Consumers buying from out-of-state sellers

Recent tax law changes across the country have changed tax requirements for out-of-state sellers. Many businesses are now required to collect sales tax in states where they conduct business. In Washington, we refer to this as the marketplace fairness law.

Sales/use tax collection changes

You may notice that many businesses are now collecting sales tax on your purchases, even if they did not before. As of Oct. 1, 2018, any business making more than $100,000 in gross retail sales to customers in Washington is required to collect retail sales tax on your purchase and then submit that tax to the state.

If retail sales tax is not collected, you may owe use tax. This is not an additional tax. Use tax is a tax on the use of goods or certain services in Washington when sales tax has not been paid. Goods used in this state are subject to either sales or use tax, but not both. Use tax is the same rate as sales tax.

Watch our What is Use Tax? video to learn more.

Delivery charges

Delivery charges are subject to sales/use tax, including shipping and handling charges. You must pay sales or use tax on both the item price and the shipping and handling fees.

Consumer use tax letters

If you received a letter from a business letting you know that you owe use tax, it is not a scam. You should verify that you did not pay sales tax on the item(s), and then file a consumer use tax return.

You do not need this letter when filing your federal income tax return, and you cannot pay it with your federal income tax. The use tax you owe is to Washington state.

How to pay use tax

You can pay use tax due by:

• My DOR: Our secure online application guides you through simple filing steps and gives you several payment options.
• Printing and mailing the Consumer Use Tax Return along with a check.

The tax rate and location code is generally based on your home address. Use our Tax Rate Lookup Tool (online) or Tax Rate Lookup App (mobile) to find the tax rate and location code for your address. You will need the location code for your tax return.

Report your purchases in a lump sum, with a purchase amount and generic description.

Don’t itemize purchases under $1,000, or provide a detailed description of each item.

Use tax due date

Use tax is due on the 25^th of the month after you made the purchase.

Exception: For purchases made from Jan. 1, 2019 through June 30, 2019, use tax is due July 25, 2019.

Sales and use tax exemptions

Common exemptions include:

Non-prepared food (prepared foods are subject to tax)

Prescription drugs

Tribal member in their Indian country

• see the Indian tax guide

Sales and use tax refunds

You can apply for a tax refund from the Department if you:

• purchase an item that is exempt from sales tax
• return an item and do not receive a refund of your sales tax paid
• paid too much sales tax

Questions

Call 360-704-5900 or email DORMarketplaceFairness@dor.wa.gov.