Tax & Accounting Blog

50% Penalty for Misuse of a Reseller Permit in Washington State

Blog, ONESOURCE, Sales and Use Tax April 10, 2017

A resale permit or resale certificate allows retailers and wholesalers to purchase items for resale without paying sales tax.  When your business uses a Washington State reseller permit you must be careful to only use it for items that you will directly resell in the regular course of your business.  If you are making mixed purchases, where some items will be resold and some will be used in the business, it is important to have the vendor charge you tax on the items to be used in the business or self-assess the appropriate use tax in a timely manner.  According to the Washington State Department of Revenue, anyone found using a reseller permit inappropriately will owe the tax due and a 50 percent penalty, even if no fraud was intended.  A 50 percent penalty can add up pretty fast so it is important to keep a close watch on your purchases and ensure that the appropriate sales tax is paid to the vendor or you pay the corresponding use tax directly to the Department of Revenue.  You can find out more about Washington State reseller permits here.