Washington construction tax, explained for the bookkeeper
Who charges sales tax on a Washington construction job, what changes for subcontractors and speculative builders, why the local rate follows the job site, and what late returns cost, with the statute cited for each point, and how a bookkeeper handles it all in one Sundry close.
- 0:00 Is the sub right?
- 0:11 The prime contractor
- 0:23 The subcontractor and the reseller permit
- 0:32 Speculative builders
- 0:49 The rate follows the job site
- 1:03 Late penalties
- 1:11 One close in Sundry
- 1:32 A practice you can grow
Transcript
Ray My sub says he doesn't have to charge me sales tax. Is that right?
Dana If you gave him your reseller permit, yes.
Sal In Washington, a prime contractor on a custom job for a private owner collects retail sales tax on the whole contract price, and reports it under retailing B and O.
Sal A subcontractor on a custom job charges no sales tax when the prime gives him a reseller permit. Without one, he charges it.
Sal A speculative builder who owns the land is the consumer of the materials, and the sale of the finished home is subject to real estate excise tax, not sales tax, unless the buyer signs before the home is finished. Then the work after that is taxed as a retail sale.
Sal And the local sales tax rate follows the job site, not the contractor's office. A contractor working in several cities can owe B and O to each city that has one, based on where the jobs are, even with no office there.
Sal Pay late, and the penalty runs nine, then nineteen, then twenty-nine percent in total.
Sal Sundry knows whether your client is the prime contractor, a subcontractor or a speculative builder, and applies the right rule. Each sale is placed at the job site, every product gets a Washington decision with the statute cited, and month-end stops only where you are needed. Then your client signs off on the Sundry Worksheet.
Dana Contractors need a bookkeeper who knows this. That's a practice I can grow.
Rory Almost every contractor in Washington deals with this. Their bookkeeper shouldn't have to do it by hand.