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Sales tax exemption eligibility - items acquired for resale
What is a Resale Certificate?
For which activities may the Resale Certificate be used?
How is the Resale Certificate to be completed at the University of Washington?
Tax due upon resale
Exemptions for purchases made for out-of-state use

Sales tax exemption eligibility - items acquired for resale

The University of Washington (UW) normally has to pay Washington State (WA) and any applicable local sales taxes on most purchases it makes. However, if certain criteria are met, the UW may be eligible for a sales tax exemption on items acquired by the university for resale to a third party.

What is a Resale Certificate?

A WA Department of Revenue (DOR) Resale Certificate is a document that must be provided to the seller by a buyer who is purchasing an item for resale if that buyer plans to claim the sales tax exemption for that purchase. If the Purchase Order (PO) is issued by the university's Purchasing Department, the UW provides the seller with the necessary documentation requested in the Resale Certificate via an insert (variable) in the Purchasing Accounting System (PAS). Please see below for the required process in order to get a Resale Certificate completed.

For which activities may the Resale Certificate be used?

A registered business may only complete a Resale Certificate for purchases of property for:

Resale in the regular course of business without intervening use by the reseller, or
Use as an ingredient or component part of a new article of tangible personal property to be produced for sale, or
Use as a chemical used in processing a new article of tangible personal property to be produced for sale.

How is the Resale Certificate to be completed at the University of Washington?

Once a departmental representative has identified that the product to be acquired is for resale, that person should do the following:

When getting a quote for a product, or when placing an order, notify the vendor that the purchase will be exempt from the sales tax as it is being acquired by UW for resale to a third party, AND
Inform the Buyer in the Purchasing Department that this purchase is tax exempt because the product is being acquired for resale. This is generally done via narration in the requisition (comments, item description, or notes) or object and sub-object codes. This will prompt the Buyer to include a paragraph in the PO, which will act as a Resale Certificate to be presented to the seller.

NOTE: If placing a Confirming Order (an order under $3,300) directly with a seller and a Resale Certificate is requested by the seller, make a note in the comments on the requisition requesting the Buyer to send a Confirming Purchase Order with the required Resale Certificate language.

Tax upon resale

Once a product produced from the tax exempt materials is sold by the UW department, the department will be responsible for collecting the sales tax from the party purchasing the product from the university. If the product is to remain at the UW for the university's own use, the UW will have to pay the use tax; the department that placed the order must contact the UW's Accounts Payable department to charge the department budget for the appropriate use tax amount.

Exemptions for purchases made for out-of-state use

Goods delivered and received in Washington: The retail sales tax generally applies to all retail sales made within Washington if the goods are to be delivered in Washington. This general rule applies irrespective of whether the purchaser may use the property outside the state. Thus, where tangible personal property located in Washington at the time of sale is received by the purchaser or its agent in-state, and the purchaser or its agent exercises ownership over the property, the sale is subject to the retail sales tax under the retailing or wholesaling classification. The tax applies even though the purchaser or its agent may intend to, and thereafter does transport or send the property out of state for use or resale there.

Goods delivered and received outside Washington: When the seller delivers the goods to the purchaser where the point of delivery is outside of Washington, the goods qualify for a sales tax exemption. The purchaser and seller must show proof of delivery. Acceptable forms of proof are:

Contract or agreement of sale, if any,
If shipped by for-hire carrier, then a waybill, bill of lading, or other contract of delivery indicating the seller has delivered the good to the for-hire carrier for transport to the purchaser at a point outside the state with the seller shown on the contract of carriage as the consignor and the purchaser or its agent as consignee, or
If sent by the seller's own transportation equipment, then a trip-sheet signed by the person making delivery for the seller showing the following:

The seller's name and address, and
The purchaser's name and address, and
The place of delivery, and
The time of delivery to the purchaser together with the signature of the purchaser or its agent acknowledging receipt of the goods at the place designated outside the state of Washington.

When making a purchase of goods for use outside the state of Washington, it is important to communicate directly to the seller that the sales tax will not apply. When a requisition is submitted to the Purchasing Department for such a purchase, the ordering department must state in the comments that the order should be flagged as exempt and clearly state that the goods are for use outside of Washington. Please be certain that the requirements noted above apply to the purchase.

The buyer will flag the order as exempt as it is processed, and the appropriate language to the seller will be included on the purchase order when applicable.

Exports (RCW 458-20-193C): The retail sales tax does not apply if the seller agrees to and does deliver the goods to the buyer at a foreign destination or to a carrier consigned to and for transportation to a foreign destination or to the buyer at shipside or aboard the buyer's vessel or other vehicle of transportation under circumstances where it is clear that the process of exportation of the goods begun. Such exportation will not necessarily be deemed to have begun if the goods are merely in storage awaiting shipment, even though there is reasonable certainty that the goods will be exported.

In all situations, there must be a certainty of export and the process of export must have started. To be tax exempt upon export sales, the seller must document the fact that he placed the goods into the export process. The following may be shown by the seller as proof of export to foreign destination:

A bona fide bill of lading in which the seller is shipper/consignor and by which the carrier agrees to transport the good sold to the foreign buyer/consignee at a foreign destination, or
A copy of the shipper's export declaration, showing that the seller was the exporter of the goods sold, or
Documents consisting of:
Purchase orders or contracts of sale which show that the seller is required to get the goods into the export stream, and
Local delivery receipts, trip sheets, waybill, warehouse releases reflecting how and when the goods were delivered into the export stream, and
When available, United States export or customs clearance documents showing that the goods were actually exported, and
When available, records showing that the goods were packaged numbered or otherwise handled in a way which is exclusively attributable to goods for export.

All purchases made for goods to be exported without intervening use must be clearly communicated to the Purchasing Department in advance of the purchase. Purchasing will flag the requisition as exempt, arrange to include the appropriate language in the purchase order, and provide the seller with the appropriate documentation.

For additional information on the WA sales and use taxes, including how to correct for over/under charges of the use tax: Please see the UW's Accounts Payable department's Sales and Use Tax webpage.

If you still need further assistance: You may refer to the DOR's website (http://dor.wa.gov/content/FindTaxesAndRates/) as a resource for information, but please refrain from contacting the DOR directly with any inquiries that you may have. If your questions remain unanswered and you need to speak to someone, please contact:

Purchasing Department: Mark Conley at (206) 543-4211; mconley@u.washington.edu ; or,
Accounts Payable: Pramilla Chand at (206) 616-9021; pchand@u.washington.edu ; or,
Accounts Payable: Julie Condit at (206) 685-0571; jacondit@u.washington.edu