B.C. tax exemption hearing moved back

By Ryan Wynne

The Department of Revenue (DOR) will have to wait a bit longer before advising Washington retailers that British Columbia residents can buy goods in Washington without paying sales tax.

A restraining order barring the department from sharing that opinion with retailers will remain in place for an extra week.

The order is part of a case in which local governments have banded together to challenge a recent DOR ruling that would allow Canadian shoppers to forgo paying sales taxes on some purchases in Washington.

According to legal staff for the city of Bellingham, the hearing, which was originally scheduled for July 9, was moved to July 16.

The restraining order was issued by Skagit County Superior Court Judge Susan Cook in response to an action filed by the city of Bellingham and Whatcom County.

Local governments contend that British Columbia and Ontario’s new harmonized sales tax is in fact a sales tax, and are disputing the DOR’s assessment that the new system is not a sales tax. If Cook determines the DOR’s ruling is correct, B.C. residents would be entitled to claim the tax exemption under a 1965 state law that provides sales tax exemptions for residents of any state or province with a sales tax of less than 3 percent.

Using available figures, Bellingham Finance Director John Carter estimated that city sales tax collections could be reduced by $600,000 to as much as $1.3 million per year.

As per the judge’s order, retailers that offer the exemption may be liable for any unpaid tax if the court determines that B.C. residents should not have been afforded the nonresident sales tax exemption.

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