Washington Updates Spirits Sales Tax Regulations
- Apr 17, 2012 | Will Frei
Washington recently updated its information on spirits sales tax regulations.
Initiative 1183 mandates that all Washington state liquor stores close by May 31, 2012, so that private licensed retailers can sell spirits to the public beginning July 1, 2012. In preparation for the transition, the Department of Revenue has given clarification in the following areas: determining spirits sales tax, delinquency in reporting spirits sales tax, and sales involving Indian Tribes.
A licensed retailer selling spirits to the "general public" must calculate and collect a spirits sales tax at the point of sale. The spirits sales tax is 20.5% of the selling price, which "can include but is not limited to:
- Cost of goods sold.
- Markup, which may include,
- Federal, state and local taxes imposed on the seller . . .
- License fee.
- Business expenses.
- Additional markup for desired profit."
Effective March 15, 2012, if a taxpayer is over thirty days delinquent in reporting or remitting spirits sales taxes, "the Department of revenue . . . may request that the Washington Liquor Control Board . . . suspend or deny the issuance or renewal of a taxpayer's spirit license(s)." The Department's complete process for requesting a license suspension is described in the bulletin (link above).
The Department lists two types of spirits taxes: spirits sales tax and spirits liter tax. Spirits sales tax is 20.5% and applies to sales of spirits to the general public. Spirits liter tax is 13.7% and applies to sales of spirits to those who sell alcohol for consumption on-site. For example, on-premise licensees, such as restaurants and bars. According to the Department of Revenue, sales of spirits in the following situations are exempt from these taxes:
- Sales of spirits to a tribal on-premises licensee in Indian country.
- Sales of spirits to tribal off-premises licensees.
- Sales of spirits by tribal off-premises licensees located in Indian country to "the tribe and the tribe's enrolled members/citizens . . . ."
All sales to non-tribal members are subject to spirits sales taxes.