Even though the "use tax" has been in effect since 1935, many people still do not fully understand how it functions as a substitute for the sales tax.
What is use tax?
As the name implies, use tax applies to items being used in Washington where sales tax has not been paid. It applies to both businesses and individuals. The tax is due when the item is first used in the state, and the tax rate is the same as the sales tax rate where the item is being used.
Use tax must be paid by each new owner of the item, and is calculated on the value of the property, which is generally the purchase price.
When is use tax due?
Use tax is due on:
- items purchased over the Internet or through catalogs, without paying sales tax, and delivered to Washington for use here.
- any consumer item purchased in another state, without paying sales tax, and brought into Washington for use here.
- items purchased in Washington where sales tax has not been paid. This includes items purchased through private parties.
What are some examples of items subject to use tax?
Any item of tangible personal property put to use as a consumer in this state may be subject to use tax.
- computer equipment
It also includes:
- private party automobile purchases (use tax on vehicles is normally paid to the Department of Licensing at the time of registration)
- purchases from garage sales, estate sales, etc.
Effective October 1, 2013, RCW 82.12.225 provides a use tax exemption for the use of any article of personal property, valued at less than ten thousand dollars, purchased or received as a prize in a contest of chance, as defined in RCW 82.04.285, from a nonprofit organization or a library. This exemption only applies if the gross income from the sale by the nonprofit organization or library is exempt under RCW 82.04.3651. This exemption is scheduled to expire July 1, 2017.
How do I report and pay the tax?
For vehicles, use tax is normally paid to the Department of Licensing at the time or registration. Refer to WAC 458-20-17802 for additional information.
For other types of items, report use tax on a designated tax return:
- If you are a registered business, you must report use tax on your regular excise tax return.
- If you are an individual or a business not required to register with the Department of Revenue, report use tax on the Consumer Use Tax Return.
For more information on use tax, please see our Use Tax section, or call 1-800-647-7706.