Paper Bag Fees Subject to Tax in Washington

Monday, August 13th, 2012

 
 
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The Washington Department of Revenue recently issued guidance addressing whether paper bag fees charged by retailers are subject to sales tax in the state. The Taxability of Paper Bag Fees, Wash. Dept. of Revenue (Aug. 8, 2012). Several cities in Washington have passed local ordinances that require retail establishments to charge a minimum fee to customers for the use of certain carry-out bags. For tax purposes, these charges are treated as retail sales and are, therefore, subject to retail sales tax and the retailing Business and Occupations (B and O) tax. The charge for selling reusable bags is also subject to the retail sales and B and O tax.

Please note that certain cities, like Seattle and Bellingham, have recently passed ordinances that prohibit the use of plastic carry-out bags and authorize or require the retailer to collect a fee from customers who request paper carry-out bags. This fee is not remitted to the city. Because the retail establishment is not collecting the fee as an agent for the city, the fee is considered a retail sale, so it, too, is subject to the retail sales and B and O tax.


About TTR

Transaction (buying or selling things), Tax (the tax on this activity), Resources (our people, our website, our support services) - TTR, Inc.

TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

Please visit TTR on the web at www.ttrus.com or call 866.578.8193.

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