State defines tax rules regarding B.C. customers

The Bellingham Business Journal

The Department of Revenue has posted instructions on its website for retailers who may be selling goods tax-free to British Columbia residents beginning July 1.

British Columbia residents will become eligible for the tax break because the province is shifting from a Provincial Sales Tax to a Harmonized Sales Tax (HST) on July 1. Despite the name, the combined federal-provincial HST is a value-added tax and not a sales tax.

A 1965 Washington law allows Washington merchants to sell products exempt from sales tax to residents of states and provinces that have either no sales tax or a sales tax of less than 3 percent.

Currently, residents of six states, four U.S. possessions, and eight provinces qualify for the exemption, and both British Columbia and Ontario will as well after June.

Retailers are not required to make tax-exempt sales. If sellers choose to collect sales tax, buyers cannot get a refund from the department of revenue.

The exemption applies only to the sale of tangible personal property that will be used outside Washington and does not apply to lodging, meals, or other retail services that are provided in the state.

A seller making exempt sales to eligible nonresidents must keep records to prove the buyers qualified for the tax exemption in the event the seller is audited. Generally the seller can record the information from the purchaser’s driver’s license (ID number, expiration date, purchaser’s name, and state of residency).

Complete information on the record-keeping requirements is available at


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