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Sales of prepared food and soft drinks
Prepared food is food where the seller:
- Combines two or more food ingredients and sells it as a single item.
- Sells the food in a heated state or heats the food.
- Sells the food with eating utensils such as a plate, fork, knife, spoon, cup, or straw.
Soft drinks are beverages that are sealed and ready to drink, except those that contain milk, milk products, milk substitutes, or more than 50% fruit or vegetable juice.
Reporting requirements
Sales of prepared foods and soft drinks are subject to Retailing business and occupation (B&O) tax and retail sales tax. Sales tax is due at the location where the customer receives the item. You can find the correct location code by using our Tax Rate Lookup tool.
References
- RCW 82.04.050 – “Sale at retail,” “retail sale.”
- WAC 458-20-244 – Food and food ingredients.
- Restaurants and retailers of prepared foods
Sales of merchandise
Merchandise and licensed merchandise are considered tangible personal property, which is property that can be seen, weighed, measured, felt, or touched. Merchandise can include, but is not limited to:
- Clothing.
- Keychains.
- Posters.
- Toys.
- Commemorative decor.
Reporting requirements
Sales of merchandise are subject to Retailing business and occupation (B&O) tax and retail sales tax. Sales tax is due at the location where the customer receives the item. You can find the correct location code by using our Tax Rate Lookup tool.
References
- RCW 82.04.050 – “Sale at retail,” “retail sale.”
Licensing for merchandise, including brand licensing
Licensing rights are legal permissions that allow a manufacturer and/or seller to sell merchandise bearing the names and images owned by another organization. These rights are typically protected by copyright and/or trademark laws and allow the owner to control how, when, and where the names and images are used and sold.
Reporting requirements
The gross income from charges to others for granting the right to use images and names for merchandise is reported under the Royalties B&O tax classification.
How is royalty income attributed?
Generally, royalty income is attributed to Washington based on where the customer will use the intangible property. If the customer uses the intangible property in multiple states and the business can reasonably determine the amount of a specific receipt that relates to a use in Washington, it must attribute that receipt to Washington.
If you are unable to attribute the royalty income to the location of customer use, see the series of steps for attributing income on the Attributing royalty income page.
References
- RCW 82.04.2907 – Tax on royalties.
- RCW 82.04.460 – Apportionable income—Taxable in Washington and another state.
- RCW 82.04.462 – Apportionable income.
- WAC 458-20-19403 – Apportionable royalty receipts attribution.