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House of Representatives P.O. Box 40600 Office of Program Research Olympia WA 98504-0600 Finance Committee Phone 360-786-7100
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House of Representatives P.O. Box 40600 Office of Program Research Olympia WA 98504-0600 Finance Committee Phone 360-786-7100
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HB 1327
Bill Analysis
February 18, 1997
Brief Description: Reimbursing sellers for sales tax collection costs.
Bill Sponsors: Representatives Huff, Carrell, Quall, Mulliken, Morris, Linville, Ogden, Dunshee, B. Thomas, Johnson, Conway, Sheldon, Grant, Mastin, D. Schmidt, Robertson, Kessler, Skinner, Boldt, Lisk, Mielke, Dickerson, L. Thomas, O'Brien, Hatfield, Kenney, Gardner, Cooke, Costa, Ballasiotes, Thompson, Koster, Lantz, Mason, Schoesler, Dunn, Alexander and Anderson.
Staff: Linda Brooks (786-7153)
Background: The sales tax is imposed on retail sales of most items of tangible personal property and some services. The state tax rate is 6.5 percent and is applied to the selling price of the article or service. In addition, local sales taxes apply. The total tax rate is between 7 percent and 8.6 percent, depending on location. Sales tax applies when items are purchased at retail in state. Sales tax is paid by the purchaser and collected by the seller.
Summary of Bill: Businesses are allowed to retain 1.25 percent of state retail sales tax collected from consumers on the first $40,000 of retail sales per month. In addition, businesses are allowed to retain 0.65 percent of the state retail sales tax collected from consumers on retail sales in excess of $40,000 per month. The amounts retained serve as reimbursement to the retailers for administrative costs incurred in collecting sales taxes.
Fiscal Note: Available
Effective Date: If enacted, the bill takes effect on September 1, 1997.
Addendum to HB 1327 Bill Analysis
Forty-five states levy retail sales taxes. According to a January 1, 1997, publication of the Federation of Tax Administrators, 25 of the 45 states allow retailers to retain a percentage of the sales taxes collected as reimbursement for their administrative costs.
House Bill 1327 proposes to reimburse retailers for collecting sales taxes in Washington as follows:
CAllow retailer to retain 1.25 percent of all sales taxes collected each month on the first $40,000 of retail sales per month (on $480,000 of sales annually).
CAllow retailer to retain 0.65 percent of all sales taxes collected each month on sales in excess of $40,000 per month (in excess of $480,000 of sales annually).
Comparing Small and Large Retailers
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Businesses |
Retail Sales Taxes Collected |
Amount of Retail Sales Retained by Retailer |
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Volume of Annual Retail Sales |
Number of Businesses in this Category |
As a Percent of All Businesses |
Total Sales Taxes Collected |
Percent of Total Taxes |
Retail Sales Taxes Retained |
Percent of Retained Taxes |
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Less than $50,000 |
116,238 |
63% |
$145,182,000 |
2% |
$1,815,000 |
3% |
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$50,000 to $250,000 |
40,195 |
22% |
592,942,000 |
8% |
7,412,000 |
12% |
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$250,001 to $500,000 |
11,856 |
6% |
516,203,000 |
7% |
6,449,000 |
10% |
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$500,001 to $3,000,000 |
12,911 |
7% |
1,733,382,000 |
23% |
15,836,000 |
25% |
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$3,000,001 to $10,000,000 |
1,855 |
1% |
1,195,340,000 |
16% |
8,426,000 |
13% |
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Over $10,000,000 |
748 |
under 1% |
3,480,542,000 |
45% |
22,888,000 |
36% |
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TOTAL |
183,803 |
100% |
$7,663,591,000 |
100% |
$62,826,000 |
100% |
Data Source: Department of Revenue
Note: percentages may not add exactly to 100% due to rounding