I love Twitter. I think it’s a great way to connect with people, stay on top of trends, and to share your knowledge with others.
This morning, I posted the tweet shown above in hopes of helping anyone who might have a sales tax question. As a result, my friend Andy Campbell not only took me up on my offer, but asked a really good question to boot. See below for his tweet:
I tried to reply to Andy’s tweet, but my attempts to flush out such a technical issue within 140 characters didn’t really work. Here was my first draft:
A- thx 4 ur q. What u buyin? Cash/Credit/Groupon? AFAICT from ur tweet…..
Thankfully I decided to abandon ship and blog about it instead.
Let me lay out a couple of basics before I dig into the details of Andy’s case:
1) In general, if you buy goods/services in a state outside of your home state, you may be subject to that state’s sales tax.
For example, if you’re a Pennsylvania resident that’s driving down I-95 toward Walt Disney World, you may find yourself making a pit stop in Virginia at a Cracker Barrel. After enjoying some ham biscuits, you’ll see a charge on your bill for 5% Virginia sales tax. Because you purchased something that’s subject to sales tax in Virginia, and took possession of it in Virginia, your meal is subject to Virginia’s sales tax even though you’re a Pennsylvania resident.
2) In general, you can buy goods in a state outside of your home state without paying sales tax if you have it shipped back to your home.
For example, after you had a hearty lunch at the Cracker Barrel, you stopped in their gift shop and decided to buy 4 rocking chairs. They can’t fit in your wood-paneled station wagon, so you have them shipped back to your home in Pennsylvania. (In this case, Pennsylvania would ask that you pay use tax on those chairs when you file your state income tax return for that year.)
Now, on to Andy’s question:
Andy laid out a unique set of facts and circumstances because he’s a resident of Oregon (which does not have a state-level sales tax) and he often buys stuff when he travels into Washington (which has a rather uncommon sales tax policy with respect to Oregonians).
Residents of Oregon (as well as residents of Alaska, Colorado, Delaware, Montana, and New Hampshire) can generally buy goods from vendors/stores in Washington and not have to pay sales tax as long as they intend to use the goods in their home state. There are a few exemptions to the rule (e.g. certain services, meals prepared for immediate consumption, etc.), but this is by far a very unique and generous sales tax law.
So, Andy and his fellow Oregonians can typically enjoy a sales tax exemption when traveling through Washington. Flash your Oregon driver’s license with pride! Just be prepared that when you take a trip to Walt Disney World, flashing your Oregon driver’s license won’t yield a sales tax exemption on your Mickey Mouse souvin-ears.
Thanks for the question Andy!