The State of Washington issued an excise tax advisory to provide assistance for taxpayers in clarifying the distinction between maintenance agreements and warranties. The Department provided a description of the maintenance agreement being a contract in which a vendor will provide the service of maintenance over a periodic basis regardless of how the property is performing. The State of Washington also stated that these types of agreements are subject to retail sales tax. The Department detailed warranty charges into categories of those included in the selling price at no additional cost, optional extended warranty charges, and mandatory extended warranty charges. Warranty charges included in the selling price at no additional cost are subject to retail sales tax. In contrast, optional warranty charges that are separately stated from the selling price of the product being sold are not subject to retail sales tax, but are subject to business and occupational tax. If a customer cannot purchase a product without purchasing an extended warranty, the sales amount would be included in the taxable base, even if the warranty charge is separately stated. (Excise Tax Advisory No. 2022.08.257, January 4, 2005)