The purpose of this information is to assist persons in the beauty industry to understand Washington's excise taxes. Beauty-related services include body piercing, haircuts, manicures, massages, and tattoos.

For additional information or answers to any questions about Washington excise taxes, please contact us.

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Contents

Definitions Service and Other Activities Business and Occupation (B&O) Tax Classification Retail Sales Tax/Retailing B&O Tax Wholesale B&O Tax Use Tax Chair and/or Booth Rental

Tax Exercise Sample Tax Return "A" (pdf) Sample Tax Return "B" (pdf)

Definitions

Barber

A person licensed under RCW 18.16 to engage in the practice of barbering. 

Barbering

"The practice of barbering" means the cutting, trimming, arranging, dressing, curling, shampooing, shaving, and mustache and beard design of the hair of the face, neck, and scalp.

Business and Occupation (B&O) Tax

The B&O tax applies to the gross amount received from conducting business. There are different reporting classifications for retail sales, wholesale sales, professional services, and other business activities. Each classification has its own tax rate. Persons performing more than one activity may be subject to B&O tax under more than one reporting classification.

Consumer

A consumer is any person who uses tangible personal property and receives services defined as retail sales. Tangible personal property or services may be for personal use or for use conducting business activities. If you 're a seller, you need to know who is a consumer to know when to collect sales tax. If you are a buyer, you need to know when to pay sales tax to the seller and, if sales tax hasn't been paid, when to pay sales tax (often referred to as "deferred sales tax") or use tax directly to the Department of Revenue.

Cosmetology

"The practice of cosmetology" means arranging, dressing, cutting, trimming, styling, shampooing, permanent waving, chemical relaxing, straightening, curling, bleaching, lightening, coloring, waxing, tweezing, shaving, and mustache and beard design of the hair of the face, neck, and scalp; temporary removal of superfluous hair by use of depilatories, waxing, or tweezing; manicuring and pedicuring, limited to cleaning, shaping, polishing, decorating, and caring for and treatment of the cuticles and nails of the hands and feet, excluding the application and removal of sculptured or otherwise artificial nails; esthetics limited to toning the skin of the scalp, stimulating the skin of the body by the use of preparations, tonics, lotions, or creams; and tinting eyelashes and eyebrows.

Cosmetologist

A person licensed under RCW 18.16 to engage in the practice of cosmetology.

Esthetics

"Practice of esthetics" means care of the skin by application and use of preparations, antiseptics, tonics, essential oils, or exfoliants, or by any device or equipment, electrical or otherwise, or by wraps, compresses, cleansing, conditioning, stimulation, pore extraction, or product application and removal; the temporary removal of superfluous hair by means of lotions, creams, mechanical or electrical apparatus, appliance, waxing, tweezing, or depilatories; tinting of eyelashes and eyebrows; and lightening the hair, except the scalp, on another person.

Esthetician

A person licensed under RCW 18.16 to engage in the practice of esthetics.

Gross Amount

The term "gross amount," which appears at the top of column one on the excise tax return, is a "catch-all" term for whichever of the following terms is applicable to your business: "gross proceeds of sale," "gross income of the business," or "value of products." The gross amount includes all consideration received without deductions for the costs of doing business or other expenses.

Manicuring

"Practice of manicuring" means the cleaning, shaping, polishing, decorating, and caring for and treatment of the cuticles and the nails of the hands or feet, and the application and removal of sculptured or otherwise artificial nails by hand or with mechanical or electrical apparatus or appliances.

Manicurist

A person licensed under RCW 18.16 to engage in the practice of manicuring.

Retail Sales Tax

A tax imposed on the buyer of goods and certain retail services. The seller is responsible for collecting the tax from the consumer and remitting the tax to the Department of Revenue. The sales tax is a combined state and local tax.

RCW

Revised Code of Washington. The Revised Code of Washington (RCW) is the compilation of all permanent laws (i.e., statutes) currently in force.

Salon/shop

"Salon/shop" means any building, structure, or any part thereof, other than a school, where the commercial practice of cosmetology, barbering, esthetics, or manicuring is conducted; provided that any person, except employees of a salon/shop, who operates from a salon/shop is required to meet all salon/shop licensing requirements and may participate in the apprenticeship program when certified as established by the Washington state apprenticeship and training council established in chapter 49.04 RCW.

UBI/Tax Registration Number

Sometimes called a registration, tax reporting account, or "C," the Unified Business Identifier (UBI) number is a nine-digit number used to identify persons engaging in business activities. The number is assigned when a person completes a Master Business Application to register with or obtain a license from state agencies. The departments of Revenue, Licensing, Employment Security, Labor and Industries, and the Corporations Division of the Secretary of State are among the state agencies participating in the UBI program.

Use Tax

Use tax is a tax imposed on the use of goods in this state as a consumer when the goods are purchased or acquired without payment of this state's retail sales tax. With respect to the use of goods as a consumer, either sales tax or use tax, but not both, applies. In this manner, use tax serves to complement the sales tax. Like the sales tax, the use tax is a combined state and local tax. Use tax rates and sales tax rates are identical.

WAC

Washington Administrative Code. The Washington Administrative Code codifies the rules (i.e., regulations) of each state agency having rule-making authority.

