Collection of Washington State sales tax
By Douglas Thompson
September 12, 2021
I wrote to complain about this to Senator Lisa Murkowski and after quite some time got the enclosed reply from the Washington Department of Revenue that they sent back to her office. Washington in a very disingenuous fashion claims that "they do not collect the sales tax" (see who comes to your door if you don't remit your sales taxes in Washington?) that it is up to the sellers to do so. However the sellers only have the guidance of the "official" webpage that directs them to collect sales tax if the item is sent to a Washington address. Ignoring completely Federal Law which specifically states any shipment out of state via common carrier is exempt.
Note that you can claim any sales tax illegally collected directly from the Washington Department of Revenue a process most won't endure.
I have asked which Federal Agency is responsible for enforcing the law in this regard and have not received an answer after nine months from Murkowski's office. It used to be the Interstate Commerce Commission but they were 'reorganized' many years ago and it would appear that the job was left unattended thus allowing the State of Washington to engage in illegal conduct with no consequences.
Please see the enclosed email correspondence which enumerates the Washington State Law by number that also disallow their own conduct.
It is also very interesting that they have a mechanism to refund a small portion of that illegal collection extremely complicated and onerous which attempts to shift the blame onto the victim rather than the perpetrator, i.e. the State of Washington.
Hopefully when purchasing items subjected to this people can use the quoted statutes which prohibit the seller from collecting sales tax on such shipments. I would also refer the seller to the phone number enclosed for the Department of Revenue, State of Washington where he can get an official interpretation not to collect the tax.
Ten percent is a hefty sum that is patently theft and need not be paid or assessed. I hope this helps the people of SE Alaska. I hope that during this election year some official action is taken by Murkowski's office to bring this to a halt expeditiously. It is costly enough living in Alaska without a government stealing from us.
---------- Forwarded message ---------
From: Eckl, Lauren (Murkowski) <Lauren_Eckl@murkowski.senate.gov>
Date: Tue, Jul 6, 2021 at 9:06 AM
Subject: Correspondence with Senator Murkowski's office
Thank you for contacting the office of Senator Murkowski regarding sales tax issues. I forwarded your correspondence to the Washington State Department of Revenue to respond to your concerns. Please see their response and contact information below:
--- begin message ---
“Thank you for your email and giving us this opportunity to provide you information about how the retail sales tax applies in Washington. As an initial matter, Washington state statute prohibits us from providing confidential taxpayer information, and therefore, we are providing general information that we believe is responsive to your inquiry. Moreover, for purposes of our response, we assume the issue that you are asking about relates solely to the sale of tangible personal property and not to other types of retail taxable goods and services.
Retail sales tax application and sourcing
In Washington, retail sales tax applies to the retail sale of tangible personal property, if the sale is sourced to Washington (deemed to occur in Washington). RCW 82.04.050, 82.08.020, and 82.32.730.
Sales of tangible personal property are deemed to occur at the place where the property is received. RCW 82.32.730(1)."Receive" means taking possession of tangible personal property and does not include possession by a shipping company, such as a common carrier, on behalf of the purchaser. RCW 82.32.730(9)(f); WAC 458-20-193(202). There are sourcing defaults to the purchaser’s address if the seller does not know the location of receipt. These rules are same as at least 24 other states who are members of the Streamlined Sales and Use Tax Agreement. Possession can include obtaining dominion and control of the property, even without physical possession (constructive possession). WAC 458-20-193(202)(b). Thus, generally, tangible personal property that is shipped to a purchaser in Alaska will not be sourced to Washington or subject to Washington retail sales tax if the purchaser receives the item in Alaska.
Example 9. An instate seller arranges for shipping its goods to an out-of-state purchaser by first delivering its goods to a Washington-based shipping company at its Washington location for further transport to the out-of-state customer's location. Possession of the goods by the shipping company in Washington is not receipt by the purchaser for Washington tax purposes, and the sale is not subject to B&O and retail sales tax in Washington.” See WAC 458-20-193.
However, there are some scenarios where the purchaser may receive the item in Washington before the item is further shipped outside Washington. In particular, cases in which the purchaser exerts dominion or control, e.g., the purchaser picks up the tangible personal property in Washington using its own employees or agents, the purchaser stores the tangible personal property at a warehouse in Washington, or the tangible personal property is delivered to a third-party packaging facility that operates according to the buyer’s control.
Seller obligation to collect retail sales tax
In Washington, sellers are obligated to collect retail sales tax from their purchasers and to remit the collected amounts to the Department of Revenue. RCW 82.08.050. Neither the state of Washington nor the Department of Revenue directly collects any retail sales tax. Thus, it is the seller that makes the determination if purchased tangible personal property is taxable in Washington and whether retail sales tax should be collected.
However, if a seller asks the Department of Revenue whether a sale is sourced to Washington, we would provide them substantially the same information above, but in greater detail, to help the seller make that determination. We would not advise the seller to collect retail sales tax on purchases of tangible personal property simply passing through Washington and received in Alaska.
Retail sales tax exemption for certain nonresidents
Washington provides an exemption from Washington retail sales tax paid by qualifying nonresidents. See sales tax exemption for nonresidents. Residents of Alaska qualify for this exemption because they are residents of a state that does not impose a retail sales tax or has a retail sales tax of less than 3%. This exemption is not legally required under federal law, but is something Washington legislators determined was good policy to enact.
Under this exemption, qualifying nonresidents can apply for a refund of the state, but not local, portion of the retail sales tax. For administrative purposes, qualifying nonresidents can only apply once a year and are subject to other requirements. Typically, this exemption is claimed by qualifying nonresidents that purchase and receive qualifying tangible personal property while physically in Washington for use outside Washington.
This exemption only applies if Washington retail sales tax is due. For sales that are not sourced to Washington, retail sales or use tax is not due and the exemption is unnecessary.
Retail sales tax collected in error
If retail sales tax was collected in error, there are mechanisms to obtain a refund. Typically, we request that purchasers seek a refund of retail sales tax from the seller. This is because the seller has the records to know if retail sales tax was collected on the original sale, knows the buyer, knows the circumstances surrounding the original sale, is aware of any disputes between itself and the buyer concerning the product, and may already be aware of the circumstances as to why a refund of retail sales tax is or is not appropriate. In certain situations, the Department will refund a buyer directly. See WAC 458-20-229; Consumer Refund Webpage; Registered Business Refund Webpage. These refunds are not limited to once a year.
In summary, for purchases of tangible personal property that are shipped through Washington and receipt is in Alaska, Washington retail sales tax would not be due. This assumes the purchaser did not exert dominion or control over the tangible personal property in Washington. If the purchaser paid retail sales tax in error, they can seek a refund from the seller or in some cases directly from the Department. If the retail sales tax was due, then current law provides the purchaser with the right to get a partial refund of tax, directly from the Department, of the retail sales tax paid, assuming the statutory requirements of the exemption are met.
The forgoing information is based on general Washington law. If Mr. Thompson would like to contact the Department directly, we would be happy to work through this matter and see what further assistance we could provide.
Thank you for your time and attention in this matter. I hope this information was helpful. If you have any further questions or would like to chat, please feel free to reach out again.”
Assistant Director | Interpretations and Technical Advice Division
Washington State Department of Revenue
6400 Linderson Way| Tumwater, WA 98501
Office of U.S. Senator Lisa Murkowski (R-AK)
522 Hart Senate Office Building
Washington D.C. 20510
Received September 12, 2021 - Published September 12, 2021
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