Collecting retail sales tax from customers

Collecting retail sales tax from customers

Retail sales tax must be collected on many items sold by convenience stores and gas stations. Following is a list of commonly sold items on which sales tax must be collected: (This list is not all inclusive.)

  • Air and water for vehicle use (coin operated)

    • Retail sales tax is collected on the machine receipts when the equipment is owned by the convenience store and/or gas station owner. The gross income is also reported under the retailing B&O tax classification.

    • When the equipment is owned by someone other than the convenience store and/or gas station owner, the store owner reports the fee received from the equipment owner under the B&O tax classification service and other activities.

  • Alcoholic beverages: All beverages containing 0.5 percent or more alcohol by volume.

  • Blocks of ice: Blocks of ice of any weight. (Ice sold in cubes, shaved or crushed form, weighing ten pounds or less, is exempt from sales tax).

  • Carpet cleaning machine rental: The rental and the purchase of cleaning products to use with the carpet cleaning machine are subject to retail sales tax.

  • Car wash

  • Cigarettes: Cigarettes are subject to both retail sales tax and the cigarette tax. The cigarette tax is paid by the first person to sell, use, consume, handle or distribute the cigarette(s) in this state. The cigarette tax on a pack of 20 cigarettes is $3.025 and a pack of 25 is $3.78125. (Federal cigarette taxes also apply.) These taxes are passed on to the consumer.

    The Liquor and Cannabis Board enforces the tobacco laws for the state of Washington. They enforce retail and wholesale licensing, sales to minors, vending machine sales, sampling, and illegal cigarette sales and possession. For more information on tobacco enforcement activities, you may visit the Liquor and Cannabis Board’s web site. RCW 82.24.080, WAC 458-20-186, Special Notice - Cigarette Tax Rate Increased May 1, 2010, Special Notice - Tobacco Tax Rate Increases and Definition Change

  • Convenience stores whose prepared food sales are more than 75 percent of their total food sales: Businesses with prepared food sales that are more than 75 percent of their total food sales are required to collect retail sales tax on all sales of food and food ingredients, except items that are four or more servings sold in a single container.

    The formula for calculating the total sales percentage of prepared food is the sum of gross sales of heated food, mixed/combined food and food sold in such a way that a plate, glass, cup or bowl is necessary to receive the food divided by gross sales of all food and food ingredients (including all prepared food, dietary supplements and soft drinks).

    For a definition of prepared food, please see Prepared food items within this list. For more details, and examples of this calculation, please see our online industry guide for Retailers of Prepared Food and our Special Notice - Prepared Food Tax Changes (pdf).

  • Dietary supplements: These include any product, other than tobacco, that is intended to supplement the diet and that meets all of the following requirements:

    • Is labeled as a dietary supplement with a “Supplement Facts” box.

    • Contains a vitamin, mineral, herb or other botanical, amino acid, or dietary substance taken to supplement the diet by increasing the total dietary intake, or a concentrate, metabolite, constituent, extract, or combination of these ingredients.

    • Is intended for ingestion in tablet, capsule, powder, soft gel, gel cap, liquid form; or is otherwise not represented as a conventional food; or for use as the sole component of a meal or diet.

Products labeled with both a “Supplement Facts” box and a “Nutrition Facts” box are not dietary supplements. Such products are “food and food ingredients” and are exempt from retail sales tax unless they are taxable as a “soft drink” or “prepared food.”

  • Cleaning supplies

  • Clothing

  • Magazines/books/greeting cards

  • Prepaid telephone cards

  • Rental of DVD or VHS tapes

  • Motor oil and lubricants

  • Prepared food items: Includes all products that meet any of the following criteria:

    • Food sold with eating utensils provided by the seller.

      • Utensils include plates, knives, forks, spoons, glasses, cups, napkins, or straws.

      • Utensils do not include container or packaging used to carry the food. Example: container for potato salad

    • Food and food ingredients sold in a heated state or heated by the seller, except bakery items. Examples: Hot dogs, hamburgers, pizza slices

    • Two or more food ingredients mixed or combined by the seller for sale as a single item; unless the product:

      • Is only cut, repackaged, or pasteurized by the seller.

      • Contains raw eggs, fish, meat, poultry, and food containing these raw foods that require cooking by the consumer as recommended by the Food and Drug Administration (FDA) to prevent food borne illness.

    • If sold without eating utensils provided by the seller, prepared foods do not include:

      • Bakery items

      • Food sold by weight or volume as a single item in an unheated state

      • Food sold by a food manufacturer [North American Industry Classification System (NAICS), Sector 311, except for bakeries – subsector 3118}

  • Propane and pre-filled propane tanks: The exchange of an empty propane tank for a full propane tank is subject to retail sales tax.

  • Soft drinks: Drinks which are sweetened, contain 50% or less fruit/ vegetable juice, no milk or milk substitutes.

    • Sports drinks

    • Bottled tea/coffee, sweetened, no milk

    • Lemonade

    • Soda pop

    • Tonic water

    • Flavored water with sweeteners

    • “Juices” with 50 percent or less fruit juice

    • “Energy” drinks

    • Fountain drinks

  • Toiletries: Includes toothpaste, lotion, toilet paper, and shaving cream.

  • Tobacco products: These are subject to retail sales tax and the tobacco products tax. The tobacco products tax is imposed on the first possessor of untaxed tobacco products in this state. The tobacco tax is passed on to the consumer. Retail sales tax is also paid on tobacco products by the consumer. Retailers who order from out-of-state must pay the tax on their excise tax return on the tobacco products line. WAC 458-20-185

  • Vacuum machines (coin operated)

  • Vehicle care products: Examples include wax, glass cleaner and polishing cloths.