Washington Sales Tax and the Global Supply Chain
- Dec 3, 2014 | Gail Cole
The job of a customs broker is to move goods through customs, thereby facilitating the importation and exportation of goods. To that end, customs brokers prepare documents and electronic submissions, and communicate between those importing or exporting goods and the pertinent government authorities. Customs brokers must also calculate and pay all applicable taxes, duties, and excises.
Exempt export sales are, as the name suggests, exempt from Washington State Department of Revenue (DOR) has updated a tax topic publication.
To illustrate the point, the DOR provides the example of Carl.
Carl is a Canadian resident who hired a customs broker in Blaine, Washington, to accept shipments on his behalf. When Carl buys goods from a Washington seller, the goods are delivered to the customs broker in Blaine. Carl then picks up the goods from the customs broker and drives them across the border into Canada himself.
Must the Washington sellers collect sales tax on these goods? Or are they exempt export sales?
Exempt export sales
In order to qualify as an exempt export sale in Washington, one of the following three requirements must be met:
- The seller must deliver the goods to the buyer at a place in another country;
- The seller must deliver the goods to a carrier who transfers the good to a place in another country; or
- The seller must deliver the goods to the buyer at shipside, or aboard the buyer’s vessel or other transportation vehicle (such as a truck). The exports process must obviously be under way when the goods are delivered.
Back to Carl
Carl’s products do not meet any of the above three requirements. They are not delivered to the buyer at a location in another country. They are not delivered to a carrier who transports the goods to another country. And they are not delivered to the buyer at shipside or aboard another transportation vehicle. Instead, they are delivered to the customs broker in Blaine, where they await the arrival of Carl.
As a result, Carl’s purchases are not “exempt export sales.” Washington sellers must collect both retail sales tax and Retailing B&O tax.
Learn about Carl first hand by reading the DOR tax topic, “How do you know an item qualifies for an export sale when a customs broker is involved?”
Learn how to simplify sales tax management in Washington and other states by implementing automated sales tax software as a service (SaaS).