A state tax people forget to pay

By Tony Buhr

The Wenatchee World

Have you received a letter telling you to pay taxes to the state Department of Revenue for online purchases?

Pat Oldham, of East Wenatchee, said she received three letters in January and February telling her she needed to pay taxes for online purchases she made out of state. Oldham contacted the Wenatchee World about a week ago.

She made the purchases a year ago in January 2018, for things like toys, personal checks and a dress. Her total taxes were about $19 on a little over $300 worth of items.

She didn’t understand why she received the letter at first, Oldham said. Her personal tax adviser told her she needed to calculate and send money back to the state for her online purchases.

“I’m not objecting to them doing that,” she said. “I am objecting to the fact that it wasn’t clear to me,” that I needed to pay that tax.

Use tax isn’t anything new, it’s been around since the 1930s, said Patti Wilson, state Department of Revenue marketplace fairness project manager. Anytime people buy outside of Washington state, bring the item back and don’t pay sales tax on that item, they are supposed to pay a use tax.

“It is something that has been around for many years,” Wilson said. “Some people feel that it is a new law and it is not.”

What is new is that out-of-state businesses that sell items to Washington state residents need to send a use tax form to their customers to fill out, Wilson said.

Businesses that generate less than $100,000 in sales from residents in Washington state can elect to send customers the use tax form, she said. But businesses that make more than $100,000 in sales must collect sales tax.

That’s why people don’t receive a use tax form when they make a purchase on Amazon, Wilson said. Amazon already collects the sales tax on all items.

A bill passed in 2017 by the Washington state legislature removed a section of the law that said businesses were not required to collect sales tax for online purchases, according to the bill’s language.

The department estimated in 2017 that it would collect an additional $30.2 million a year in sales tax revenue from the new law, according to Department of Revenue documents. It also estimated that local governments across the state would collect $11.8 million a year in additional sales tax.

The Department of Revenue has the ability to go after people with fines and interest if they don’t pay their use taxes, Wilson said. But most of the time what people buy wouldn’t generate much in the way of sales taxes and it isn’t worth the cost of pursuing.

The Department of Revenue is more likely to prosecute a person who buys a vehicle out of state, she said.

Still it impacts how purchasers like Pat Oldham may shop online in the future, Oldham said.

“I’ll be watching to see who collects taxes or not and if they’re not going to than those may be the vendors I choose not to use because this is an annoyance to me,” Oldham said.