Service and Other Activities Business and Occupation (B&O) Tax Classification

Cosmetology

Income received from the following activities performed by a cosmetologist is taxable under the Service and Other Activities B&O tax classification:

• Hair cutting, styling, coloring, bleaching, trimming, shampooing, conditioning, permanent waving, chemical relaxing, straightening, curling, dressing, lightening, tweezing, and waxing
• Mustache and beard trimming, shaving and designing
• Temporary removal of superfluous hair by use of depilatories, waxing, threading or tweezing
• Attaching hair extensions
• Booth or chair rental income
• Ear/body piercing

Barbering

Income received from the following activities performed by a barber is taxable under the Service and Other Activities B&O tax classification:

• Hair cutting, trimming, arranging, dressing, curling, shampooing and shaving
• Mustache and beard trimming, shaving and designing
• Booth or chair rental income

Manicuring

Income received from the following activities performed by a manicurist is taxable under the Service and Other Activities B&O tax classification:

• The cleaning, shaping, polishing, decorating, and caring for and treatment of the cuticles and nails of the hands and/or feet
• The application and removal of sculptured or otherwise artificial nails by hand or with mechanical or electrical apparatus or appliances
• Booth or chair rental income

Esthetics

The income received from the following activities performed by an esthetician is taxable under the Service and Other Activities B&O tax classification:

• The care of the skin by application and use of preparations, antiseptics, tonics, essential oils, or exfoliants, or by and device or equipment, electrical or otherwise, or by wraps, compresses, cleansing, conditioning, stimulation, pore extraction, or product application and removal
• The temporary removal of superfluous hair by means of lotions, creams, mechanical or electrical apparatus, appliance, waxing, tweezing, or depilatories
• The tinting/lightening of eyelashes and eyebrows
• Booth or chair rental income
• Ear/body piercing

Retail Sales Tax/Retailing B&O Tax

All sales of tangible personal property or charges for services defined as “sales at retail” or “retail sales” to a consumer are subject to Retail Sales Tax and taxable under the Retailing B&O Tax classification. The following are examples of items or services typically sold or performed for consumers by cosmetologists, barbers, manicurists or estheticians:

• Sales/cleaning and repairs of wigs, hairpieces and extensions (without attaching them)
• Sales of beauty/cosmetic products such as shampoo, hairspray, nail polish, hair coloring products, etc. (does not include products used in performing services)
• Sales of nutritional supplements
• Sales of combs, brushes, curling irons, hair dryers, hair clippers, etc
• Sales of extensions (without attaching them)
• Charges for tanning, steam or Turkish baths (spas)
• Charges for tattoos, including cosmetic tattoos
  

Wholesale B&O Tax

The income received from sales of tangible personal property or retail services to persons or business entities who will in turn sell them to consumers is taxable under the wholesaling B&O tax provided the seller receives from the buyer a completed resale certificate prior to January 1, 2010 or a reseller permit after December 31, 2009.

Use Tax

Use Tax Obligations of Cosmetologists, Barbers, Manicurists and Estheticians

Use tax is a tax imposed on the use of tangible personal property in Washington when sales tax has not been paid. It is computed at the same rate as the sales tax. Unless specifically exempt by law, all tangible personal property purchased or used in this state is subject to either the sales tax or use tax, but not both, regardless of where or from whom the property is purchased.

There are many instances where sales tax is not paid to the seller. The following are examples of transactions where sales tax may not be collected by the seller:

• Catalog purchases from an out of state seller
• Internet purchases from an out of state seller
• Inventory withdrawals for use by the business

The following equipment and supplies are subject to use/deferred sales tax if sales tax was not previously paid:

• Equipment and supplies such as clippers, scissors, curlers, hair dryers, chairs, capes, smocks, combs, brushes, towels, etc.
• Any tangible personal property consumed while performing any activity taxable under the Service and Other Activities B&O tax. Examples of consumable supplies used to accomplish these tasks are shampoo, conditioners, hairspray, hair coloring agents, tints, hair extensions, perm solutions, nail polish, artificial nails, lotions, wax, hair tonic, creams, hair dye, shaving cream, depilatories, etc
• Computer equipment, prewritten software, and  maintenance contracts that include updates to prewritten software

Chair and/or Booth Rental

In most cases, when a cosmetologist, barber, manicurist, or esthetician rents a chair or booth, they are not considered an employee and must have their own business license.  If, as part of the rental agreement, the owner of the business provides all consumable supplies, then the owner must have paid either sales or use tax on those items.  If the person renting the booth or chair provides their own supplies, they must pay sales tax (or report use tax) on their consumable supplies and any other tangible personal property they acquire.  The person renting the booth or chair is also responsible for reporting all of their own income. 

Tax Exercise

All-City Hair Salon provides hair, tanning, massage, and nail services. In addition to the two partners, they have an independent stylist that rents a booth/chair and provides hair services. The independent's customers pay that stylist directly. The booth renter pays a flat fee of $250 a month. The salon has a nail technician and a masseuse that are employees. Tanning beds and spas are also available to the salon's customers.

The salon has a monthly reporting frequency. During the month of September 2002, salon revenues were as follows:

	Salon	Independent	Classification
Haircuts	$5,500	$1,200	Service and Other Activities
Colors/tints	3,000	400	Service and Other Activities
Permanents	1,000	100	Service and Other Activities
Sales of cosmetic products	3,000	200	Retailing
Sales of hair dryers, curlers, brushes, etc.	1,700	500	Retailing
Wholesale sales	750		Wholesaling
Tanning	2,000		Retailing
Spas/steam baths	2,500		Retailing
Nail services	4,000		Service and Other Activities
Massages	2,200		Service and Other Activities
Tips	900	300	Exempt
Booth/chair rental	250		Service and Other Activities

See a sample excise tax return for All-City Hair Salon. The business is located in Seattle. The four-digit location code is 1726 and the local tax rate is 8.8%

Also, see a sample tax return for the independent, John's Booth.

doingbusiness/businesstypes for the salon and the independent booth renter are as follows:

	Salon	Independent
Service and Other Activities B&O tax	$15,950	$1,700
Wholesaling B&O	750
Retailing B&O	9,200	700
Retail Sales Tax	9,200	700
Location Code 1726	9,200	700
RTA	9,200	700
Litter Tax	3,000	200