Washington Provides Guidance on Taxability of Federal Government Employee Purchases

By November 30, 2018, the U.S. General Services Administration (GSA) SmartPay 3 program will provide charge card services to the federal government and its employees for official business. The charge cards will be embossed with “for official government use only”. The Washington Department of Revenue has provided guidance informing federal government employees that their purchases are only exempt from Washington sales tax if they are paid for by the federal government. Federal government employees with an Individually Billed Account (IBA) must pay sales tax on purchases, even if they are reimbursed by the federal government. In order to document exempt transactions with federal employees, vendors must keep the following information in addition to a receipt:

• Federal employee’s name
• Federal government agency’s name
• Type of agency card (e.g., purchase card, fleet card, travel card, integrated card)
• Expiration date of credit card
• Name of credit card company
• The sixth digit of the card (for Travel or Tax Advantage Travel cards)

Even though this guidance from the Department of Revenue is regarding purchases within the state of Washington, purchases by federal government employees with the proper documentation and payment card would be exempt from tax throughout the United States. (Special Notice, Washington Department of Revenue, October 25, 2018)