Washington Sales Tax Handbook

RATE OF SALES TAX:

6.50%

LOCAL & COUNTY MAXIMUM RATES:

4.00%

What are the taxable goods and services?

The first step in sales tax compliance is determining if the items or services your firm offers are taxable in Washington.

Traditional Products and Services

Physical property, such as furniture, household appliances, and automobiles, is subject to sales tax in Washington.

Prescription drugs, food, and fuel are all tax-free purchases.

In Washington, certain services are subject to sales tax. View this page from the Washington Department of Revenue website for a complete list of taxable services.

Digital Products and Services

A digital item or service is anything that is supplied electronically, such as a music downloaded from iTunes or a movie bought from Amazon.

Businesses in Washington are required to collect sales tax on the sale of digital products or services.

How to Register for Sales Tax in Washington

If you have concluded that you must charge sales tax on part or all of the products and services that your company sells, the next step is to apply for a seller’s licence.

This enables your company to collect sales tax on behalf of the municipal and state governments.

You will need the following information to register:

Application’s Goal
Structure of ownership
Owners of a business and their wives
Company information such as location, business activity, bank name, and so on.
Employment/Optional Coverage

A Resale Certificate might help you save money.

When acquiring items for resale, your firm does not have to pay sales tax if you obtain a resale certificate, also known as a reseller’s permit.

Sales Tax Collection

After obtaining your seller’s licence and starting your company, you’ll need to figure out how much sales tax to charge various consumers. It is critical for company owners to collect the right rate of sales tax to avoid penalties and the danger of expensive audits.

When computing sales tax, consider the following types of transactions:

Store Sales Shipping Within-State Sales Outside-State Sales

Retail Sales

For conventional company owners who sell products or services on-site, calculating sales tax is simple: all sales are taxed at the rate determined by the store’s location.

Here’s an illustration of how this situation may look:

In Everett, Washington, Mary owns and operates a bookshop. Because books are taxed in the state of Washington, Mary charges a flat 9.2000% sales tax on all purchases. This includes the 6.500% state sales tax in Washington and the 2.7000% sales tax in Everett.

Sales inside the state

Washington has what is known as a destination-based sales tax scheme. This implies that long-distance transactions inside Washington are taxed based on the [if origin=seller; if destination=buyer] address. This regulation applies to sales taxes levied by the state, county, and city.

Consider the following scenario:

Steve operates his own eBay electronics company from his home in Spokane, Washington. A Tacoma client discovers Steve’s eBay website and purchases a $350 set of headphones. Steve uses the 6.500% state tax rate for Washington, plus 3.100% for Tacoma’s municipal tax rate, when computing the sales tax for this transaction. The entire cost is $383.60 ($33.60 sales tax) at a total sales tax rate of 9.600%.

Out-of-State Purchases

Businesses in Washington must only pay sales tax on out-of-state sales if they have a presence in other states.

Nexus indicates that the company has a physical presence in another state.

Common nexus types include:

A physical place, such as an office, retail shop, or warehouse.
An employee who works from home or as a roaming sales representative.
An affiliate marketer
Dropshipping from a third-party vendor.
A temporary physical site, such as a festival or fair booth.

Submit Your Sales Tax Return

You’re ready to submit your sales tax return now that you’ve obtained your Washington seller’s permit and understand how to charge the correct amount of sales tax to all of your customers. You avoid penalties and fines, be sure to meet all filing dates.

How to File a Claim

Businesses in Washington are required to file sales tax forms and make sales tax payments online.

The Resale Certificate may be obtained through the Washington Department of Revenue. At the time of purchase, show the certificate to the vendor.

How Frequently Should You File?

The frequency with which you must submit is determined by the total amount of sales tax collected by your firm. When you receive your Seller’s Permit, the state of Washington will ask for an estimate of projected sales tax and will assign you a filing frequency. When you reach a specific amount of sales tax collected, the state will notify you of the bracket you are in.

Deadlines for Filing

Unless it is a weekend or a federal holiday, all sales tax return deadlines occur on the 25th or final day of the month. The filing deadlines for this year are shown below.

Penalties for Filing Late

Washington assesses a late filing penalty of 9% for the first month, 19% for the second, and a maximum of 29% for the third and subsequent months.