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Sales Tax Exemption Change for Nonresidents: Effective July 1, 2019

by | Jun 24, 2019 | Business And Corporate Law

In May of 2019, Governor Jay Inslee signed Senate Bill 5997 into effect, which changes the way Washington businesses handle and collect retail sales tax for nonresidents.

Beginning July 1, 2019, businesses who make retail sales of tangible personal property, digital goods, and digital codes must collect sales tax from all consumers at the point of sale, regardless of residency. Under the prior law, nonresidents were exempt from the sales tax on such items and businesses were not required to collect sales tax from these consumers. Under the new law, the exemption is eliminated and nonresident consumers must pay sales tax at the point of sale, but instead may request a refund from the Department of Revenue once a year for the state portion of the sales tax they paid in the prior year.

Note: Purchases of items and services that are substantially used or consumed within Washington are ineligible for the refund. Additionally, sales tax exemptions on sales of vehicles and trailers, watercraft, and farm machinery or implements have different requirements.

What You Need To Know:

  • Sellers: Beginning July 1, 2019, retailers must collect retail sales tax from nonresidents when the nonresident takes delivery of the merchandise at a Washington location.
  • Buyers: Qualified nonresident consumers must pay retail sales tax at the point of sale in Washington. Retain your receipts and submit an annual refund request with the Department of Revenue beginning January 1, 2020 for a refund of taxes paid on qualifying purchases in the prior year. The refund request must be at least $25.00.

For additional information, refer to the Washington Department of Revenue (DOR) Special Notice or the DOR website.