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Burdened with Collecting and Managing Reseller Permits?
Allan G. Steinman, MBA, CPA
Principal, Tax Practice; Director of Accounting Services
March 22, 2010
One hundred million dollars, annually: It's the amount that Washington State loses each year in uncollected state and local sales taxes―and a significant revenue-enhancement opportunity at a time of growing budget deficits.
To enhance the effectiveness of the state's sales tax collection efforts, the legislature enacted new rules effective January 1, 2010. If you sell products or services, you're required to obtain reseller permits from buyers who claim exemption from retail sales tax. Otherwise, it's generally your responsibility to prove the transaction was not a retail sale. (To learn more about reseller permit requirements, refer to our previous article Buy Products or Services for Resale?)
As a consequence of the current law, many sellers find themselves over-burdened in collecting and managing their buyers' reseller permits. To help ease that burden, last week Governor Chris Gregoire signed legislation that "improves, clarifies, and corrects" aspects of the existing law.
Among other provisions, the new rules will allow sellers to verify reseller permits electronically―which relieves them of the responsibility of managing paper copies. The new rules also allow the Department of Revenue to adopt a uniform expiration date for reseller permits, further simplifying administration.
The bill (SHB 2758) as passed by the legislature and signed by Governor Gregoire, is available online. You can also view a summary of the bill's provisions, drafted by the Senate Committee on Ways & Means.
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