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School districts are considered municipal corporations and are required to collect and remit:

Purchases/Sales for Resale

School districts are not eligible to make purchases using a reseller permit. Because school districts do not typically collect retail sales tax, they must pay retail sales tax on all retail items they purchase (see below).

Taxable and Nontaxable Purchases

School districts must pay retail sales tax or use tax on the following goods and services:

  • Catering services
  • Construction services
  • Copying services
  • Equipment, including used and surplus
  • Landscape maintenance and horticultural services
  • Lease or rental of tangible personal property
  • Lodging
  • Magazine subscriptions
  • Musical instruments
  • Office supplies
  • Portable classrooms
  • Prewritten software, including updates and patches
  • School books
  • Telephone services
  • The use of a recreational facility when the owner controls the facility

The following goods and services are not subject to retail sales tax/use tax:

  • Computer training
  • College testing services
  • Chemical toilet services
  • Internet access
  • Janitorial services
  • A license to use a recreational facility when the school district controls the facility
  • Newspapers
  • Piano tuning services
  • Royalty payments for use of music, scripts, etc.

Food Services

When food service is prepared offsite and sold to the school district, retail sales tax applies to the purchase of meals.

When a food service contractor prepares meals at the school facility, the taxability depends on the contract:

  • Contracts for the sale of meals to the school district are taxable.
  • Contracts for management of a food service program are not taxable.

Sales by the school district of meals and beverages to students, faculty, and staff are not subject to retail sales tax.


When a teacher purchases materials in Washington, pays retail sales tax, and is reimbursed by the school district, no additional sales tax or use tax is due. The school district must maintain a copy of the teacher’s receipt to document that retail sales tax was paid.

When a teacher purchases materials outside the state and is reimbursed by the school district, the school district is subject to use tax on the value of the materials. The school district can take a credit for any sales tax that was paid to the other state on the purchase of the materials.

Working with Vendors

Some Washington registered vendors may not initially collect retail sales tax when selling to schools because they may think the school is exempt. If this occurs, the school should notify the vendor that sales tax applies and request that a new invoice be issued.

If the vendor does not issue a new invoice or collect retail sales tax, the school should pay “deferred sales tax” directly to the state. Deferred sales tax is reported and calculated on the use tax line of the tax return. To determine the local sales tax rate, click here.

Working with Contractors

When a school district hires a contractor, the school district must obtain and keep a record of the contractor’s UBI/TAX Registration Number. Failure to do so may result in a penalty of up to $250. Additionally, school districts must pay retail sales tax on any construction work performed for them.

Donated Goods

School districts are not subject to use tax on donated goods or donated amusement and recreational services. Donors are also exempt from use tax on amusement and recreational services (such as rounds of golf) donated to school districts.

Sales between Schools within a School District

Charges between schools within a school district or other budgetary units, do not constitute bona fide sales and are not taxable.

Nonenterprise Activities

Nonenterprise activities are activities not financed and operated in a manner similar to a private business. Activities include all sales of goods and services that are exclusively governmental in nature, and related to providing public education.

Nonenterprise activities also include activities funded by less than 50% of user fees or charges to consumers.

For example, the cost of maintaining recreational facilities that a school may lease to organizations or groups is rarely, if ever, funded more than 50 percent with amounts charged to those groups or organizations.

To determine the percentage, user fees or charges to consumers must be measured against the total costs attributable to providing the activity, including overhead. This review should be performed on the fiscal year basis used by the school district in maintaining its books and records.

Application of Tax

  • Nonenterprise activities are exempt from B&O tax.
  • Retail sales tax must be collected on nonenterprise activities defined as retail sales.

Examples of Nonretail, Nonenterprise Activities (Exempt from B&O tax, Exempt from RST):

  • charges for academic transcripts
  • charges for admission for school events
  • charges to a group, organization, or the public for use of recreational facilities when the school does not control the facility
  • sales of meals/beverages to students, faculty, and staff
  • shop & lab fees

Enterprise Activities

Enterprise activities are activities financed and operated in a manner similar to a private business and includes activities in competition with private businesses. They are subject to tax in the same manner as a private business. Activities include sales of goods and services that are not exclusively governmental and are not directly related to providing public education.

The activity must also be funded by over 50% of user fees to be considered an enterprise activity. See nonenterprise activities for how to determine the percentage.

Application of Tax

  • Income received from enterprise activities is subject to the B&O tax under the appropriate classification.
  • Retail sales tax must be collected on retail sales.

Examples of Retail Enterprise Activities (Subject to Retailing B&O Tax, Subject to RST):

  • Sales of meals to the public or to guests of students.
  • Sales of tangible personal property, such as surplus equipment. (Excluding student store sales)

Examples of Nonretail Enterprise Activities (Subject to Service and Other Activities B&O Tax, Exempt from RST):

  • Commission income from allowing coin-operated machines on the school premises (telephones, candy, soda pop, etc.)
  • Income from special event (nonschool) admission fees.
  • Rental income from renting conference facilities. (If funded over 50 percent with user fees)

Student Stores

The school is considered as the consumer of all goods that pass through a student store. Therefore, the school is not eligible to use a reseller permit and must pay retail sales tax at the time of purchase on all taxable goods sold at student stores, such as student supplies, soft drinks, etc.

Student store sales are not taxable and retail sales tax is not collected from students.

School Purchases of Student Photographs, Class Rings, and Yearbooks

When the school is responsible for making payment to the vendor, it must pay sales tax. This is true regardless of how and when funds are collected from students.

As in the case of student stores, the school is not considered to be purchasing then reselling the items, so the school should not collect sales tax from students.

ASB Fundraising Activities

Unlike school districts, Associated Student Body (ASB) organizations are eligible for a B&O tax and retail sales tax exemption for qualifying fundraising activities.

Tax exempt activities include soliciting contributions of and selling goods or services. For example:

  • Auctions
  • Bake sales
  • Car wash receipts
  • Concession sales
  • Raffles
  • Meals
  • Sales of “booster” items
  • Yearbook sales

Purchases for Fundraising Activities

ASB organizations may purchase the goods they will resell during periodic fundraisers without paying retail sales tax by providing the vendor with a reseller permit.

Reseller Permits

Effective January 1, 2010, the resale certificate was replaced with a reseller permit issued by the Department of Revenue. Reseller permits are issued to businesses that make wholesale purchases. ASB organizations will have to apply to the Department to receive a reseller permit. Applications are available on our web site or you may contact the Department.

Sales in Conjunction with a For Profit Business: Subject to Retail Sales Tax

ASB organizations may make sales on behalf of for profit businesses to raise funds while providing the opportunity for persons to purchase goods at a discount. The ASB solicits the sales, collects the money, retains a commission or portion of the amount collected, and sends in the order to the business with the balance of the amount collected. While the ASB qualifies for the fundraising exemption, the for profit business does not.

Under this circumstance the ASB must:

  • make sure that the for profit business is registered to collect sales tax in Washington.
  • collect retail sales tax on the gross amount of the sale.
  • turn over the collected sales tax to the business for reporting to the Department of Revenue.

The commission amount retained or received by the ASB is exempt from tax.