Washington Sales Tax Demystified

Ok, where to start with Washing Sales Tax ….

Let’s start with the basics. 

• Washington can have up to 4 tax rates that make up the Total Tax Rate:  State, County, City, and the Motor Vehicle Use Tax
• The local rates (County & City can, and will, vary depending on if the customer’s address is in one of the following areas:
  • Inside incorporated city limits
  • Unincorporated (outside incorporated city limits)
  • Regional Transit Authority (RTA)
  • Hospital Benefit Zone
  • Public Transportation Benefit Area (PTBA)
  • Transportation Benefit District
  • Here is a link to a very informative rate chart: http://dor.wa.gov/Docs/forms/ExcsTx/LocSalUseTx/LocalSlsUseFlyer_17_Q2_alpha.pdf
  • The WA DOR website provides a lookup to make sure you use the proper tax rate: http://dor.wa.gov/content/findtaxesandrates/salesandusetaxrates/lookupataxrate/

Sales Tax Structure Base On Invoice Type:

• Jobs:  Jobs & Service Tickets are pretty straight forward.  It is just a matter of knowing what is taxable and what is not.  The following items make up the Total Taxable Amount on these types of invoices:
  • Parts
  • Labor
  • EPA Charge *
  • Shop Materials *
  • Pickup/Delivery
• Major Unit Sales Invoices:  These are a bit complicated so I will attempt to UN-complicate how these work.
  • The first thing to know what is taxable and what is not.
  • Also, you need to know that the Motor Vehicle Use Tax can have a different Total Taxable Amount then what is used when calculating State, County, & City Sales Tax (I will give more detail below).
  • When calculating State, County, & City Sales Taxes the following make up the Total Taxable Amount:
    • Price
    • Freight & Shipping
    • Setup & PDI
    • Attached Accessories
    • Installation Charge for Attached Accessories
    • Extended Service Contracts
    • Pre-Paid Maintenance Contracts
    • LoJack / GPS Unit
    • Battery Tender
    • Chemicals (Interior Protection, Paint Protection, Undercoating)
  • What is notable here is what is NOT taxable:
    • Dealer DOC Fees
    • Tire & Wheel / Roadside Hazard Protection
    • Theft Protection
    • Battery Protection
    • Key Replacement
• When calculating the Motor Vehicle Use Tax only items that directly affect the unit itself are taxable:
  • Price
  • Freight & Shipping
  • Setup & PDI
  • Attached Accessories
  • Installation Charge for Attached Accessories
• Trade-In Credit:  The State of Washington categorizes serialized units.  In order to receive Trade-In Credit the Trade-In(s) must be matched up to one of the Units being purchased of the same category.   If there are no matches then there is no Trade-In Credit given. The categories are:
  • Snowmobiles
  • Watercraft (PWCs & Boats)
  • RVs
  • Trailers
  • Everything else
• Special Note: The City of Spokane has a Max Tax Rate of 8.9%.  When the State + County + City + Motor Vehicle Use Tax are all in play they total up to 9%.  When this happens the City rate gets reduced so that the Total Tax Rate = the Spokane City Max Tax Rate.
• Sales to Idaho Residents:  Lizzy uses Idaho Tax Rules to figure Sales Tax on any units being sold to Idaho residents but use Washington Tax Rules on any carry out items.  But, if the customer is paying CASH then THEY are responsible to pay the Idaho Sales Tax when they register the vehicle no unit sales tax will be calculated or collected by the dealer.  BUT, if they are having some accessories installed on their unit; the Installation charge is taxable.  Also, they have to pay Washington tax on any carry out items.  So we have a special tax just for that scenario: Idaho Cash Deals

*  These two items are being taxed because we were unable to ever get a definitive answer from the WA DOR on their taxability so an executive decision was made, on the safe side, to tax them.

Well, I hope this helps to answer any questions regarding how Lizzy calculates Washington Sales Tax!