Sales Made to Canadian Residents but Delivered in Washington Are Subject to Tax

The Washington Department of Revenue (DOR) has issued guidance regarding the taxability of sales made to Canadian residents that are shipped to businesses in Washington for pickup by the Canadian residents. Some businesses receive packages in Washington near the Canadian border on behalf of Canadian residents making a purchase. Canadian residents subsequently can pick up the packages from the Washington business and take them across the border. This allows Canadian residents to avoid international shipping costs and waits at customs.

Sellers that make sales to Canadian residents and deliver the products to in-state businesses must collect and remit retail sales tax from the Canadian buyer. The seller must also pay retailing Business & Occupation (B&O) tax. These sales do not qualify as export sales since the products are delivered in Washington. As a result, an export exemption is not available under the retail sales tax or retailing B&O tax.

Note that residents of Alberta, the Northwest Territories, Nunavut or Yukon may qualify for a refund of the state portion (6.5%) of retail sales tax. For more information regarding this refund, visit the DOR’s Sales Tax Exemption for Nonresidents page. (Tax Topics, Washington Department of Revenue, October 24, 2023)

Posted on October 30, 2023