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Get a Sales Tax Permit Number document sample
Document Sample
Washington’s change from
resale certificates to
Reseller Permits
John Wack 360-705-6658
Linda Miller-Baldwin 360-705-6649
1
The transition to reseller permits
• Why the change?
• How to get a permit
• How to use a permit
• Resources
2
Senate Bill 6173
• Eliminates the use of resale
certificates
• Effective January 1, 2010,
businesses may no longer accept,
honor or use resale certificates
• Must use a permit issued
by DOR
• Permits are free
• Issued only to businesses that
make wholesale purchases
3
Why the change?
Misuse of self-issued resale certificates
costs the state over $100 million dollars
in lost revenue each year
• Anyone can download the form, fill
it out and make purchases without
paying sales tax
• Some don’t know the law and use it
to buy everything for their business
4
How is the reseller permit different?
• Changes process from “an honor system
with audits” to a managed system with
oversight
• Reseller permits: issued by the Department
to qualifying businesses
• Permits can be verified online
(available January 2010)
• The Department will continue to examine
wholesale activities during audits
5
Eligible for a reseller permit
Retailers, Wholesalers, Manufacturers
Actively reporting income
No documented misuse of
resale certificates
6
Eligible For a reseller permit
Contractors
Reporting retail or wholesale
25% or more of material
and contract labor costs
related to retail or
wholesale construction
activities
No documented misuse of
resale certificates
7
Reseller Permit - Contractors
• Construction industry applies annually
– 12 month expiration period for construction
– Complete “Reseller’s Permit Application”
– Report $ amount for all material and labor purchases
during previous 12 months
– If new business & actual figures not available -
estimate
8
9
Required information
• Application requires:
– Tax registration number
– Description of business activity
– Description of items to be purchased
• Contractors:
– Provide total cost of material and
contract labor purchased during prior
12 months
– Percentage related to retail/wholesale
construction
10
Resellers Permit
• Applications denied if:
– Applicant not entitled to make wholesale purchases
– Application incomplete
• Right to appeal if denied permit
– WAC 458-20-100
11
25% Threshold
• Material costs and contract labor costs are calculated
for:
– Wholesale/Retail construction (custom construction)
– Other construction
• Public road construction
• Speculative building
• US government contracting
• Percentage of wholesale/retail construction material and
contract labor costs greater than 25% may qualify
12
Issuing permits
• Notify all active reporting businesses in September
• Many eligible businesses will receive their permit
automatically
• Others will need to apply,
including contractors
13
Apply for a permit
Get an application:
• Online at dor.wa.gov
• Call 1-800-647-7706
• October – apply online
through “My Account”
please allow up to 60 days
14
15
Make copies of your permit
• DON’T GIVE AWAY your original
• Provide a copy (paper or
electronic) to your vendors - where
you purchase goods that you resell
16
How long is my reseller permit valid?
1 year – for qualifying contractors
Contractors must reapply every
year.
Annual renewals – apply no
earlier than 90 days prior to
expiration date.
17
Use the permit to buy
• Merchandise & inventory that you sell
• Ingredients, components, or chemicals
used to process new products for sale
• Materials and contract labor for
retail/wholesale construction projects
• Feed, seed, fertilizer, and pesticides
(farmers only)
18
Don’t use permit to buy
• Items for personal or household use
• Items for business use (office
supplies/equipment, furniture)
• Promotional items or gifts
• Materials and contract labor for public
road construction or federal government
contracting
• Tools, equipment, or equipment rentals
• Materials and contract labor for
speculative construction projects
19
Example
A painter may use a reseller
permit to purchase:
Materials that become a permanent part
of the completed project (paint, primer,
spackle)
May not use to purchase:
Tools, equipment or supplies (brushes,
rollers, equipment ladders, pressure
washer, sanders, etc)
20
What if I don’t qualify for a permit but
on occasion buy goods to resell?
• Pay sales tax on your purchases and
• Recover the tax you paid on qualifying
purchases
Take a “Taxable Amount for Tax Paid
at Source” deduction on your excise
tax return, or
Request a refund from the
Department
21
Example - Tax Paid at Source Deduction
Big Little Construction Co.
Gross contract price of remodel (7.8% sales tax) 50,000
Materials purchased for job 17,700
Materials delivered to Eatonville site (7.8% sales tax) 12,000
Materials picked up at Auburn store (9.5% sales tax) 5,700
22
Example - Tax Paid at Source Deduction
23
Example - Tax Paid at Source Deduction
24
Example - Tax Paid at Source Deduction
Eatonville Auburn Total sales tax
remitted:
32,300 + 5,700 - 5,700 $2,422.50
25
Example - Tax Paid at Source Deduction
Collected
$3,900 sales
tax (50,000 x
.078)
Eatonville Auburn Total sales tax
remitted:
32,300 + 5,700 - 5,700 $2,422.50
26
Example - Tax Paid at Source Deduction
Collected Tax paid at source: $1,477.50
$3,900 sales Eatonville – 12,000 x .078 = 936.00
tax (50,000 x Auburn – 5,700 x .095 = 541.50
.078)
Eatonville Auburn Total sales tax
remitted:
32,300 + 5,700 - 5,700 $2,422.50
27
Example - Tax Paid at Source Deduction
Collected Tax paid at source: $1,477.50 Check:
$3,900 sales Eatonville – 12,000 x .078 = 936.00
3,900 –
tax (50,000 x Auburn – 5,700 x .095 = 541.50 1,477.50 =
.078)
2,422.50
Eatonville Auburn Total sales tax
remitted:
32,300 + 5,700 - 5,700 $2,422.50
28
Resources
• dor.wa.gov/resellerpermit
• Reseller permit brochure
• Online video tutorial
• Online lookup
(available January 2010)
30
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