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Washington Sales Tax: When Nonresidents Don't Have to Pay

  • Oct 5, 2015 | Katherine Gustafson

Like most states, Washington charges sales tax -- and in fact, a whole lot of it (6.50 percent, and with local taxes the total can get as high as 9.5!). But that doesn't mean that every single person buying Space Needle statues at Pike Place Market has to fork over to The Man.

A little-known Washington law says that residents of various states and Canadian territories don't have to pay sales tax for purchases made in the Evergreen State as long as what they're buying is intended for use back at home.

Those tapped for the exemption live in jurisdictions that don't impose a retail sales tax, use tax, value added tax, or other similar tax of at least 3 percent. If they don't pay tax at home, they shouldn't have to pay tax anywhere, the reasoning goes. I guess "when in Rome" doesn't apply to taxation.

The Lucky Few

Are you one of the lucky few who can shop in Washington tax-free? Residents of the following places currently qualify for this exemption.

  • Alaska
  • Colorado
  • Delaware
  • Montana
  • New Hampshire
  • Oregon
  • American Samoa
  • Alberta
  • Northwest Territories
  • Nunavut
  • Yukon Territory

If you're from one of these garden spots, next time you're in our country's northwestern-most corner, flash your ID to forego those charges on any tax-eligible purchases that you plan to use back at home.

What does this mean for retailers?

If you're a Washington store owner, and an Oregonian or an Albertan hands you his driver's license on check-out, you can rest easy knowing that he doesn't mistake you for a cop but instead wants you to quote a tax-free total for his transaction.

You are not required by law to comply with his request -- you can if you want, and only if you're satisfied that the address on the official ID he presents is in one of the eligible territories. If you choose to honor the tax exemption, make sure to keep a record of it by recording the type of ID the customer provided, any identification numbers, and the expiration date. (Photocopying the customer's driver's license is a good way to go.)

And remember that the customer only gets the exemption if whatever he buys is something he's likely to use upon return home and not right away. So a hotel or launderette will need to charge tax to all customers, even Montanans and Nunavummiuts. But a vendor of souvenir t-shirts can be pretty sure most of the wear will happen on home turf.

A notable exception to the tax-exemption rule is marijuana and marijuana-infused products. No matter how much your pot-smoking customer insists that the green stuff will only be smoked back in Oregon -- Scout's honor -- these products simply don't qualify for a non-resident tax exemption. 

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Katherine Gustafson
Avalara Author Katherine Gustafson