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Washington StateTax GuideLODGING

Taxpayer Rights and ResponsibilitiesThe taxpayers of the State of Washingtonhave the right to: Simple and prompt administrative process for taxrefunds and credits. Timely, fair, and equitable treatment with dignityand respect. Accurate, written information on reportinginstructions, appeal procedures, refund claims,and reasons for assessment.The taxpayers of the State of Washingtonhave the responsibility to: Register with the Department of Revenue. Know their tax reporting obligations and seekinstructions when they are uncertain. Keep accurate and complete business records. File returns and pay taxes in a timely manner. Public hearings on proposed rules. Ensure the accuracy of the information entered ontheir tax returns. Review and appeal of assessments, businessregistration revocation, and adverse rulings. Substantiate claims for refund. Remedies when statutes and rules are found to beunconstitutional. Confidentiality of financial and businessinformation.Reference: RCW 82.32A Notify the Department of Revenue and pay taxespromptly when closing a business.

Table of ContentsIntroduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Common Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-3Services Provided by the Lodging Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Business and Occupation (B&O) Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-5 B&O tax classifications common to the lodging industry Retailing B&O tax classification What are retail sales? Persons subject to retailing B&O tax must collect retail sales tax Service and other activities B&O tax classification What activities are taxable under the service and other activities classification? Washington cities and towns may impose tax on general business activitiesCollection of Sales Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-8 Retail sales are subject to retail sales tax Selling price is measure of tax Sales tax rates Combined state and local sales tax Determining the location of the sale Itemize sales tax Retail sales tax exemptionAgency Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Payment of Sales/Use Tax on Consumables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Sales tax Use taxSpecific Topics to the Hotel Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-12Miscellaneous Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Gratuities Unclaimed property and unredeemed gift certificatesOther Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Personal Property Tax Leasehold Excise TaxRecord Keeping Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15How to Prepare for an Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Lodging Change Special Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-25Clark County. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18City of Liberty Lake. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-20Spokane County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-22Yakima County. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-24Tri-Cities Regional. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Rental of Real Estate for Hotels and Motels. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Sales Tax Exemption for Foreign Diplomats. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-28Retailers Making Sales to the U.S. Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-32

IntroductionThe lodging industry is an important one in Washington State. Tourism dollars collected through the hotelindustry help support not only the state, but local cities and counties as well.This guide was created to assist businesses that provide lodging the ability to better understand the WashingtonState taxes that apply to their business. Our goal is to provide easy-to-follow information, so that companies inthe lodging industry can learn their proper tax responsibilities. The information contained in this guide providestax reporting information for the following business types:HotelsBed & Breakfast HousesResortsTrailer CampsMotelsRooming HousesSummer CampsRecreational Vehicle (RV) ParksThe information provided is current at the time of publication. Please remember state tax laws change on aregular basis and this guide will not reflect any changes that occur after printing.For additional information or answers to any questions about Washington excise taxes, please contact theDepartment of Revenue using the telephone number, web site address, or mailing address listed below.Additional information about the Department of Revenue’s services is available in the back of this tax guide.Toll Free Telephone Number:1-800-647-7706DOR Web Site:http://dor.wa.govMailing Address:Washington Department of RevenueTaxpayer ServicesPO Box 47478Olympia, Washington 98504-7478 1

