Tax & Accounting Blog

Washington State Discusses the Tax Treatment of Chemicals Used to Treat Drinking Water

Indirect Tax, ONESOURCE, Sales and Use Tax February 15, 2013

Sunset Water

The Washington Department of Revenue issued guidance regarding the tax treatment of chemicals used to treat drinking water.

Chemicals that are used to treat drinking water but that do not remain with the water when delivered to the customer will be subject to sales or use tax. For example, ozone is a chemical that is typically used in the water treatment process but does not remain with the final product that is delivered to the customer. The sale of this chemical would be subject to sales and use tax.

Chemicals that are used to treat drinking water and remain with the water when delivered to the customer will not be subject to sales and use tax. For example, chlorine and fluoride are commonly used to treat drinking water and remain with the final product that is delivered to the customer. The sale of these chemicals would be exempt from sales and use tax.

This exemption can be claimed using a reseller permit. Customers who have previously paid sales and use tax on exempt chemicals may apply for a refund online with the Washington Department of Revenue.

For more information, please visit: http://dor.wa.gov/Content/GetAFormOrPublication/PublicationBySubject/TaxTopics/DrinkingWater.aspx