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Q:  How should I report the sale of an extended warranty when I am selling on behalf of the warrantor?


A separate charge for a third-party extended warranty is taxed as follows:  

  • Gross commissions are reported under the service and other activities classification of the B&O tax. (Since extended warranties are not insurance policies that are regulated by the Office of the Insurance Commissioner, the insurance commission B&O tax classification does not apply.)
  • Selling price of the extended warranty is reported under the retailing classification with a deduction under “consignment sales.”
  • Selling price is reported under retail sales tax, local sales tax, and RTA tax, if applicable.

The net result is that you will pay the service and other activities B&O tax on your commissions and remit the sales tax collected on behalf of the warrantor.

More information
Special Notice - Extended Warranties Now Subject to Sales Tax (pdf)
WAC 458-20-257
Auto Dealers Guide - Warranties
Related questions & answers
I am not the warrantor how do I report repairs made under an extended warranty?
If the warranty requires the owner to pay a reduced charge to obtain the warranty services, is that amount subject to sales tax?
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