Common Termsof Revenue. Retail sales tax paid or to be paiddirectly by the buyer to the Department – forexample, when a person uses a resale certificateto purchase goods for dual purposes and laterdetermines some of those goods will not beresold (see WAC 458-20-102) – is commonlyreferred to as “deferred sales tax.” A “deferredsales tax” liability is reported on the use tax lineof the excise tax return and remitted on the basisof the local tax code and tax rate for the locationof the seller. The terms “sales tax” and “deferredsales tax” refer to the combined state and localcomponents of the tax.Business and Occupation (B&O) Tax: Agross receipts tax imposed on persons conductingbusiness activities in Washington. There aredifferent reporting classifications for variousbusiness activities such as retail sales, andwholesale sales services. Each classification hasits own tax rate. Persons performing more thanone activity may be subject to B&O tax undermore than one classification.Consumer: A person who uses tangible personalproperty and receives services defined as retailsales. Such tangible personal property or servicesmay be for personal use or conducting businessactivities. It is important for sellers to know whothe consumer is to correctly collect sales tax orremit use tax.RCW: (Revised Code of Washington): Lawsof the state of Washington.Transient: Any guest, resident, or other occupantto whom lodging and other services are furnishedunder a license to use real property for less than30 continuous days.Lodging: Sleeping accommodations.Master Application: A document completedby persons wishing to register a business withone or more state agencies. Upon submitting aMaster Application, the person receives a UnifiedBusiness Identifier (UBI) number. The personthen receives a Master License to post at thebusiness location(s).UBI/Department of Revenue (DOR)Registration Number: A nine-digit numberissued via the Unified Business Identifier (UBI)system and used to identify registered businesses.Sometimes referred to as a registration, tax, “C,”or resale number.Non-transient: An occupant, guest, or residentwith a license to use real property for 30 or morecontinuous days.The number is assigned when a person completesa Master Application to register with or obtaina license from state agencies. The departmentsof Revenue, Licensing, Labor and Industries,Employment Security, and the Office ofSecretary of State are among the state agenciesparticipating in the UBI program. In mostcases, your UBI number will also be your DORregistration number. Spouses who file separatelyand corporations that file multiple accounts areassigned separate DOR registration numbers asneeded.Resale Certificate: A certificate a seller takesfrom the buyer to document the wholesale natureof a sale. The law requires that a resale certificatecontain certain information. See WAC 458-20-102for more details.Retail Sales Tax: A tax imposed on thebuyer of goods and certain services. Sellersare responsible for collecting the tax from theconsumer and remitting the tax to the Department 2

Common Terms (continued)sales tax. Like the sales tax, the use tax is acombined state and local tax. Use tax and sales taxrates are the same for the particular local taxingjurisdiction (e.g., the retail sales and use tax ratesare the same for the City of Spokane).Use Tax: A tax imposed on the use inWashington of goods and certain services by aconsumer when the state’s retail sales tax hasnot been paid. Either sales tax or use tax applies,but not both, with respect to goods or servicespurchased and/or used by a consumer. In thismanner, the use tax serves to complement theWAC: Washington Administrative Code.Services Provided by the Lodging IndustryAn occupant remaining in continuous occupancyfor 30 days or longer is considered a nontransient upon the thirtieth day. An occupantwho contracts in advance and does remain incontinuous occupancy for the initial thirty dayswill be considered a non-transient from the startof the occupancy. Charges for non-transientlodging are exempt of tax as a rental ofreal estate.Generally, hotels provide many services, such aslodging, telephone access, food service, vehicleparking, Internet access, faxing, copying andlaundry. Often, the hotel uses third parties toprovide some of these services. When the hotelbills the guests for the retail services it has anobligation to collect sales tax on all retail charges.Charges for transient lodging are taxable asretail sales. Transient means any guest, resident,or other occupant to whom lodging and otherservices are furnished for less than one month orless than 30 continuous days if the rental perioddoes not begin on the first day of the month.Many hotels have restaurants on the premises.For hotels with restaurants, please consult theDepartment’s Restaurant Guide.Business & Occupation (B&O) TaxBusiness &Occupation(B&O) TaxAlmost all businesses doing business in Washington State are subject to the statebusiness and occupation (B&O) tax. This includes corporations, partnerships, soleproprietors, and nonprofit organizations. The B&O tax is a gross receipt tax; itapplies to the gross income of the business. This means there are no deductionsfrom the B&O tax for labor, materials, taxes, or other costs of doing business.Different tax classifications with different rates apply for the various businessactivities.The state B&O tax is reported on the Department of Revenue’s excise tax return.A business is assigned by the Department to file these returns on a monthly,quarterly, or annual basis, depending on the estimated yearly tax due and the typeof business.B&O TaxClassificationsThe most common B&O tax reporting classifications for hotels and other lodgingproviders are retailing, and service and other activities. Businesses performingmore than one activity may be subject to tax under one or more B&O taxclassifications. 3