Fireworks display businesses have pyrotechnicians that are licensed to create fireworks displays for their customers. Often, pyrotechnicians provide, set up, and discharge fireworks for their customers as a fireworks display business.

Cities and organizations often hire pyrotechnicians as contractors to run firework displays during events.

Income from fireworks displays is subject to business and occupation (B&O) tax under the Service and Other Activities classification. Retail sales tax is not due on this income.

The contractor is considered the consumer of the fireworks and other materials used and must pay sales tax or use tax on these items.

Special licensing requirements

Along with your business license, businesses that engage in the manufacture, importation, sale, or use of fireworks in a public display are required to be licensed by the Washington State Fire Marshal’s Office.

Selling fireworks as an independent retailer

Sales of fireworks by independent retailers are subject to retailing business and occupation (B&O) tax and retail sales tax. The sales tax rate is based on the location of the fireworks stand/store.

To be considered a fireworks retailer, the business must meet all the following criteria:

• The business and the fireworks distributor enter into a purchase and sale agreement, where ownership of the goods is transferred to the business at or before delivery.
• The business is responsible for paying for the goods based on the type and quantity of goods received (the distributor may agree to repurchase unsold goods).
• All sales are conducted by the business who has the authority and control to sell the products, rather than the distributor.
• The business has control over the profits received from the sales.

Reseller Permit

A reseller permit may be used to purchase fireworks for resale. The reseller permit allows the business to purchase fireworks without paying sales tax.

Selling fireworks as an agent of a fireworks distributor

A business may sell fireworks as an agent of the fireworks distributor. The agent is responsible for collecting sales tax on their sales of fireworks on behalf of the distributor.

The agent will report the gross sales of fireworks under retailing B&O tax and retail sales tax. They will then claim a “Consignment sales” B&O tax deduction. The agent does not submit the retail sales tax to the distributor.

The agent will receive a commission from the distributor as payment for selling the fireworks. Commission income is reported under the service and other activities B&O tax classification.

Selling fireworks as a distributor

When fireworks distributors sell fireworks to independent retailers who provide a reseller permit, they should report the sale under the wholesaling B&O tax classification.

If fireworks distributors sell fireworks to customers who do not provide a reseller permit, they must report the sale under the retailing B&O and retail sales tax classifications.

However, when fireworks distributors sell fireworks through an agent, they should report the sale under the retailing B&O and retail sales tax classifications. They should also claim a “Gross sales collected by facilitator” deduction under the retail sales tax classification.

Special licensing requirements

Along with your business license, businesses that engage in the manufacture, importation, sale, or use of fireworks in a public display are required to be licensed by the Washington State Fire Marshal’s Office .

An organization may be considered a nonprofit organization if any of the following conditions are met:

• Formed under the Washington Nonprofit Corporation Act.
• Qualifies as a nonprofit for federal tax purposes.
• Is a church, charity, or benevolent organization.

Selling fireworks as an independent retailer

A nonprofit organization will be considered an independent fireworks retailer if it meets all the following criteria:

• The business and the fireworks distributor enter into a purchase and sale agreement, where title to the goods is transferred to the business at or before delivery.
• The business is responsible for paying for the goods based on the type and quantity of goods received (the distributor may agree to repurchase unsold goods).
• All sales are conducted by the business who has the authority and control to sell the products, rather than the distributor.
• The business has control over the profits received from the sales.

A nonprofit organization selling fireworks as an independent retailer for a qualifying fundraiser may be exempt from paying business and occupation (B&O) tax and collecting retail sales tax. Please see our Nonprofit organizations guide for more information.

Providing a reseller permit to the fireworks distributor

Nonprofit organizations purchasing fireworks to sell to their customers must provide the distributor with a reseller permit. Nonprofits that are not required to register with the department should complete a Streamlined Sales Tax Agreement. Qualified nonprofits that are reselling fireworks at a qualified fundraising event will check box G on this form.

Selling fireworks as an agent of the fireworks distributor

A nonprofit may act as a sales agent of a distributor. For example, the nonprofit will receive and sell the distributor’s products to the public. In this case, the nonprofit will receive a commission as payment for selling the products.

Since the nonprofit is selling fireworks as an agent of the distributor, the sales will not qualify as a fundraising event. The nonprofit must collect and submit retail sales tax on all sales of fireworks to the public.

The nonprofit will:

• Report the gross sales of fireworks under retailing B&O tax.
• Take a “Consignment sales” B&O tax deduction for the gross amount of fireworks sold.
• Collect and submit retail sales tax on sales of fireworks.

The sales tax rate is based on the location of the fireworks stand or store. The nonprofit does not submit the retail sales tax to the distributor.

Commissions that the nonprofit receives as payment for selling fireworks on behalf of the distributor will likely qualify as a fundraising event. In this case, the nonprofit organization does not need to report the commission.

Special licensing requirements

Along with your business license, the Washington State Fire Marshal’s Office separately licenses businesses that engage in the manufacture, importation, sale, or use of fireworks in a public display.