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Sales Tax Obligations of Sellers in Washington

April 13, 2006

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Washington imposes various requirements on sellers doing business in the state. We recommend that you go through the items below to help you with the most frequently asked questions concerning sellers and sales and use tax issues.

Procedure for accepting resale certificates. The resale exemption certificate must contain the following information:

• the name and address of the buyer
• uniform business identifier or revenue registration number of the purchaser if they are required to register
• the type of business the purchaser is engaged in
• unless the purchaser is in a business classification that is authorized by the Department of Revenue to present a blanket resale certificate, the categories of items or services to be purchased for resale
• the date on which the certificate was provided
• a statement that the items or services were purchased for resale in the regular course of business
• a statement that the purchaser acknowledge that they are solely responsible for purchasing within the categories specified on the certificate and that misuse of the resale or exemption privilege claimed on the certificate subjects the purchaser to a penalty of 50 percent of the tax due, in addition to the tax, interest, and any other penalties imposed by law
• the name of the individual authorized to sign the certificate
• the signature of the authorized individual
• your name as the seller

Procedure for accepting blanket certificates. As a seller you may accept a blanket certificate if your customer repeatedly purchases the same type of property or service for processing or resale. However, blanket certificates may not be used to purchase property or service 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.

Sales and use tax liability for out-of-state mail order and catalogue retailers. 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:

• Do I have retail facilities, a warehouse, or any office space in Washington? Maintaining retail or warehouse facilities will give you physical presence. Also, having an office for employees, even for business activities unrelated to mail order sales, will give you physical presence.
• Do my employees or I enter Washington for purposes of taking and transmitting orders from Washington? If your employee or independent contractor goes into Washington to take or transmit orders, your business may have physical presence in Washington. However, contracting with a common carrier to deliver mail order goods does not constitute physical presence.
• Do my delivery vehicles frequently enter Washington for purposes of delivering property? Frequent deliveries in Washington by your trucks will give you physical presence in Washington.

Sales tax "bracket system." 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:

Absorbing the tax — using a "no sales tax" advertising strategy to drum up business. In Washington 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":

• are printed immediately following the price in print size at least half as large as the advertised price,
• are printed at the head of a list of prices in print size the same as the advertised prices or
• are stated orally or visually in substantially the same inflection and volume, and
• are also printed on the price tags.

Claiming refund for excess tax payments. 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.

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