Private mailing business tax guidePrivate mailing business tax guide
For specific questions about Washington excise taxes, please contact us.
Updated January 2015
Your business is considered a private mailing business if:
- You package items for mailing.
- You arrange for packages or goods to be shipped through U.S. Postal Service and private delivery companies.
- You rent private mailboxes.
- You sell postage stamps, packaging supplies, office supplies, and other miscellaneous retail items.
- You supply equipment for customers to make copies, send faxes, and scan documents. You provide computer and Internet access.
A private mailing business will typically be subject to the following taxes:
- Business and Occupation Tax
- Retail Sales Tax
- Use Tax
- Reseller Permit Tax
- Litter Tax
If you need further assistance, visit our assistance page.
Business and Occupation (B&O) taxBusiness and Occupation (B&O) tax
Classification: Retailing B&O tax
This tax classification applies to you if there are sales (or rental) of goods and certain services to customers. You need to report the income of such sales under this classification. The Retailing B&O tax rate is 0.471 percent (.00471) of your gross receipts.
In addition, retail sales tax must also be collected on all sales subject to the retailing classification of the B&O tax, unless a specific retail sales tax deduction or exemption applies.
To see a more specific list of activities and tangible items that apply to this tax classification, visit the Retail Sales Tax section.
Classification: Wholesaling B&O tax
This tax classification applies to you if there are sales of goods and certain services to a person who will resell to others. You need to report the income of such sales under this classification. The Wholesaling B&O tax rate is 0.484 percent (0.00484) of your gross receipts.
If you are selling items at wholesale you must receive a reseller permit from the buyer. Keep the reseller permit in your records for five years.
Example: A private mailbox business runs out of shipping boxes (packaging). You can sell a portion of your supply at wholesale if the business owner gives you a reseller permit.
Classification: Manufacturing B&O tax
This tax classification applies if you manufacture products in Washington, whether for your own use or for sale (as tangible property) to another person. The tax amount is based on the value of the manufactured products or by-products. The Manufacturing B&O tax rate is 0.484 percent (0.00484) of your gross receipts.
For products manufactured and sold in Washington, a business owner is subject to both the Manufacturing B&O Tax and the Wholesaling or Retailing B&O Tax. However, you may be entitled to the Multiple Activities Tax Credit (MATC). The MATC is also known as Schedule C. Basically, you can take a credit against the Manufacturing B&O tax in an amount equal to the Wholesaling or Retailing B&O tax due on the selling activity. When you use the MATC, it eliminates the duplicate B&O tax paid on goods that are manufactured and sold in Washington.
Example: Annie’s Mail Store has an area, operated by Annie or her employees (separate from the self-service copy machines), where special order copies are made for customers. Income from sales of the copies is reported under the Manufacturing B&O tax classification, as well as the Retailing and/or Wholesaling tax classifications. A MATC is completed when Annie’s business tax return is prepared.
Visit the department’s website for a copy of the MATC form. WAC 458-20-19301 gives more information on reporting requirements. People involved in the business of printing activities can also refer to WAC 458-20-144 (Printing industry).
Classification: Service and other activities B&O tax
Generally, when a business provides professional or personal services (including being an agent to third parties) the income (including commissions) from the activity is reported under the Service and Other Activities B&O tax classification. Income that isn’t classified anywhere else is also taxable under this classification. The Service and Other Activities B&O tax rate is 1.5 percent (0.015). Sales tax does not apply to this income.
Amounts received from the following service activities are reported under the Service and Other Activities B&O Tax Classification:
- Postage stamps, government postage, or stamped envelopes sales – This is based on the selling price that exceeds the face value of the product. Example: You sell a book of stamps for $8 and the face value of the book of stamps sold totals $7. The amount taxable is $1.
Notary fee – The fee received for notarizing a document.
- Money order fees, Western Union money transfers, travelers check fees – Fees received for the sale of money orders, traveler’s checks, and money transfers.
- Mailbox rentals – Rental income received for mailbox rental (rented or leased for more than 30 days). Mailbox rentals are considered a “license to use real estate.” A license grants the right to use the real property of another but does not give exclusive control over the property.
- Internet access and computer usage – The income from such activity is reported. (A customer’s temporary use of a computer and Internet access is not subject to retail sales tax.)
- Late fees – Income from late fees.
Custom or commercial packaging
Packaging services are taxed on the activity you perform for the customer. The income received is generally reported under the Service and Other Activities B&O tax classification. The amount for packaging services (labor) must be stated separately from the cost of shipping supplies or materials.
Sales of shipping supplies or materials to customers are subject to retail sales tax. Items include boxes, crates, labels, and packaging materials. Shipping items that will be resold may be purchased with a reseller permit.
Generally, a private mailing business arranges to ship a customer’s goods through a commercial carrier. The compensation (fee or commission) that your business receives for arranging the shipping is reported under the Service and Other Activities B&O tax.
Retail sales taxRetail sales tax
Retail sales tax
If your business sells retail products or provides retail services to a customer then you must collect retail sales tax. The income from retailing activity is reported under the Retailing B&O tax classification. The Retailing B&O tax rate is .471 percent (.00471) of your gross receipts.
Sales tax rates
Washington’s retail sales tax is made up of the state rate (6.5 percent) and the local sale tax rate. Local rates vary depending on the location. The sales tax rate for items delivered to the customer at the store location (over the counter sales) is based on the store location. The sales tax rate for items that are shipped or delivered to customers at another location within the state is determined by the place of shipment or delivery.
