Sales Tax State Activity Update December 2005

Washington Adopts Emergency Rules Surrounding Promotional Materials

Effective October 28, 2005, emergency rules were adopted to reflect the appropriate definitions for WAC 458-20-141, which explains the sales and use tax reporting responsibilities of persons who engage in duplicating activities or who provide mailing bureau services and WAC 458-20-144, which explains tax reporting responsibilities of persons engaged in printing activities. Both rules had been revised in January, 2005, with an effective date of July 1, 2005.

One of the major changes in the January 2005 revision was the removal of language stating that a deduction from the measure of tax was available where a mailing bureau or printer purchases postage for a customer and charges that customer for the postage. This revision explained that amounts received from a customer for postage costs incurred by the seller are, under the law, included in the measures of both taxes. The change to Rule 141 also removed the language under which postage charges were not included in the measure of tax because the charges qualify as advances or reimbursements.

Also, effective October 28, 2005, an emergency rule was adopted for WAC 458-20-17803, which explains the use tax reporting responsibilities of persons who distribute or cause to be distributed tangible personal property promoting the sale of products or services. While the January 2005 rule action had a July 1, 2005 effective date, the rule explains a use tax responsibility that resulted from provisions of chapter 367, Laws of 2002 that became effective June 1, 2002.

The thrust of the current rule making action is that Chapter 514, Laws of 2005, provides a retail sales and use tax exemption for delivery charges of direct mail advertising material, if the charges are separately stated. These provisions of chapter 514 which became effective May 17, 2005, supersede the instructions regarding charges for postage costs in these rules.

The emergency adoptions to these three rules are due to expire February 25, 2006 unless a permanent rule is adopted before this date.

To read more use the following links: (All links lead to the Washington State Department of Revenue website.) Duplicating activities | Printing Industry | Use tax On Promotional Materials Washington Department of Revenue, Website, October 2005