International services credit

From the 2024 DOR Tax Exemption Study

Det. No. 10-0201, 31 WTD 43 (June 28, 2012) 45 ANALYSIS [1] Retail Sales Tax In 2003, RCW 82.08.037 was amended to provide [expressly] that a credit or refund for sales taxes paid on bad debts do not include repossessed property. Specifically, RCW 82.08.037 provides: (1) A seller is entitled to a credit or refund for sales taxes previously paid on bad debts, as that term is used in 26 U.S.C. Sec. 166, as amended or renumbered as of January 1, 2003. (2) For purposes of this section, “bad debts” does not include: (a) Amounts due on property that remains in the possession of the seller until the full purchase price is paid; (b) Expenses incurred in attempting to collect debt; and (c) Repossessed property. (3) If a credit or refund of sales tax is taken for a bad debt and the debt is subsequently collected in whole or in part, the tax on the amount collected must be paid and reported on the return filed for the period in which the collection is made. (4) Payments on a previously claimed bad debt are applied first proportionally to the taxable price of the property or service and the sales or use tax thereon, and secondly to interest, service charges, and any other charges. RCW 82.08.03