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This section applies to prime contractors who work directly for a tribe or enrolled tribal member/citizen in their Indian country
The way the law applies taxes in these instances is significantly different from most other construction contracts (Washington Administrative Code (WAC) 458-20-192).
Retail sales tax: If you are a prime contractor, you do not apply retail sales tax to your construction charges to a tribe or enrolled member/citizen when you perform the construction in their Indian country.
If you perform construction both in and outside Indian country, you only exclude sales tax from the portion of the contract that relates to work done in Indian country. If you perform work for a tribe or enrolled tribal member/citizen outside of their Indian country, for example road work that extends outside of Indian country, you must collect and pay retail sales tax on the portion of work performed outside Indian country.
Business and occupation (B&O) tax: If you are a prime contractor, you do not owe B&O tax for construction charges to a tribe or enrolled member/citizen when you perform the construction in their Indian country.
Reseller permit: You may use a reseller permit to purchase materials and subcontractor labor for construction in Indian country for tribal members/citizens. The department considers these purchases you make for resale.
New exemption form: Tax exemption for sales to tribes
Prime contractors working directly for the tribe do not owe sales tax on construction supplies and rentals if both of the following apply:
- The prime contractor has them delivered in the Indian country of the tribe they work for.
- They will use such items exclusively to perform that construction in Indian country.
Contractors must use the Tax exemption for sales to tribes to document the exemption.
Examples of supplies:
- Nails.
- Drop cloths.
- Caulk.
- Form lumber.
Use tax: Prime contractors do not owe use tax on the materials that they permanently install or affix to real estate in Indian country when the construction they perform is for the tribe or an enrolled member/citizen. Prime contractors do not owe use tax on consumables or services that they fully consume to perform such construction.
Rentals: Prime contractors who work in Indian country do not owe sales or use tax on equipment rentals with or without an operator, when they have the equipment or services delivered to the reservation. The prime contractor must use the Tax exemption for sales to tribes.
This section applies to subcontractors who work for a prime contractor in Indian country
Subcontractors who work in Indian country are generally taxed as if the construction occurred outside of Indian country. In other words, a subcontractor works for the prime contractor and not directly with the tribe or tribal member/citizen. Subcontractors owe B&O tax (generally, under the wholesaling classification if they obtain the prime’s reseller permit).
Rentals: Subcontractors who work in Indian country owe sales or use tax on equipment rentals with or without an operator.
Retail sales tax: If subcontractors obtain a reseller permit from the prime contractor, they are not required to charge sales tax.
Use Tax: Subcontractors do not owe use tax on materials they permanently install or affix to the project in Indian country when the construction they perform is for the prime contractor. Subcontractors do owe use tax on consumable supplies or services that they consume to perform construction.
This section applies to construction you perform in Indian country for non-Indians
The law does not provide a special tax treatment for contractors or subcontractors that perform work for a non-Indians inside Indian country. If you work for a consumer/landowner/speculative builder, you owe both retail sales tax and retailing B&O tax on the contract price.
Federal government construction
The tax treatment described above relating to construction for tribes and tribal members does not apply to construction for the federal government, even if the work is performed in Indian country. Please refer to the government contracting section in this guide for more information (WAC 458-20-17001).
How to document tax-exempt transactions
Contractors that provide construction services to tribes or enrolled tribal members/citizens in Indian country must verify the tax-exempt status of the tribe or enrolled tribal member/citizen. To do this, they must review the buyer’s identification and obtain a completed Tax exemption for sales to tribes from the buyer.
Here are some examples of acceptable identification:
- Tribal membership card.
- Letter from tribal official.
- List of tribal members from a tribal official.
- Treaty fishery identification card.
You must keep appropriate records on the tax exempt status of transactions for five years. Individual businesses may contact the department to determine the best way to keep records for specific situations.
Current Indian tribes
Our state allows pre-emption of tax for federally recognized tribes and their members.
As of the date of this notice, the following tribes are federally recognized and have Indian country within the state of Washington:
- Chehalis Confederated Tribes.
- Colville Confederated Tribes.
- Cowlitz Tribe.
- Hoh Tribe.
- Jamestown S'Klallam Tribe.
- Kalispel Tribe.
- Lower Elwha Klallam Tribe.
- Lummi Nation.
- Makah Tribe.
- Muckleshoot Tribe.
- Nisqually Tribe.
- Nooksack Tribe.
- Port Gamble S'Klallam Tribe.
- Puyallup Tribe.
- Quileute Tribe.
- Quinault Nation.
- Samish Nation.
- Sauk-Suiattle Tribe.
- Shoalwater Bay Tribe.
- Skokomish Tribe.
- Snoqualmie Tribe.
- Spokane Tribe.
- Squaxin Island Tribe.
- Stillaguamish Tribe.
- Suquamish Tribe.
- Swinomish Tribe.
- Tulalip Tribes.
- Upper Skagit Tribe.
- Yakama Nation.
You can find contact information on tribal government and administration on the Governor’s Office of Indian Affairs website or:
Governor's Office of Indian Affairs
210 11th Avenue SW, Suite 415
PO Box 40909
Olympia WA 98504
360-902-8827
Definitions
Indian means a person on the tribal rolls of an Indian tribe. A person on the tribal rolls is also known as an “enrolled member,” “member,” “enrolled person,” “enrollee,” or “tribal member.” The term "Indian" includes only those persons who are enrolled with the tribe upon whose territory the activity takes place and does not include Indians who are members of other tribes. An enrolled member's spouse is considered an "Indian" for purposes of this rule if this treatment does not conflict with tribal law.
Indian country means all land within the limits of any Indian reservation. In addition, Indian country includes trust land located outside of a reservation. This includes allotments that have restricted land status. "Restricted land” is identified by title that is vested in an Indian or tribe, and the property is subject to federal restrictions on alienation and encumbrance.
Tribe means an Indian nation, tribe, band, community, or other entity recognized Indian tribe by the United States’ Department of the Interior. The phrase “federally recognized Indian tribe” and the term “tribe” have the same meaning as “Indian tribe.”
Materials means items that become a permanent part of the finished construction provided that the items have not previously been used or consumed in the performance of the construction activity. For example, “materials” include concrete, tie rods, lumber, finish hardware, windows, roofing, etc., which become part of the structure being built or improved.
Consumables means items and services consumed in the performance of the construction. This includes rental equipment with or without an operator. Consumables include form lumber, sand paper, saw blades, equipment, and tools.
