Federal law provides that the sales of tangible goods, including motor vehicles, to tribes and enrolled tribal members are exempt from retail sales tax if the goods are delivered to or the sale is made in the tribe or enrolled tribal member’s Indian country.
Starting June 9, 2016, a new Washington law states there are updated requirements to document:
- The sale of a motor vehicle was to a tribe or an enrolled tribal member and
- The motor vehicle was delivered to or the sale was made in the buyer’s Indian country.
How to document a tax exempt sale to a tribe or enrolled tribal member
The buyer is a tribe or an enrolled tribal member
A buyer must present to the seller, and the seller must keep a copy of, one of the following documents to substantiate that a sale was made to a tribe or an enrolled tribal member: If a buyer does not provide one of the above documents, the seller must collect retail sales tax on the sale.
- the buyer’s tribal membership or citizenship card;
- the buyer’s certificate of tribal enrollment; or
a letter signed by a tribal official confirming the buyer’s tribal membership status or that the buyer is a tribe
Delivery to or sale made in the buyer’s Indian country
An exempt motor vehicle sale to a tribe or an enrolled tribal member must also meet one of the following:
The motor vehicle is delivered in the buyer’s Indian country
To establish delivery in the buyer’s Indian country, the seller must:
- Deliver the motor vehicle to the buyer’s Indian country and
- Complete a declaration, attesting to the location of delivery and enrollment status of the buyer. Both the buyer and seller must sign the declaration. The Department of Revenue created the Declaration for a Dealer Selling a Motor Vehicle to Tribes for buyers and sellers to use.
- The seller must keep the declaration in their records.
No additional proof is required to document delivery.
No other Department of Revenue form or certificate may be used to document delivery.
Note: If a declaration is not completed and signed by both the buyer and the seller, the seller will be unable to meet the delivery requirement and retail sales tax is due on the sale, unless the sale is made in the buyer’s Indian country as discussed below.
The sale of the motor vehicle is made in the buyer’s Indian country
If the sale is made in the buyer’s Indian country, a declaration does not need to be completed by the buyer and the seller. The buyer must still present one of the three documents above and the seller must examine and keep a copy of the document presented.
For motor vehicle sales, the most common example of when a sale is made in the buyer’s Indian country happens when the seller’s business (such as an auto dealership) is located in the buyer’s Indian country and the sale is completed at the seller’s location.
For more information see, Special Notice - Retail Sales Tax Exemption for Sales of Motor Vehicles to Tribes and Enrolled Tribal Members.