Washington Sales Taxes: Free Reseller Permits Replace Resale Certificates

By: Greg J. Duff, Cairncross & Hempelmann, P.S.

Effective January 1, 2010, the resale certificate will be replaced with a reseller permit issued by the Washington State Department of Revenue to reduce sales tax noncompliance. A 2008 study by the Washington legislature estimated that each year there is more than $100 million in unpaid state and local sales and use taxes. Reseller permits are free and will be issued by the Washington State Department of Revenue to businesses that make wholesale purchases, such as restaurants. The permits allow businesses to purchase items or services for resale without paying retail sales tax.

How can my business obtain a reseller permit?
Beginning in September 2009, the Washington State Department of Revenue will automatically issue reseller permits to businesses that make wholesale purchases, as determined by the Department based on business activities, tax returns, and other information available to the Department. Businesses that do not automatically receive a permit may apply to the Department, and the Department will rule on an application within 60 days of receipt. Permit applications will be available from the Department shortly. Currently, the existing resale certificate form continues through December 31, 2009.

What if my business does not receive a reseller permit but makes purchases for resale?
Businesses that make purchases without a permit or other exemption certificate must pay retail sales tax, but can take a Taxable Amount for Tax Paid at Source deduction on a tax return, or may request a refund from the Washington State Department of Revenue. Forms for the deduction and for a refund request are available on the Department’s website. This procedure may be avoided through a proper application for a reseller permit.

How long is a reseller permit valid?
Businesses registered with the Washington State Department of Revenue:

- before January 1, 2009, will get a permit valid for four (4) years.
- on or after January 1, 2009, will get a permit valid for two (2) years that can be renewed for four years.
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Attorney Greg Duff formed Cairncross & Hempelmann’s Hospitality, Travel and Tourism Practice, which he now chairs. With specialized experience in hospitality development, hotel management and operations, franchising, sales and marketing and licensing, Greg brings a unique perspective and advisement capacity to each engagement.