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Sales made directly to the United States government are exempt from retail sales and lodging taxes. However, sales made to employees or representatives of the federal government (including members of the military) are not exempt, even if they will receive reimbursement from the federal government.
To qualify for an exemption, the purchase must be made with one of the following payment types:
- Eligible U.S. General Services Administration (GSA) SmartPay Centrally Billed Account (CBA) card/account.
- Check from the United States payable directly to the seller.
- United States voucher.
- Electronic funds transfer made by the United States.
You must keep a copy of documentation clearly indicating the payment was made directly by the federal government.
Eligible GSA SmartPay card
A card/account holder may use a GSA SmartPay charge card as a method of payment for authorized purchases of goods or services. A charge card may be a centrally billed account (CBA), an individually billed account (IBA), or a combination of both.
- CBAs are paid directly by the federal government. All CBA transactions are exempt from sales tax.
- IBAs are not paid directly by the federal government. All IBA transactions are subject to sales tax.
GSA SmartPay charge cards have specific account number prefixes (first four digits), as seen below. Citibank and U.S. Bank issue Visa, Mastercard, Wright Express (WEX), and Voyager branded SmartPay charge cards.
SmartPay Travel and Tax Advantage Travel cards
Travel cards may be IBA or CBA. All states are required to exempt purchases made with CBA cards. However, states may choose whether to exempt purchases made with IBA cards. Travelers making purchases with an IBA card must pay sales tax in Washington.
SmartPay Travel and Tax Advantage Travel cards prefixes include:
- Visa: 4486, 4614, 4615, 4716.
- Mastercard: 5565, 5568.
The sixth digit of the travel card identifies if it is CBA and is tax exempt:
- For Travel cards, this is a 6, 7, 8, 9, or 0.
- For Tax Advantage Travel cards, this is 5.
- Tax Advantage Travel cards are a combination of CBA and IBA. Lodging and rental car purchases are tax exempt. All other purchases, such as meals and incidentals, are subject to retail sales tax.
If the sixth digit of the travel cards is 1, 2, 3, or 4, it is IBA, and the purchase is subject to retail sales and lodging taxes. The most common travel card is IBA.
Typically, the travel cards have one of these designs:
Please note that card designs may vary.
SmartPay Purchase, Fleet, and Integrated cards
All SmartPay Purchase, Fleet, and Integrated cards are CBA and are exempt from retail sales tax.
SmartPay Purchase card prefixes include:
- Visa: 4614, 4715, 4716.
- Mastercard: 5565, 5568
SmartPay Fleet card prefixes include:
- Visa: 4486, 4614.
- Mastercard: 5563, 5565, 5568.
- WEX: 5565, 6900, 7071.
- Voyager: 7088
SmartPay Integrated card prefixes include:
- Visa: 4614
- Mastercard: 5565
The Integrated card combines the functions of the Purchase, Travel, and/or Fleet business lines.
The sixth digit identifier used to differentiate travel cards does not apply to Purchase, Fleet, or Integrated cards.
Typically, the cards have one of these designs:
Please note that card designs may vary.
Records you must keep
To document an exemption on purchases made with an eligible card, you must keep the following information in addition to a receipt:
- Federal employee’s name.
- Federal government agency’s name.
- Type of card (eg., purchase, fleet, travel, integrated).
- Expiration date of card.
- Name of credit card company.
- The sixth digit of the card for Travel or Tax Advantage Travel cards.
- The first four digits of the card.
Business and occupation (B&O) tax
Gross income from sales of tangible personal property or retail services to the federal government is subject to the Retailing B&O tax. The retail sales tax exemption does not extend to B&O tax.
More information
For more information about the GSA SmartPay program, visit the GSA website.
