Use tax

Use tax

Use tax is imposed on the use of goods in Washington where sales tax has not been paid. Goods used in Washington are subject to either the sales or use tax, but not both, regardless of where or from whom the property was purchased or acquired. Like sales tax, use tax is a combination of state and local rates and is the same rate as sales tax.

References: Chapter 82.12 RCW and WAC 458-20-178

When use tax is due

Use tax applies at the time a taxpayer makes first taxable use of tangible personal property within Washington if Washington sales tax wasn’t paid when the item was acquired.

Amount subject to use tax

Generally, use tax applies to the fair market value of the goods on the date of the first taxable use in Washington. The use tax applies to the value of the article used which includes any charges paid to the seller for freight, delivery, or shipping.

Vessels and watercraft are subject to use tax based on the combined state and local use tax rate at the location where the vessel or watercraft is permanently moored or stored in Washington. Items which are purchased without paying sales tax are generally subject to the use tax on the purchase price.

In some instances, the purchase price does not represent fair market value. In such cases, the taxable value will be adjusted upward to reflect the fair market value. Value is generally determined by comparing the selling price to similar products of like quality and character, valuation guides, or appraisal of the property.

The value subject to use tax for vessel dealers and vessel manufacturers for their intervening use of a vessel otherwise held for sale is the fair rental value of the vessel for the time of such intervening use.-

References: WAC 458-20-110, WAC 458-20-145, WAC 458-20-178, RCW 82.12.802

Sales or use tax previously paid

When a vessel or watercraft is purchased outside of Washington State and a legally imposed sales or use tax is paid, a credit may be allowed against the amount of use tax due in Washington.

Reference: RCW 82.12.035

Rate of use tax

Like retail sales tax, use tax is a combination of state and local rates. See our online Tax Rate Look-Up Tool to find the rate for the location where the vessel or watercraft is permanently moored or stored in Washington.

Intervening/personal use

Property purchased without paying sales tax is subject to use tax (or deferred sales tax) when there is intervening use of the property even if the property is subsequently sold.

Use tax on display items

As a general guide, tangible personal property will be deemed to have been used on an intervening basis and therefore subject to the use tax, when such items are carried in the taxpayer's books of account as demonstrator or display merchandise, or when so extensively used for demonstration or display purposes that they can no longer be sold as new merchandise.

Use tax does not apply to the brief and superficial use which occurs when articles held for sale are displayed in single trade shows (boat shows, home shows, auto shows, agricultural fairs, conventions, etc.) for short periods, or are used in floor or window displays, and are then sold as new merchandise.

Reference: ETA 3005: Intervening use

Use tax on supplies

Use tax (or deferred sales tax) applies on items of tangible personal property acquired without payment of sales tax for which there is intervening use. This is true even when the cost for the property is itemized or subsequently billed to the customer. Examples include such items as shop rags and masking tape.

Reporting and paying use tax

Use tax on licensed property, such as vessels, is collected at the time of licensing or registration.

This commonly occurs when a vessel is brought into this state from outside Washington or is acquired from a private party where a broker was not involved.

Generally, consumers should pay use tax on unlicensed property with their Excise Tax Return (for a registered businesses) or by using a Consumer Use Tax Return (for an individual).