Revenue Automatically Renewing Reseller Permits for Most Contractors
OLYMPIA, Wash., Oct. 12, 2010 —The Department of Revenue is sending renewed reseller permits to nearly 18,000 construction businesses this month.
The permits allow the businesses to make purchases for resale without paying sales tax. The permits, which would have expired on December 31, 2010, are now valid through 2011.
The state Legislature simplified the permit renewal process this year by allowing the Department to automatically renew permits to construction businesses that qualified based on tax reporting history. Prior to that change, the businesses had to reapply for the permits each year.
Later this month, more than 3,000 construction businesses will be notified that their reseller permits will not be automatically renewed. They can reapply for a reseller permit, use other approved exemption certificates, or pay sales tax upfront and take qualifying deductions on their tax returns.
Taxpayers who do not provide a copy of a reseller permit or other acceptable exemption certificate to wholesalers must pay retail sales tax when buying goods and services for resale. Normally, resellers don’t pay the retail sales tax because they collect it when the product is sold to customers.
In 2009, the state Legislature replaced self-issued resale certificates with Department-issued reseller permits to reduce misuse of the resale system. State and local governments had been losing an estimated $100 million annually when businesses bought products tax-free for their own use rather than for resale. Complete reseller permit information is online at dor.wa.gov/resellerpermit.
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