Washington state resale certificate
Department of revenue vs. internal revenue service–what’s
A sales tax is a tax on the sale of certain goods and services that is paid to a governing body (state or local). The state of Washington first enacted a general state sales tax in 1933, and the rate has since increased to 6.5 percent. There may be one or more municipal sales taxes, as well as one or more special district taxes, in addition to the state sales tax, each of which may range from 0% to 3.9 percent. Combined sales tax rates in Washington currently range from 6.5 percent to 10.4 percent, depending on where the sale is made.
As a seller of taxable goods or services, you represent the state of Washington by collecting tax from customers and remitting it to the appropriate tax authority. The Washington Department of Revenue is in charge of collecting sales and use taxes in the state (DOR).
The state of Washington owns any sales tax collected from consumers, not you. It is your responsibility to keep track of the taxes you collect in order to comply with state and local regulations. Penalties and interest charges may be imposed if this is not done.
Wucioa part 2 – final
Businesses that make wholesale purchases, such as qualified repair shops, are eligible for free reseller permits. Businesses can use the permits to buy goods or services for resale without paying sales tax. If your business qualifies, you will be automatically issued a reseller permit; if you aren’t, you must apply for one online.
At the time of sale, the reseller permit must be obtained. During an audit, permits obtained after the sale may not be approved. A reseller permit must be obtained or sales tax must be charged on the purchase.
For five years after the date of sale, sellers must keep adequate documentation to support wholesale sales. Reseller permits must be kept on file for five years after the date of sale by sellers.
Failure to have a valid, current reseller permit or documentation on file may result in the sale being reclassified from wholesaling to retailing B&O tax during an audit. For that sale, the company would owe sales tax.
How to start your business: getting a resellers certificate
It’s critical to stay current on state and local laws governing the purchase and sale of goods in Washington, as well as which sales taxes may apply to your business. Resale certificates are no longer used in Washington; instead, any business that sells wholesale products must apply for and present a reseller permit to vendors. Reseller permits allow you to buy products (or services) to resell without paying retail sales tax on the initial purchase. If you own a company that buys items to resell, you should get a reseller permit to avoid paying extra taxes on your purchases. In today’s post, we’ll go over some of the key issues surrounding reseller permits in Washington.
To apply for a reseller permit, go to the Washington Department of Revenue’s website. The easiest way to apply is to create an account on the DOR website and then fill out the application using the “manage company account” link. The steps are straightforward, and the DOR will walk you through the process. Most companies are given free reseller permits.
Report of sale
When retailers buy goods to resell, they often do not pay sales tax to the supplier. Sales tax will still be collected, but instead of the retailer paying it, the customer will be charged sales tax on the final value of the goods. The retailer then sends the sales tax collected to the Washington Department of Revenue.
When a pet store buys dog toys from a supplier to sell in the store, for example, the pet store owner usually doesn’t have to pay sales tax to the supplier. When a customer (or end-user) buys a dog toy, the retailer will charge them sales tax based on the total price of the toy. The retailer will collect sales tax from all transactions and send it to the state on a regular basis (usually at the end of the month).
The certificate’s intent is to show why sales tax was not collected on a particular transaction. Resale certificates are also known as reseller numbers, seller’s permits, exemption certificates, wholesale licenses, and reseller’s licenses. The seller must provide evidence that the buyer intends to resell the product by providing a valid resale certificate in order for the supplier to approve the tax-exempt purchase.