My wife and I recently started a small contract-research business in Washington State, and are filling out our state tax forms...Much as I've griped about the IRS over the years, they are positively gregarious in contrast to WA State's scarcity of explanations in their forms.It is the Use Tax which I'm not sure I understand. After reading through everything they sent, and looking through their website, I understand a Use Tax to be a tax on things that I purchase without having paid WA state sales tax on.Questions:What about when I've paid sales tax from a different state? We often order chemicals and reagents from other states - these are consumed in the process that provides our service, research. Is it only "equipment" type stuff that gets taxed, or consumables as well?I was also surprised to find that there are no deductions for costs of doing business. It would seem to me that one could lose money in a tax year and then STILL owe tax, which on the face of it at least to me, doesn't make much sense.I'm sorry if these questions are awfully basic, but it's rather new to me!Thanks in advance, Patrick
One further issue which I forgot to include.Would the Use Tax apply to used equipment we purchased at auction (at an in-state University, upon which no sales tax was charged)? Complicating this (at least to me) is that the one or two pieces of equipment we wanted were part of several palettes of used stuff, much of which was junk, not fit to use, or which we have absolutely no use for. Is used stuff subject, and do we actually have to USE the stuff for it to be taxed?Thanks again!
As a small business owner in WA state, I agree that the taxes are confusing. We sell services, so we don't have the use tax. However, I went to one of their tax workshops and asked all sorts of questions and got answers.They had a tax auditor there. It was helpful. The link is: http://dor.wa.gov/menu/services/workshops.htm or call 800-747-7706 to find one in your area.As for losing money but still paying taxes - you're right, it could happen. (Tax is on gross reciepts, not net income).Kathy
Kathy - Thanks for the reply.So are you saying that service businesses are exempt from the Use Tax, or that your business is a service that doesn't use anything that would trigger the Use Tax?I am still unclear as to whether equipment purchased used gets hit, and also if the same equipment is taxed each year, or only once.Again, I fear I am asking stupid questions, but my expertise is really elsewhere!Thanks again, Patrick
Patrick - Sorry to be so long in responding. Up to now, I haven't had any run-ins on use tax but I do think that we could fall under it, even as a service business. For example, if I bought a computer in Oregon (no sales tax) and brought it into Washington I would have to pay WA sales tax (I think that's the use tax you're talking about, I'm a little out of my depth here so feel free to disregard if it seems to make no sense). The WA auditor explained in the session I went to that, technically, if you bought something in Oregon - even for personal use - you should pay WA sales tax once you bring it into WA to use. In this example the use tax would be a one-time deal.Again, feel free to ignore these comments if I'm way off base.Kathy
Kathy - Thanks; that jibes with what I _think_ I've learned.. ;)Did the taxes last night online (nice of the state to put it online!). Unfortunately, we spent a couple of thousand dollars on equipment from out of state (can you say Ebay?), and so our tax bill will be higher than it would have otherwise. Ah well, better to do it right the first time, eh?Thanks for your help! - Patrick
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