Washington – When Sales Tax is Not Added to the Invoice

2/18/2013

SALT Report 2161 – The Washington Department of Revenue issued guidance regarding retail purchases that do not include sales tax on the invoice.  Washington sellers are required to collect sales tax on all taxable purchases however, if the seller fails to do so, the buyer is then required to pay use tax to the Department. This notice discusses what to do if you receive an invoice without sales tax from in-state or out-of-state vendors.

In-state vendors

If you receive an invoice for a retail purchase from an in-state business that does not include sales tax you should contact the vendor and ask him to issue a new invoice that itemizes the amount of sales tax due.

However, the Department warns not to add sales tax to the invoice yourself as there will be no way to prove that the tax for this sale was remitted to the Department.  In situations like this, the vendor may credit the amount you remit for sales tax to something else.

Additionally, an invoice should never state that the sales price “includes sales tax.”  If you receive this type of invoice, you should contact the vendor and ask for a new invoice with the sales tax separately stated. Washington law requires that all customer sales slips, contracts, and invoices separately state the amount of sales tax due.  If you cannot contact the vendor, or they will not issue a new invoice, you must pay tax directly to the Department using either a Consumer Use Tax Return or on the use tax lines of your Excise Tax Return.

Out-of-state vendors

If you know the out-of-state vendor has an in-state business presence, contact the vendor and ask them to send you a new invoice that includes sales tax. However, many out-of-state businesses do not have a business presence, or “nexus,” in the state, therefore these businesses are not required to register with the Department and are not required to charge sales tax to their Washington customers.

If you have purchase items from this type of business, you must pay use tax to the Department based on the value of the item.  If you are not a registered business you can pay use tax by filing a Consumer Use Tax Return.  If you are a registered business you can pay on your Excise Tax Return.

For Further Information

Washington Department of Revenue – Tax Topics