Canadians Eligible For US State Tax Break

by Mike Godfrey, Tax-News.com, Washington

10 June 2010

Washington State has noted that from July 1, residents of British Columbia and Ontario will become eligible for a non-resident sales tax exemption on purchases of goods in the State for use outside the state.

State law allows a sales tax exemption to residents of jurisdictions that impose a sales tax of 3% or less. Washington sellers are not required to make tax-exempt sales to qualifying nonresidents, but most do. The exemption applies only to tangible personal property and does not apply to lodging, meals, or other retail services that are provided in the state.

The Washington State revenue authority said that in order to receive the exemption, qualifying residents must show proof of residency, such as a driver’s license, to the Washington seller. The seller must retain the information to support the exemption in the event of a tax audit.

Residents of British Columbia and Ontario previously did not qualify for the exemption but both provinces are adopting a harmonized sales tax in tandem with the Canadian federal government beginning July 1, which is technically a value-added tax rather than a sales tax.

Six US states, including Alaska, Colorado, Oregon, Montana, Delaware and New Hampshire, eight Canadian provinces, and four US possessions already qualify for this exemption, the revenue agency said.

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