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The Department intends to issue new Excise Tax Advisory (ETA) 3185.2013 titled Sourcing and Allocation of Income on Leases and Rentals of Tangible Personal Property on or after December 18, 2013. This ETA explains the business and occupation (B&O) and retail sales tax reporting responsibilities of a seller (lessor) leasing tangible personal property to a consumer (lessee).  The ETA clarifies that the lease of tangible personal property to a consumer is a retail sale subject to retailing B&O tax and retail sales tax unless a specific exemption applies; the measure upon which theses taxes are due; and how these taxes are sourced and allocated under Washington law. The ETA addresses both leasing arrangements that require recurring periodic payments and those that do not as they relate to:

  • Tangible personal property (other than transportation equipment or motor vehicles, trailers, semitrailers, and aircraft that do not qualify as transportation equipment);
  • Transportation equipment; and
  • Motor vehicles, trailers, semitrailers, and aircraft that do not qualify as transportation equipment.


View draft ETA 3185.2013.

If you have questions or comments, please send them to Wan Chen at WanC@dor.wa.gov.