Using a Reseller Permit

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This video will explain how to use your
Washington State reseller permit when you

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purchase goods to resell.

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You can provide your vendor with your
reseller permit so that the vendor does

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not need to collect retail sales tax from
you.

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Reseller permits may be used to buy
merchandise and inventory for resale and

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ingredients or components used in
processing new products for sale.

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For example,
contractors can use their reseller permit

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to purchase materials and contract labor
for retail or wholesale construction jobs.

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Farmers can use their reseller permits to
purchase feed, seed, seedlings,

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fertilizer and spray materials.

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If you have a clothing store,
you could use your reseller permit to

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purchase the clothes, shoes, handbags,
and hats that you sell in your store.

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You can also use it to purchase price
tags and shopping bags that you give to

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your customer with their purchases.

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However,
you may not use your reseller permit to

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purchase the clothing racks or mannequins.

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If you are a clothing manufacturer,
you could use your reseller permit to

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purchase fabric, thread, zippers, buttons,
and other similar items that you use to

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make the clothing.

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You can also use your reseller permit to
purchase packing items,

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such as boxes and protector bags,
that are used when you ship the clothing

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to your customers.

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However,
you may not use your reseller permit to

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purchase consumable items such as printer
paper or assets such as office furniture.

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If you purchase items with your reseller
permit that you do not resell,

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you must report those purchases under the
used tax classification on your excise

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tax return.

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Use tax is due whenever retail sales tax
should have been paid but was not.

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The tax rate is the same as the retail
sales tax rate for the location where the

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item is first used.

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Misuse of a permit may result in
penalties for the buyer and the permit

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may be revoked.

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Your vendors are not required to accept
your reseller permit.

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You may find that not all your vendors
accept your reseller permit and instead

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insist on collecting retail sales tax
from you.

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When this happens,
you have two options to recover the sales

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tax you paid on resale items.

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The first option is to claim a deduction
on your excise tax return,

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called Taxable Amount,
for tax paid at source.

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This deduction is found under the Retail
Sales Tax classification on the State

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Sales and Use Tax page of the excise tax
return.

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To take the deduction,
enter the gross amount of purchases

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intended for resale that you paid sales
tax on before the sales tax was added.

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For example,
if you purchased $1000 worth of goods to

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resell and paid $93.
00 of sales tax to the vendor for a total

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of $1093,
you would claim a deduction for $1000 on

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your excise tax return.

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If you choose this option,
make sure to keep copies of all invoices

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or receipts for at least five years.

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In the event of an audit,
you will need to show that you paid

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retail sales tax on the purchases that
you've deducted.

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If the invoice or receipt is printed on
thermal paper, make sure to scan,

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photocopy,
or take a photo of it because the ink

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will fade over time.

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The second option is to request a refund
from the department.

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For more information about reseller
permits, go to dor.wa.gov/resellerpermits.