Washington State Combined Excise Tax Return

[jasdlm]

I have clients who are subcontracting with a firm out of another State to perform work in Washington State. I believe that my clients have to file a combined excise tax return. I called the Washington State Department of Revenue to confirm. According to the gentleman I spoke to, although technically it is a 'double tax' (the company with the contract is paying the tax on the total revenue, and then my clients have to turn around and pay tax on their subcontracting income), he insists that that is the system. (He actually seemed pretty proud of the double tax.)

So . . . It appears to me that my clients, who are software providers, fall under the 'service and other activities' category, and I don't see any deductions that apply to them when I read through the instructions.

For anyone familiar with this tax, does this sound accurate?

Thanks to anyone who can provide assistance.

[Peggy Cobb]

I am a resident of Washington state. Washington state collects sales taxes on the "end user". The subcontractor is not the end user, the firm that hired them is. If the firm that hired them is out of state they are paying taxes for the state they resided in. If they are a Washington business they are paying sales taxes based on what area of the state they sell to. Your client by definition is a wholesaler and does not pay state sales taxes. They are subject to state excise taxes. BUT, there is a deduction for no local activity. So you would report all of their income as Wholesale under the excise tax portion of the return and then deduct all sales because there is no local activity.

To add to this you would need to apply using the state's master business licensing and get a UBI (Unified Business Identifier).

The state also has a small business credit and reduces or eliminates the excise taxes. The excise taxes are .00484 of the gross receipts.

ATX has much better instructions than the state publishes and they are easier to access. You would click on the Washington tab in the forms menu and open CETRA for the annual state form. From there you can click on any cell and then government instructions. Plus you can bunny hop to the deduction area and also click on instructions for this part of the form

I strongly suspect that you will find you do not have to file a state excise tax form.

Good luck,

Peggy Cobb

Mount Vernon, WA

[jasdlm]

Peggy - thank you so much! My clients do not have any 'sales' in WA. They provide service for the Primary Contractor, who has a contract with the State to provide computer software/support. My clients actually received a letter from the Washington Department of Revenue asking them for their excise tax report, which is how this got started.

I'm glad that ATX has better instructions. I will look at those immediately. I'm not sure what you are saying about the UBI, but I will read the instructions thoroughly and see if I can figure it out.

I won't post any more questions until I've thoroughly read the ATX instructions.

Thanks so much!

[Peggy Cobb]

You will need the Washington state master business license application to get a UBI number. It is the state identifying number for each person or business needing to file an excise or sales tax number. ATX has the form under the Washington state tab and it is BLS-700-028. The letter from the state may have a 9 digit number on it. My UBI number is 602 909 668 with this type of spacing and 99.9% start with a 6. If there isn't a number on the you might be able to file it on line or fax it in and get the number.

Good luck,

Peggy