An excise tax is a tax or duty imposed on manufactured goods. This tax is levied during the manufacturing process, not at the time of sale. This tax helps the government fund public services and programs. It also helps the government fight tax evasion. This type of tax is collected by the government from businesses and individuals.
Washington the Retail and Restaurant Sales Tax
In Washington, there are two different sales taxes. The first tax is called the retail sales tax and is 20.5%, while the second is called the restaurant sales tax and is 13.7%. These tax rates will give you an idea of how much you’ll need to pay.
However, you should note that some purchases may be exempt from sales tax or be subject to special sales tax rates. The rules vary from one zip code to the next, so knowing which type of sales tax will apply to your purchase is essential.
Washington State Business Excise Tax
A business that manufactures and sells products in Washington state must pay a Business & Occupation (B&O) tax. This tax varies in rate depending on the business classification and is based on the gross receipts from sales. The business owner cannot claim any deductions for materials, labor, or other costs when calculating the amount to pay.
The filing frequency is based on the estimated tax owed. Most businesses must file with the Department of Revenue every three months or yearly. Some businesses can file their excise tax returns electronically.
Business owners that employ employees are also required to pay unemployment taxes. This tax is calculated by multiplying the employee’s wages by the employment security rate. There is a maximum amount that can be due each year.
In the past, Washington retailers had to collect sales tax based on their point of origin. However, in recent years, Washington has adopted a destination-based sales tax system called the streamlined sales tax. This means that the point of sale is no longer the same as the point of delivery, and the retailer must collect sales tax at the buyer’s location.
Washington State Real Estate Excise Tax
The Washington state excise tax on real estate is a levy that applies to most real estate sales. It is based on the selling price, which includes any mortgages, liens, or other debts. It is usually paid by the seller, but in some cities and counties, the excise tax may be split with the buyer.
An entity owning real estate in Washington is responsible for 50% of the real estate tax if the ownership is divided evenly between four people. Typically, this is a partnership or LLC with four equal members. To determine if a transaction is subject to the excise tax, you must fill out an affidavit. The affidavit should cite the Washington Administrative Code and Washington State Statutes.
The Washington state excise tax law has several exemptions that may lower the amount of tax that needs to be paid. EHB 1643 adds several transactions to the list of exempt transactions. The tax does not apply to property given to a nonprofit housing provider, a public housing authority, or a local government.