You are responsible for sending The Department of Revenue the correct tax amount, even if you have under collected or did not collect the tax from the purchaser. To determine the correct tax rate to collect, use our online Department’s Tax Rate Lookup Tool or download our mobile device app on the same page. See WAC 458-20-145 for additional information on computing local sales tax rates.
Itemizing sales tax
Retail sales tax must be separately listed on the receipt you provide your customers. The retail sales tax is collected on the selling price of an item and includes any additional charges, such as a fee for handling, shipping, or any other amount that may be separately stated on an invoice.
Collecting sales tax
Self-service copies - A customer using someone else’s duplicating equipment to make their own copies is often called “self-service copying.” Retail sales tax on this activity must be collected unless a sales tax exemption applies. The gross sales are reported under the Retailing B&O tax classification.
Copies made by mailing business for customers – Private mailing businesses often have a separate area where the business makes copies for customers. Retail sales tax is collected from the customer unless the customer gives a completed reseller permit to the private mailing business, or unless a sales tax exemption applies.
When your business manufactures and sells a product, such as making copies for a customer (manufacturing) and selling them (retailing or wholesaling) you must report the income under both the production activity and the selling activity. You then complete a multiple activities tax credit (MATC) so B&O tax is not paid twice on the same activity.
Faxing – Retail sales tax is collected on faxing documents.
Sales of goods – All sales of tangible personal property to customers are retail sales and subject to sales tax unless specifically exempted. For example, sales of postage stamps are exempt from sales tax. A partial list of items subject to retail sales tax follows:
- Calling cards (including prepaid wireless cards)
- Greeting cards and post cards
- Stationary supplies (envelopes, paper, etc.)
- Office supplies (staples, paper clips, tape, etc.)
- Packing supplies (boxes, wrapping, labels, tape, etc.)
- Miscellaneous Items (baseball caps, T-shirts, cup holders, etc.)
Your business may be selling other items subject to retail sales tax.
Use taxUse tax
Use tax is a tax on the use of goods or certain services in Washington when sales tax has not been paid. Goods used in this state are subject to either the sales or use tax, but not both.
Use tax is based on the value of the article or service and includes charges for labor, materials, freight, handling, or any other amount paid or accrued when separately stated on an invoice.
Examples of when use tax is due include:
- Mail order, telephone, or Internet purchases from people or businesses that did not collect retail sales tax.
- Goods purchased with a reseller permit certificate and then used or consumed.
- Tangible personal property gained with the purchase of real property.
- Goods purchased in a state with no sales tax or a tax rate lower than Washington’s.
Reseller permitsReseller permits
Purchasing items with a reseller permit
If you purchase items for resell, you need to complete and submit a reseller permit to the seller (person or business you went through). If the seller does not receive a properly completed reseller permit they must charge you (the buyer) retail sales tax.
Reseller permits may only be used to purchase property or services that are:
- For resale in the regular course of business.
- Part of tangible personal property for sale.
Example: A mailing business can purchase the following items without having to pay sales tax. This is because the items will be resold to customers:
- packing boxes
- greeting cards
If you use items from your own business inventory, the items are subject to either sales tax or use tax.
Example: ABC Mail Store pulls packing boxes from their inventory to use for storing business records. Use tax is due on the boxes because they are not being resold.
See the department’s website for information on reseller permits.
Litter taxLitter tax
If you sell the following items, you are subject to litter tax:
- Household paper and paper products
- Newspapers and magazines
- Soft drinks and carbonated beverages
- Food for human consumption
These products contribute to Washington’s litter problem. This tax is reported and paid on your Excise Tax Return. Visit Washington Administrative Code (WAC) 458-20-243 for additional information.
Telephone information center
For assistance or questions call 360-705-6705.
If you have a tax-related question specific to your business, you may request more specific help. You can email the department at firstname.lastname@example.org and we will send you a binding tax ruling, which is a letter that describes your tax obligation in greater detail. You must include the business name and other business details you find important. Tax rulings are binding on both the taxpayer and the Department of Revenue.
Tax rate lookup tools
To access online, visit dor.wa.gov and select “Find a sales tax rate.” To access through a mobile phone, download the app at http://dor.wa.gov/taxratemobile/.
Local field offices
To locate the office nearest you, visit dor.wa.gov and select “Contact Us.”
Business and Occupation Tax: The B&O tax applies to you if you conduct business activities in Washington. The tax is a gross receipts tax. This means there are no deductions for labor, materials, taxes, or other costs of doing business. There are different reporting classifications for various business activities. Each classification has its own tax rate. If you perform more than one activity, you may be subject to B&O tax under more than one classification.
The most common B&O classifications for private mailing businesses are retailing, wholesaling, manufacturing, and/or service and other activities.
Retail Sales Tax: Business owners making retail sales in Washington must collect sales tax from their customers unless an exemption applies. Generally, retail sales tax is collected on sales of tangible personal property and sales of retail services. The sales tax rate is usually determined by the location where the goods are delivered to the purchaser. Sales tax rates vary around the state. Visit the department’s tax rate lookup tool to help determine your specific tax rates.
Private mailing businesses sell a variety of products that are subject to sales tax. Items include self-service copies, stationary supplies, packing supplies, and other miscellaneous items (tangible personal property).
Use Tax: If you bought an item for use in Washington but did not pay sales tax during the transaction, then you owe use tax or deferred sales tax. The same rule applies when purchasing retail services and not paying sales tax. Exemptions can apply.
Reseller Permit: If you buy goods that can be resold to customers, you need to file for a resellers permit by submitting an application to the department. Examples of items that can be resold to customers are greeting cards, office supplies, packing supplies, etc.