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Sales of canned software - delivered on tangible media are subject to sales tax in Washington. Sales of canned software - downloaded are subject to sales tax in Washington. Sales of custom software - delivered on tangible media are exempt from the sales tax in Washington.
Goods that are subject to sales tax in Washington include physical property, like furniture, home appliances, and motor vehicles. The purchase of prescription medicine, groceries and gasoline are tax-exempt. Some services in Washington are subject to sales tax.
Services to individuals and businesses things like haircuts, medical bills, consultant fees, etc. are not personal property, and most services are not subject to sales tax.
When it comes to sales tax, the general rule of thumb has always been products are taxable, while services are non-taxable. Under that scenario, if your business sells coffee mugs, you should charge sales tax for those products.
This exclusion includes the provision of space on a server for web hosting or backing up data or other information. Charges for digital storage, hosting and back-up services are subject to B&O tax under the service and other activities classification (sales tax does not apply).
Retail sales and use tax exemptionsFarm Products.Producer Goods.Interstate Sales.Public Activities.Health-Related Purchases.Deferrals & Credits.Other Sales/Use Tax Exemptions.
Contractors performing retail services must collect sales tax based on the tax rate of the jurisdiction in which they perform their services.
Professional services are generally not taxable in Washington State. However, some services are subject to sales tax. Constructing and decorating real or personal property for others is taxable. As are digital automated services and digital goods.
Sales of custom software - downloaded are exempt from the sales tax in Washington. Sales of customization of canned software are exempt from the sales tax in Washington. In the state of Washington, any digital goods that are streamed or remotely accessed are considered to be taxable.
The sale of electronic data products such as software, data, digital books (eBooks), mobile applications and digital images is generally not taxable (though if you provide some sort of physical copy or physical storage medium then the sale is taxable.)