Use Tax applies when sales tax is not paid

Generally, when you purchase taxable goods or services in Washington State the seller will collect retail sales tax. However, there are many instances where a seller will not collect Washington’s retail sales tax. The most common circumstances where use tax will apply include:

• Goods are purchased from someone who is not authorized to collect sales tax such as an unregistered individual.
• Goods are purchased from an out of state retailer (Internet or mail order).
• Goods are purchased for resale but are consumed instead of resold.
• Goods are purchased in a state with no sales tax or a lower sales tax rate.
• Personal property is acquired with the purchase of real property.

To report use tax, total your taxable purchases and list the amount on the use tax lines (state and local) of the excise tax return.

Note: Sales tax applies to the selling price whereas use tax applies to the value. The local use tax rate is determined by the location where the goods are used.

References: RCW 82.08.020 and RCW 82.12.020; WAC 458-20-178