Effective July 1, 2008, sales tax collection is based on the location where the customer receives the merchandise or service. For retailers that ship or deliver their products this is a change in how sales tax is determined. For more information on these changes see our Streamlined Sales and Use Tax page. For answers to specific questions about sales tax collection call the Telephone Information Center at (800) 647-7706.
To ensure local governments receive the correct amount of tax money, retailers must code their sales accurately:
Sales of goods and merchandise
- Goods and merchandise sales are coded to the location where the customer receives them. Over the counter sales, where the customer receives the item at the retail location are coded to the retail store or outlet. Items that are shipped or delivered to the customer, either through the U.S. mail or a third party common carrier, are coded to location where the customer receives them.
Labor and Services
- Labor and services are coded to where they are performed. If an installation charge is normally added to the cost of an item, the entire charge for that item is coded to the site where it is installed. If the buyer picks up the item in person, the sale is coded to the retail outlet where the item was picked up.
- In the case of repaired merchandise, if the buyer picks up the item at the repair facility, then the sale is coded to the location of the repair facility. However, if the repaired item is delivered or shipped to the buyer, then the total charge, including shipping and handling, is coded to the buyer’s address.
Goods delivered into Washington
- If goods are delivered into Washington from outside of the state the sale is coded to the location where the customer receives the goods.
Lease or Rental of Tangible Personal Property
- Lease or rental of tangible personal property depends on the following:
Lease or rentals that do not require recurring payments
- If a single payment is made and the person renting the equipment (lessee) picks up the equipment at the location of the business renting the equipment (lessor), then the lessor’s location determines the code and local tax rate.
- If a single payment is made but the equipment is delivered to the lessee at another location, the code is determined by the location where the lessee receives the equipment.
Lease or rentals that require periodic payments
- If the item is leased for a length of time and periodic payments are made, the first payment is coded to the location where the lessee receives the equipment, normally the lessor’s business location. All subsequent payments are coded to the location where the equipment is primarily used by the lessee.
For additional information on sourcing retail sales tax, see our article How to Properly Code Transactions or Washington Administrative Code (WAC) 458-20-145