What Changed
The Washington Department of Revenue has published a new tax topic page titled Casual or Isolated Sales. The page consolidates the definition, taxability rules, and reporting requirements for this category of sale in one accessible reference. While the underlying rules are not new—they trace back to existing WAC and RCW provisions—the publication of a dedicated, plain-language topic page signals that DOR considers this an area worth clarifying for taxpayers.
The Core Definition
A casual or isolated sale is a sale made by a person who does not engage in selling that type of property in their regular course of business. The key distinction is regularity and continuity: if sales of a particular type of property are routine or continuous, they fall outside this category—even if they don't happen frequently.
DOR's own examples illustrate the concept well:
- An attorney selling used office furniture
- A bookkeeper selling a refrigerator
- A contractor selling a bulldozer
In each case, the seller's primary business does not involve selling that type of property. The sale is incidental, not operational.
B&O Tax Treatment
Casual or isolated sales are not subject to B&O tax—but the reporting mechanics still require attention.
DOR: “However, sales tax applies to casual or isolated retail sales made by a person who is required to be registered with the Department of Revenue.”
For sales to a consumer (retail sales):
- The transaction is reported under retailing B&O tax
- A "casual sales" deduction may be claimed under retailing B&O, effectively zeroing out the B&O liability
- Retail sales tax still applies if the seller is required to be registered with DOR
- Critically, the casual sales deduction is not available against retail sales tax
For sales to a customer who provides a reseller permit (wholesale sales):
- The transaction is reported under wholesaling B&O tax
- A "casual sales" deduction may be claimed under wholesaling B&O
The practical takeaway: the B&O deduction eliminates the B&O tax burden, but it does not eliminate the sales tax obligation on retail transactions.
The Registration Trigger Matters
A critical threshold runs through this entire framework: whether the seller is required to be registered with DOR.
- Registered sellers must report casual or isolated sales, even though a deduction offsets the B&O liability.
- Registered sellers must collect and remit retail sales tax on casual or isolated retail sales.
- The guidance does not explicitly address the treatment for sellers who are not required to be registered. If a seller's registration status is unclear or borderline, verify against WAC 458-20-101 before drawing conclusions.
This is a meaningful distinction for businesses that may assume an incidental asset sale carries no Washington tax consequences simply because it falls outside their normal operations.
Practical Scenarios to Watch
A few situations where this guidance is directly relevant:
- Equipment disposals: A manufacturer selling surplus machinery. If the manufacturer is registered with DOR, retail sales tax likely applies to the sale, and the transaction must be reported—even though B&O tax is offset by the deduction.
- Office asset sales: A professional services firm selling workstations or furniture. Same framework applies.
- Business reorganizations: WAC 458-20-106 is cited as a reference, suggesting that asset transfers in reorganization contexts may intersect with casual sale treatment. This area warrants separate analysis depending on the transaction structure.
Key References
DOR cites the following authority on the topic page:
- WAC 458-20-101 – Tax registration and tax reporting
- WAC 458-20-106 – Casual or isolated sales; business reorganizations
- RCW 82.04.040 – Statutory definition of "casual or isolated sale"
Review these sources directly for the authoritative rules. The tax topic page is a useful summary, but the WAC and RCW govern.
Editorial Note
This post is based on DOR's newly published tax topic page and the underlying regulatory references cited therein. The guidance summarizes existing law rather than announcing a rule change. Check current registration status, deduction availability, and sales tax obligations against the cited WAC and RCW text.
Official source
View the Washington Department of Revenue guidance
All dollar figures are made-up examples for arithmetic only. Where a sales tax rate is needed, an example 10% rate is used; real rates depend on location (use DOR's rate lookup).
What this means for your business (illustrative)
- A registered law office selling its used office furniture to a consumer (one of DOR's own examples). Example: a $2,000 sale. Retail sales tax applies, $200 at the example 10% rate. The office reports the $2,000 under retailing B&O and may take the "casual sales" deduction there. That deduction "is not available against retail sales tax."
- A registered contractor selling a used bulldozer to a dealer that gives a reseller permit. This is a wholesale sale. Report it under wholesaling B&O and take the casual sales deduction there. No retail sales tax is collected.
- A shop that sells used equipment routinely. DOR says routine or continuous sales are not casual or isolated, "even if the property involved is not sold on a frequent basis," so normal rules apply.
FAQ
What is a casual or isolated sale in Washington? DOR says it is a sale by a person who does not sell that type of property in their regular course of business, such as an attorney selling used office furniture.
Do I pay B&O tax on a casual or isolated sale? No. DOR says these sales are not subject to B&O tax. Registered sellers still report them and take the "casual sales" deduction.
Do I collect sales tax when my business sells old equipment? DOR says sales tax applies to casual or isolated retail sales by a person who is required to be registered with DOR.
Can the casual sales deduction be taken against retail sales tax? No. DOR says the deduction is available under retailing or wholesaling B&O only.
Sources: DOR tax topic, Casual or isolated sales https://dor.wa.gov/forms-publications/publications-subject/tax-topics/casual-or-isolated-sales · RCW 82.04.040 https://app.leg.wa.gov/RCW/default.aspx?cite=82.04.040 · WAC 458-20-106 https://app.leg.wa.gov/WAC/default.aspx?cite=458-20-106