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With Governor Inslee signing the 2019-2021 Washington State Operating Budget into law, several changes to our current tax law took place. One of specific importance to Washington wineries is the significant change to the nonresident sales tax exemption when a customer from a qualifying state makes a purchase at our winery or tasting room. Below is information on what the changes mean for all tax payers and collectors. Important note: this tax collection change does NOT apply to sales of wine delivered to customers outside the state.
Courtesy of the Washington State Department of Revenue
Background
As you may know, during the 2019 session, the Legislature modified the nonresident exemption. Effective July 1, 2019, the retail sales tax exemption is no longer available at the point of sale. Instead, eligible nonresidents who have paid at least $25 in state sales tax on qualifying purchases may apply for a refund of the state portion of the retail sales tax from the Department on an annual basis.
Sales of wine
Beginning July 1, 2019, wineries in Washington must collect sales tax on their sales of wine and other tangible goods sold to nonresidents when the nonresident customer takes delivery of those goods in this state (i.e. customer takes possession of the goods in Washington at the time of sale.) The exemption will no longer apply at the point of sale, no matter where the customer resides/lives.
Interstate and foreign sales
If a Washington winery delivers wine or other items to a customer at a location outside the state, those sales continue to be exempt from Washington’s retail sales tax and retailing B&O tax as “interstate and foreign sales.” There is no change to the way these sales are taxed or reported. Wineries do not need to start collecting Washington taxes on products shipped for delivery outside the state.
For more information, see our Special Notice on our website.