=458-20-193

Item number 3 applies to Outbound sales.

They told me they will open an inquery as to why taxes are being charged. They urged the dealership to contact them directly with questions. They also said that customers who were already charged taxes can request a refund from the state. That will trigger the state to go back and check internet sales records for the company.

Mark gave me a total with taxes. I'm going to pay the taxes and request a refund from the state. For me it will only be roughly $30 but frankly I pay enough to the government. I see no reason to hand them more of my hard-earned money.

I will repost back with the form or process for requesting a tax refund.

Mark - sorry about all this. I'm not trying to make things difficult for you. I have been told that I should not need to pay taxes on this stuff so I am not going to. Given you've been told by your management to charge taxes on internet sales I suggest you stay cool with management and charge tax. We'll just request a refund from the state of Washington and handle things that way.

-Matt H.
85 7mgte

[Darrow]

I think the RCW applies to sales when the person is in the state. Washington State does not have the authority to regulate interstate trade, only the federal government does. Since there is not a Federal sales tax there should be no tax applied to interstate sales.

[CJSREDPRA]

Isn't amazon.com out of WA? I've never paid tax there and they are probably the biggest .com shipper around. I know in CA they have spot on the income tax form to declare out of state purchase so you can pay CA tax on them. Of course its on the honor system

This one has me "curious" as well.

Yes, Amazon.com is based in WA State (Corporate HQ is in the old Marines Hospital on the North end of Beacon Hill). However....

Their "product distribution" warehouse (their ONLY warehouse, to my knowledge) is in Fernley, Nevada, which is just east of Reno. So I'm curious how this works???

Sorry for the off topic question.

[ra24man]

This one has me "curious" as well.

Yes, Amazon.com is based in WA State (Corporate HQ is in the old Marines Hospital on the North end of Beacon Hill). However....

Their "product distribution" warehouse (their ONLY warehouse, to my knowledge) is in Fernley, Nevada, which is just east of Reno. So I'm curious how this works???

Sorry for the off topic question.

Off topic, not at all Chris! I've continued to research this in the last few days, and I believe Matt and Darrow are correct. The law stipulates that if a product was not produced in the state of Washington, is sold, delivered and received out of state by a 'for hire' transportation company, the transaction is tax exempt. From WAC 245-20-193: "OUTBOUND SALES- Washington State does not assess it's taxes on sales of goods which originate in Washington if the receipt of those goods occurs outside Washington State." Now, it does require "proof of exempt outbound sales'. In my case, my UPS shipping log qualifies as either a bill of lading, or a waybill...proof that the goods were delivered out of state, and not purchased here and taken out of state, or shipped within the state. I talked with my office manager, and we both agreed that any sales delivered outside of the state are to be tax exempt sales. The law also stipulates that no retailer is required to make a tax exempt sale, but I'll be glad to take the tax off of any interstate sale and delivery. The RCW I posted at the top is supposed to be for transactions that occur within the state, meaning a sale that happens in WA state and delivered instate but taken out of the state. Tax law is so ridiculously written, you feel like your reading in circles trying to understand it. Add the B&O taxes and it gets even more head spinning. Thank you Matt for prodding me to take a more in depth look at our tax laws. All interstate transactions will be tax free from now on. Tax reimbursements from past transactions would have to be filed with the state. Please make sure that you also know all your state's tax laws, Washington (as well as many other states I'm sure) still requires people to claim out of state purchases with their local tax offices so they can assess 'use tax' on the transaction. Living so close to the Oregon border (sales tax free state) there have been local stings that caught people buying high dollar items over there and bringing them back across the border. Thanks everyone!! Happy motoring!

[Matt H]

Mark,

Didn't want to hound you or make it look like something fishy was going on. Just coudln't figure out how Washington was able to legally collect the tax. I agree tho - laws are so convoluted that it's sometimes hard to figure out how to handle situations.

ANyway thanks for supporting our community...and I'm ready to go forward with my order all is still good.

-Matt H.