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Q:  If the warranty requires the owner to pay a reduced charge to obtain the warranty services, is that amount subject to sales tax?

A:  When a repair is made, sales tax and B&O tax applies to any amount paid by the customer to the repair business. The repair business reports the amount paid by the customer under the retailing classification of the B&O tax. In addition, the retail sales tax must be collected.
More information
Auto Dealers Guide - Warranties
Special Notice - Extended Warranties Now Subject to Sales Tax (pdf)
WAC 458-20-257
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