Sales of alcohol for sanitizing purposes

Note: The discussion below is limited to taxes administered by the Department of Revenue.

Is alcohol sold to a hospital or first responders for sanitizing purposes subject to state taxation? If so, what taxes or fees would be due on this sale?

Yes, alcohol sold for sanitizing purposes is generally subject to business and occupation (B&O) tax and retail sales tax. 

Spirits taxes (spirits sales tax and spirits liter tax) do not apply to alcohol that is not sold as a beverage. The department does not consider the licensed sale of alcohol for sanitizing purposes to be sold as a beverage, whether it is denatured or not.

B&O tax

Distilleries are subject to B&O tax both for their production activity (manufacturing classification) and their selling activity (retailing or wholesaling classification).

• Manufacturers are allowed the Multiple Activities Tax Credit for the applicable selling B&O tax against the Manufacturing B&O tax when the alcohol is sold in Washington.
• Bona fide donations of alcohol are not subject to B&O tax.  

Retail Sales Tax

Alcohol sold to hospitals, clinics, and first responders for sanitizing purposes is generally subject to retail sales tax. The location of receipt will determine the tax rate. For example, if the distiller delivers the alcohol to the hospital, then the combined sales tax rate at the location of the hospital would apply.

• The seller of the alcohol is required to collect the retail sales tax from the buyer and remit the collected tax to the department. 
• Sales to a free hospital are exempt. A free hospital is a hospital that does not charge patients for health care provided by the hospital (RCW 82.08.02795).
• Bona fide donations of alcohol are not subject to retail sales tax.