When meals are prepared offsite and sold to the school district, retail sales tax applies on the charge for the meals and the seller is subject to B&O tax under the Retailing classification on this income.
Income for the management of a food service program is subject to B&O tax under the Service and Other Activities classification. Such contracts are not subject to retail sales tax.
Sales of meals by the school to students, faculty, and staff are not subject to retail sales tax.
Working with vendors
Some Washington registered vendors may not initially collect retail sales tax when selling to schools because they may think the school is exempt. If this occurs, the school should notify the vendor that sales tax applies and request that a new invoice be issued.
If the vendor does not issue a new invoice or collect retail sales tax, the school should pay “deferred sales tax” directly to the state. Deferred sales tax is reported and calculated on the use tax line of the tax return. To determine the local sales tax rate, use the Tax Rate Lookup.
Working with contractors
When a school district hires a contractor, the school district must obtain and keep a record of the contractor’s UBI number. Failure to do so may result in a penalty of up to $250. Additionally, school districts must pay retail sales tax on any construction work performed for them.
School districts are not subject to use tax on donated goods or donated amusement and recreational services. Donors are also exempt from use tax on amusement and recreational services (such as rounds of golf) donated to school districts.
Sales between schools within a school district
Charges between schools within a school district or other budgetary units, do not constitute bona fide sales and are not taxable.