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Even though the "use tax" has been in effect since 1935, many people still do not fully understand how it functions as a substitute for the sales tax.
What is use tax?
As the name implies, use tax applies to items being used in Washington where sales tax has not been paid. It applies to both businesses and individuals. The tax is due when the item is first used in the state, and the tax rate is the same as the sales tax rate where the item is being used.
Use tax must be paid by each new owner of the item, and is calculated on the value of the property, which is generally the purchase price.
When is use tax due?
Use tax is due on:
- items purchased over the Internet or through catalogs, without paying sales tax, and delivered to Washington for use here.
- any consumer item purchased in another state, without paying sales tax, and brought into Washington for use here.
- items purchased in Washington where sales tax has not been paid. This includes items purchased through private parties.
What are some examples of items subject to use tax?
Any item of tangible personal property put to use as a consumer in this state may be subject to use tax.
Examples include:
- artwork
- tools
- computer equipment
- furniture
- clothes
It also includes:
- private party automobile purchases (use tax on vehicles is normally paid to the Department of Licensing at the time of registration)
- purchases from garage sales, estate sales, etc.
Note: Consumers that support the charitable activities of nonprofit organizations or libraries by purchasing articles of personal property or winning such articles through a contest of chance per RCW 82.04.285, as part of the organization’s qualifying fundraising activity under RCW 82.04.3651, will qualify for exemption from use tax as follows:
- From October 1, 2013, through October 8, 2015, any article of personal property valued under $10,000 is exempt from use tax.
- From October 9, 2015, through July 1, 2020, any article of personal property valued under $12,000 is exempt from use tax.
See Revised Code of Washington (RCW) 82.12.225.
How do I report and pay the tax?
For vehicles, use tax is normally paid to the Department of Licensing at the time or registration. Refer to WAC 458-20-17802 for additional information.
For other types of items, report use tax on a designated tax return:
- If you are a registered business, you must report use tax on your regular excise tax return.
- If you are an individual or a business not required to register with the Department of Revenue, report use tax on the Consumer Use Tax Return.
For more information on use tax, please see our Use Tax section, or call 360-705-6705.
