Use tax applies to untaxed purchases of tangible personal property. Generally, sales tax is paid to the seller at the time of purchase. However, if the purchase is made directly from out-of-state sellers through the Internet, telemarketing, mail order, or other means, sales tax may not have been charged. In such cases, use tax is usually owed. Certain retail services, such as office remodeling or equipment repair (including both materials and labor), are also subject to either retail sales or use tax.
Use tax is based on the value of the item used in Washington, including charges for labor, materials, freight, handling, etc., even when separately stated. Examples of when use tax is due include:
- Purchases made via the Internet, over the telephone, or through mail order from businesses with no presence in Washington.
- Goods purchased with a reseller permit but then used by the business.
- Tangible personal property acquired with a purchase of real property.
- Goods purchased in a state with no sales tax or a tax rate lower than the Washington rate.
- Amounts charged for service and repairs performed outside of Washington.
- Purchases of artwork, antiques, and other collectibles where no sales tax was paid.
Local use tax rates
Use tax rates are the same as retail sales tax rates. However, the local tax rate is determined by the location where the goods are first used, not from where delivery is made.
Reporting and paying use tax
Use tax is reported and paid directly to the Department of Revenue, either on the “use tax” line of the excise tax return or on a Consumer Use Tax Return (for persons that do not have a business license). Any sales tax paid to another state may be used to offset the amount of use tax due in Washington.
Personal property tax
Most people are aware that property tax applies to real property. Personal property used in a business, such as equipment, furniture, and supplies, is also subject to personal property tax. The tax rate for real and personal property is the same.
If you use personal property in a business or have taxable personal property, you must complete a personal property tax listing form by April 30 each year. The assessor uses the form to value personal property for taxes due the following year.
County assessors and treasurers levy and collect the property tax. The county assessor mails personal property listing forms in January to persons who have previously listed personal property. If you do not receive a form or have questions about real or personal property taxes, contact your local county assessor’s office.