Reseller Permits To Replace Self-Issued Resale Certificates In Washington State Effective January 1, 2010

The days of self-issued resale certificates in Washington state are numbered. Effective January 1, 2010, buyers in Washington must provide a reseller permit or a Streamlined Sales and Use Tax Agreement ("SSUTA") exemption certificate with the buyer's reseller permit number in order to purchase goods and services for resale without paying sales tax. Buyers that are not required to be registered with the Washington Department of Revenue (the "Department") may provide a Multistate Tax Commission ("MTC") exemption certificate in lieu of a reseller permit or SSUTA exemption certificate. Businesses that have not obtained a reseller permit or provided a valid SSUTA or MTC exemption certificate must pay sales tax on their purchases for resale, but may recover the tax by claiming a "taxable amount for tax paid at source" deduction or by requesting a refund.

The Department began automatically issuing permits in September. Businesses that did not automatically receive a permit and anticipate making purchases of goods or services for resale should apply for one. Applications are available for download at the Department's Web site. (http://www.dor.wa.gov/Docs/forms/Misc/AppWaStateResellerPermit.pdf ) Alternatively, businesses may apply online. (https://fortress.wa.gov/dor/efile/Content/DoingBusiness/MyAccount/FortressLogon/Default.aspx )

The Department's Criteria for Issuing a Reseller Permit

The Department recently published criteria for determining whether a business is eligible for a reseller permit, WAC 458-20-10201.

Criteria for Businesses Other Than Construction Contractors

A business, other than a construction contractor, may receive a reseller permit if it satisfies the following criteria:

(1) The business has an active tax reporting account with the Department;

(2) The business, if it reports on a quarterly or monthly basis, reported gross income in the immediately preceding six months, or the business, if it reports on an annual basis, reported gross income on its last annual return; and

(3) 5% or more of the business's gross income during the preceding period addressed above was reported under a retailing, wholesaling or manufacturing B&O tax classification.

The Department, however, may deny an application if it determines: (1) the applicant is not entitled to make purchases at wholesale based on the nature of the applicant's business, (2) the applicant was assessed a penalty for misuse of a resale certificate, or (3) denial is in the best...