When you hear the word 'Washington', what comes to mind? Perhaps the first President of the United states, or the 'one-dollar bill' (which has George's picture on it)?
Maybe you picture the U.S. Capitol or the White House? If these are the images you are conjuring up, give yourself a failing grade.
So how about 'the Space Needle', or Orcas rising from the deep in the straights, or 'rain of course', and how could we possibly leave out 'Starbucks'? Now if this is the picture you see when we say 'Washington', you have got the right place in mind; although, certainly not all of it, after all it's 71,362 square miles, with almost 7-million residents. (And I would bet they all drink 'Starbucks'...Murph)
Despite the fact that everyone seems to think that Washington is just cold and rainy, the climate varies from west to east, and even with an annual rainfall on the Olympic Peninsula of 160 inches, portions of the eastern part of Washington are arid.
Of course you may also think of Washington as the 'volcano state', there are no less than five of them Mount Baker, Glacier Peak, Mount Rainier, Mount St. Helens, and Mount Adams. By the way Mount St. Helens is considered to be 'actively erupting' but they are all considered active.
And the Volcanoes are not the only thing active in the state of Washington, so is the Department of Revenue, and that's because almost everything in Washington is taxable, or so it seems. The Washington Department of Revenue says, "Unless specifically exempt by law, a retail sale is every sale of tangible personal property, including articles produced, fabricated, or imprinted. It also includes sales of services, such as installing, repairing, cleaning, altering, improving, constructing, and/or decorating real or personal property of or for consumers. Certain services are specifically defined in the law to be retail sales, such as charges for transient lodging, automobile parking, title, and escrow services, touring services, extended warranties, and amusement and recreation."
So if you want to go whale watching or sight-see at one of those volcanoes, you are going to get taxed just as if you had bought a cup of Starbucks, or eaten dinner at the top of the Space Needle.
About Sales Taxes and this series:
Thanks to Avalara, the 'tax people', this article is one in a 50 part series. Yes, I said (50 parts), covering sales tax issues associated with each and every state tax jurisdiction in the United States. We will be publishing an article essentially every Tuesday, thus the series name "Sales Tax Tuesday" over the entire year of 2015. Who knows, by the end of this year there could be sufficient changes to just start the whole series over again with updated information.
Sales tax provides critical revenue for states. Other than property and income tax, sales tax is the largest source of tax revenue in the majority of the 46 states that collect it. From a government perspective, making sure every sales tax dollar is collected, through audits, fines, penalties rates and rules, is an exercise for income. It’s easy to be lured into a false sense of compliance when it comes to sales tax, this series is intended to insure that you are aware of the key sales tax facts for YOUR state.
Note: For sales tax definitions and essentials check out the opening article to this series.
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Washington Sales Tax Facts1:
- Sales and Use tax managed by the Department of Revenue (the DOR).
- Washington is a member of the Streamlined Sales Tax (SST)
- There are 346 different Sales Tax Jurisdictions within Washington State
- The State-wide "average" tax rate is 8.88% (this represents a numerical average of all sales-tax rates in force, it is not intended to indicate a single rate state-wide.)
- Washington is a destination based state (converted in 2008)
- Washington taxes many products and services other states do not including installation, repair, altering, improving, construction, and decorating. (See the official definition shown above.)
- Washington also taxes computer software and related hardware systems (they do not tax training or support), and digital products which includes sounds, images, data, facts, information, or combination thereof (including but not limited to: telecom, automatic data processing, payment processing, online educational programs)
- Food is generally not taxable, but prepared foods, dietary supplements and soft drinks are taxable.
- Washington has standard common exemption certificates for resale and manufacturing, but also issues an exemption for Indian and Indian Tribes (this is fairly unique.). Even Non-profits are taxable.
- Washington has a business and occupation tax (B&O) in lieu of income tax. This is mostly unrelated to sales and use tax but is required on the same form for filing.
Well if you thought you were going to get away without a reference to some 'interesting sales tax case' in this article, you are not. Perhaps you think you might not have to pay tax for that cup of coffee if you were on-board one of those whale watching boats out in the Strait of Juan de Fuca? As it happens, Avalara has an interesting case study indicating that just because you are 'off-shore' of Washington, even perhaps by more than 3 miles, you are still not out of reach of the DOR. You can read about 'The Lengths People Go to Avoid Sales Tax2" (or perhaps the "Depth" is more appropriate) at this Avalara website.
If it is one thing we are starting to see already from this series, it is that manual sales and use tax management is subject to a lot of interpretation and errors, not to mention that it consumes a load of your valuable time in passing-through dollars to the State rather than generating revenue for your own business. Avalara can provide you with the right solution for sales tax automation, including tax calculation, exemption certificate management, returns processing and 1099 filing and reporting. When you automate your sales and use tax via Avalara your business will be fully tax compliant without sacrificing productivity.
So I wonder, just how much revenue the State of Washington earns from all those cups of Starbucks sold there? Ha, ha, ha, ha (Murph)
1 - State by State Sales Tax - Missouri, Patrick Neu, Avalara - January 6, 2015
2 - 'The Lengths People Go to Avoid Sales Tax"; Gail Cole, Avalara - August 13, 2014
3 - Starbucks, and the Starbucks 'twin-tailed siren' Logo trademark are registered trademarks of Starbucks Coffee Company, 2401 Utah Ave. South, Seattle, Washington 98134
Disclosure: This article and the information contained therein is published for informational purposes only. You should consult a tax attorney or accountant licensed in your state (including the State of Washington) should you have questions or require interpretation of your state sales or use tax.