TPS-TIE

Personal use of used vehicles taxable

Used vehicle dealers who provide used cars to their sales staff or managers for personal use without charge are subject to use tax.

How is the use tax computed?

The tax is due on one vehicle per year for each sales person or manager who uses one.

How to determine the value

The value for use tax reporting is the average selling price of all used vehicles sold in the preceding year multiplied by 25%.

Altering, improving, installing, cleaning, normal maintenance procedures, and painting are all taxable in the same manner as a repair.

For consumers

Repairs on vehicles for consumers are retail sales and are subject to tax under the Retailing classification of B&O tax on the total charge made for the repair. Retail sales tax must also be collected on the total charge.

When customers fail to meet the terms of their contract, dealers and financial institutions have the right to repossess the vehicles.

Bad debt deduction

The person who sold the vehicle and collected the retail sales tax may take a deduction on their excise tax return for both the Retailing B&O tax and the retail sales tax left on the contract.

The amount of the deduction must be adjusted to exclude amounts attributable to all of the following:

Motor vehicle sales/leases tax

RCW 82.08.020(3) imposes an additional tax of three-tenths of one percent (0.3%) on the sale of motor vehicles. This additional tax is referred to as the motor vehicle sales/lease tax.

What does this mean?

Motor vehicle dealers and motor vehicle leasing companies must collect the additional sales tax of three-tenths of one percent (0.3%) of the selling price on every retail sale, rental, or lease of a motor vehicle in this state.

What is classified as a service vehicle?

Vehicles removed from inventory and committed to use as service vehicles, parts trucks, or service department loaner cars are classified as service vehicles. Dealers will often use vehicles for this purpose for only short periods of time.

How are service vehicles taxed?

Dealers may elect to report use tax on either the purchase price of the vehicle or on 2% per month or any fraction thereof that the vehicle is being used as a service vehicle or loaner.

In general, towing charges are subject to tax under the Retailing classification of B&O tax and retail sales tax must be collected.

What is a "trade-in?"

"Trade-in property of like kind" means articles of tangible property traded in on property of the same generic classification. This means motor vehicles traded for motor vehicles and licensed recreational land vehicles for licensed recreational land vehicles. Property, such as a motor home, may be allowed as a trade-in in either classification. More than one trade-in is allowed, if the property fits the same generic classification as the item sold.

What is use tax?

Use tax is the tax which is assessed on the use of any tangible personal property in Washington, on which retail sales or use tax has not already been paid.

When is it due?

Use tax becomes due when the untaxed tangible personal property is first put to use in Washington.

Ride sharing vehicle

A ride-sharing vehicle is a vehicle that is used in a car pool or van pool. The vehicle must be used by a fixed group of no less than five or more than fifteen persons, including passengers and driver. However, where at least two of the persons are confined to wheelchairs when riding, the group can be no fewer than four persons including the driver. The gross vehicle weight may not exceed 10,000 pounds, excluding special rider equipment.