Washington – Taxability of Private Spirits Sales

SALT Report 1408 – The Washington Department of Revenue released a publication regarding the privatization of spirit sales.  On November 8, 2011 Washington voters passed Initiative 1183 allowing the privatization of liquor sales in the state. The legislation requires the state to:

  • Authorize licensed distributors to begin selling liquor to licensees on March 1, 2012
  • Allow licensed retailers to sell spirits June 1, 2012
  • Close state liquor stores no later than June 1, 2012, and
  • Repeal the Liquor Control Board’s authority to set prices for spirits and eliminate the state markup
The Department of Revenue will take on the responsibility of collecting the following liquor taxes:

Spirits Sales Tax is based on the selling price of spirits in their original package and will be collected at the following rates:

  • Rate paid by the general public – 20.5%
  • Rate paid by on-premises retailers such as restaurants, bars, etc., on their purchases from distributors, distillers, etc. – 13.7%
Spirits Liter Tax is based on the volume of the spirits being sold in the original package and will be collected at the following rates:
  • Rate paid by the general public – $3.7708 per liter
  • Rate paid by on-premises retailers such as restaurants, bars, etc., on their purchases from distributors, distillers, etc. – $2.4408 per liter
Business & Occupation taxes apply to the manufacture and/or sale of spirits. Retail sales tax is collected on drinks containing spirits sold by restaurants, bars or other establishments that have an on-premises license.

Itemizing the Spirits Taxes

For spirits sold in the original packaging to the general public and on-premises licenses, the seller must separately state the spirits taxes. This can be on a price list made available to customers or on a sales invoice provided to customers. Advertised prices or shelf prices will be considered not to include the spirits taxes unless they clearly identify the amount of spirits taxes included in the listed price. The spirits sales tax and the spirits liter tax can be combined into one “Spirits Taxes” amount. The use of the term “tax included” will not suffice for the requirement to itemize the spirits taxes.

Additionally, the nonresident exemption for the general sales tax does not apply to spirits taxes. Nonresidents must pay the spirits taxes.

The publication also includes a chart with dates the program will be implemented.

For Further Information:

Washington Department of Revenue – Privatizing Spirits Sales in Washington State