Registration & UBI number
Generally, every person doing a business activity in Washington must register with the state of Washington through the Business Licensing Service. Once registered, persons receive a nine-digit Unified Business Identifier (UBI) number. Generally, this number is also the Department of Revenue (DOR) Account ID. Businesses also receive the state Business License.
Washington’s major taxes
Persons engaged in trucking activities are potentially subject to the following taxes:
- Public Utility Tax
- Business and Occupation Tax
- Retail Sales Tax
- Use Tax
Public Utility Tax (PUT)
Persons operating motor driven vehicles used in transporting persons or property on a for hire basis are subject to the Public Utility Tax. The transportation of persons or property across state boundaries, into and out of Washington, via “through freight billing,” or shipments to ports for export, are allowed deductions for interstate transportation.
Business and Occupation (B&O) tax
Many trucking industry businesses located in Washington are subject to the state B&O tax. This includes corporations, limited liability companies, partnerships, and sole proprietors. The B&O tax is a gross receipts tax on the business. It is measured on the value of products, gross proceeds of sale, or gross income of the business. There are no deductions from the B&O tax for labor, materials, taxes, or other costs of doing business. Trucking related businesses generally report income under the retailing, retailing of Interstate Transportation Equipment, wholesaling, and service and other activities B&O tax classifications.
Retail sales tax
Retail sales tax must be collected by the business from the consumer on all sales subject to the retailing classification of the B&O tax unless there is a specific statutory retail sales tax exemption. Retail sales tax is comprised of both a state rate (6.5%) and a local rate (.5% -2.4%). Local rates vary depending on location.
Remember: Sales invoices must be given to customers for all purchases and the sales tax must be separately stated on the invoices. (RCW 82.08.050).
Use tax is a tax on the use of goods or retail services in Washington when sales tax has not been paid. Goods and retail services used in this state are subject to either the sales or use tax, but not both.
Use tax is based on the value of the article or service and includes charges for labor, materials, freight, handling, or any other amount paid or accrued when separately stated on an invoice.
Examples when use tax is due include:
- Mail order, telephone, or Internet purchases from persons with no presence in Washington.
- Goods purchased with a reseller permit and then used or consumed.
- Tangible personal property acquired with the purchase of real property.
- Goods purchased in a state with no sales tax or a tax rate lower than Washington’s.
Remember: You should always pay use tax when an out of state vendor does not collect retail sales tax on items that are subject to sales tax.
Tip: A Use Tax Return is available online.