You might have seen recent news reports about the new so-called “Internet tax.” Starting July 1, Washington joined 18 other states in requiring some e-commerce businesses to collect sales tax. Tax will be collected based on the location of the buyer, not the seller.
But what happens when you buy something in another state and bring it here yourself? You’re supposed to pay a “use tax” on out-of-state purchases when no sales tax, or less tax than is due in Washington was paid – like those jeans you bought in Oregon or that stereo you picked up in Idaho. But most people either ignore the requirement or have never heard of it.
Recently, my friend fell into the latter category. His parents bought him a car in Oregon. When he contacted the Department of Licensing to license the vehicle in Washington, he was told he needed to pay $1,300 in use tax. He was surprised to find out that even on gifted items, such as his car, it was his responsibility to pay unless the donor did.
For the most part, the government relies on the honor system to collect the use tax. Residents can pay use tax at www.dor.wa.gov or by mailing a Consumer Use Tax Return.
There are certain exemptions to the use tax. For example, use tax is not due on prescription drugs, certain medical items or food. People who move to Washington are exempt from paying use tax on their household goods and cars if they purchased them at least 90 days prior to the move. But boats, motor homes, trailers, and other recreational vehicles are subject to the tax, even if they were bought earlier.
Unpaid use tax costs our state and local governments millions of dollars in revenues each year, according to the Department of Revenue. Next time you make an out-of-state purchase, remember Washington’s use tax.
- Lisa Borkowski
Public Affairs and Consumer Protection Intern