Our guest blog post this week is from Connie Lewis at CliftonLarsonAllen. Connie’s practice focuses on state and local tax matters.
We are seeing more Washington Department of Revenue audits with our clients as the state attempts to meet their budget needs. One area typically overlooked is the sales/use tax paid on items you use for your business. Be careful if you purchase an item online or in another state that doesn’t have sales tax and bring it back here to Washington. If you purchase an item online from a company that doesn’t have a filing requirement here in Washington they are not required to charge you sales tax. Your business as the “user” is then required to pay the use tax (same rate as the sales tax) on your next business tax return.
Also beware of “free” items that you may receive to make presentations. If you receive samples from a company that you represent which you use in your sales presentations you are required to pay the use tax on the “fair market rental value” of the item even if you haven’t paid anything for the item. The term is called “bailment” and the department is looking for these types of transactions when they audit businesses.