So I did my company tax report to the DOR today (submitted $1,100 to be wasted promptly) and noticed I had an email from them that I hadn't read.  I'm supposed to go back to 2010 and report all the use tax that I should have reported between then and now.  Awesome.  I do buy the random thing online for work, like clothes and repair parts (since there are no decent repair shops in Tacoma anymore) but not enough to really bother with.  Looks like I missed the deadline, wonder what they are going to do...


State of Washington
DEPARTMENT OF REVENUE

Check your records for unpaid use tax. Respond by October 25, 2014.

Dear Taxpayer:

Please look for unpaid use tax

Most businesses providing construction services with locations in Washington owe some use tax.

Please review your purchases since January 1, 2010 and take the actions outlined below.

Required actions

After reading this message:
1.   Go to our online Use Tax Response page. Dor.wa.gov/UseTax
2.   Enter the 9-digit tax registration number found at the top of this screen.
3.   Enter the Group Code: ****
4.   Answer the questions and submit.

If you owe use tax, be sure to report and pay the use tax due on your next excise tax return to avoid penalties and interest.

If you do not owe use tax you can clear your account on our online Use Tax Response page by following the steps above.

What is use tax?

Use tax is a tax on goods and retail services that you use as a consumer (see `Tips` section below) that were acquired without paying sales tax. Either sales tax or use tax applies to goods and retail services consumed in this state.

Report Use tax

If you owe use tax, please take one of these actions:

Review goods and services acquired since January 1, 2010 and identify those that were untaxed. (See Tips in the next section below.)
Use the chart below to estimate your use tax liability.
According to our statistics, construction businesses report the following annually:

Annual Gross Business IncomeAnnual Average Value of Items Subject to Use Tax
Less than $3,000,000                                                $26,803
$3,000,000 - $9,999,999                                         $218,384
$10,000,000 - $100,000,000                                        $736,299
Greater than $100,000,000                                        $3,044,174
To use the chart, multiply the Annual Average Value times the number of years to determine the amount you must report for use tax on your excise tax return.

Tips for finding unpaid use tax

If you are reviewing your purchases for unpaid use tax, look for purchases made:

Directly from out-of-state sellers.
Through the Internet, telemarketing, mail order, classified ads, or other means.
Purchases for dual purpose (e.g., partly speculative or public road construction and retail construction) that were made with a reseller permit.
For retail services, such as office remodeling or equipment repair (including both materials and labor).
Examples of items purchased or rented that are subject to use tax if sales tax was not paid at the time of purchase, include:
Computers, peripherals and prewritten software
Digital products
Business signs
Tools and equipment
Supplies that do not become a component part of a construction project (e.g., rags, tape, sand paper, double head nails, etc.)
Equipment rentals with and without an operator
Materials installed into a project subject to B&O tax under public road construction or federal government contracting classifications
Security systems
Telephone and cable infrastructure and equipment
Exception: Merchandise/inventory and retail services purchased for resale without intervening use are not subject to sales or use tax. Complimentary/promotional items are subject to use tax.

If you do not respond

This letter serves as written instructions to you. If you do not respond, you may be subject to interest and penalty.


For more information

Online Use Tax (http://dor.wa.gov/content/FindTaxesAndRates/UseTax/) page.

Online Construction Guide ( dor.wa.gov/constructionguide)

Request a ruling (dor.wa.gov/rulings) regarding the application of use tax to your business.

Well, you can be audited...

+1

Wow....state MUST be desperate for $$$.  Typical, they go after businesses.......

Well, to the OP, it's up to you to comply or tell them you didn't buy anything from out of state.....glad I don't get that...

Sorry I wasn't very clear in my first post.  I spend very very little online for my business, I'm a framer and primarily only supply services.  Builders buy the materials directly and those are done in state.  I did buy a pair of rain pants last winter online because I couldn't find them locally and paid use tax like I should.  I only use resale certificates for what they are intended for.  I just think since I report so little they assume I'm cheating.

The part that got me though was this:

Annual Gross Business Income > Annual Average Value of Items Subject to Use Tax
Less than $3,000,000 > $26,803
$3,000,000 - $9,999,999 > $218,384
$10,000,000 - $100,000,000 > $736,299
Greater than $100,000,000 > $3,044,174
To use the chart, multiply the Annual Average Value times the number of years to determine the amount you must report for use tax on your excise tax return.

If I don't go back and review all my records they'll make it easy on me and just assume that I spent $26,803 per year and pay use tax on that amount ($2546 x 5 years = $12,730)

Yep save your records. Only do it for your business, AFAIK they won't audit individual stuff (no I'm not a lawyer, and not an expert!), but keep records and prove your business stuff, they have YEARS to come back to audit you.

Yup, have all my records going back ten years.

I do wonder how much use tax they collect from individuals every year.