What is a discount?
A discount is an amount or percentage taken off of the actual selling price. The balance is the amount on which the retail sales tax is charged.
How should a discount be reported on the excise tax return?
When the dealer gives a true discount (not reimbursed by the manufacturer or anyone else), the amount the retail customer is actually charged is subject to the retail sales tax and the Retailing business and occupation tax. If the sale is a wholesale sale, the amount the customer is charged is subject to the Wholesaling B&O tax classification.
The amount of the sale, before the discount is subtracted, should be reported in the gross amount column of the excise tax return. When the discount is given, the amount of the discount may be deducted in the deduction column. Discounts on retail sales are deductible under both the Retailing B&O and Retail Sales classification, when the discount is subtracted before retail sales tax is added. Discounts on wholesale sales may be deducted under the Wholesaling B&O tax classification.
Early pay discount
Dealers often will reduce a bill for a customer who pays early. This is also a discount.
Example
Dealer A sells parts to a used car dealer who, in turn, uses these parts to repair vehicles for resale. Dealer A will give the used car dealer a 10% discount if the total bill is paid in full by the 10th of the following month. If the discount is taken, the full amount of the sale should be reported under Wholesaling and a deduction for the discount should be taken on the return.
Senior citizen discount
A typical discount given by new automobile dealers is to senior citizens. With proof of their age, a percentage will be removed from the cost of repair labor and parts.
Example
Dealer A gives persons over 65 years of age a 10% discount. The repair labor and parts total $100. Removing the 10% discount would lower the cost to $90. Retail sales tax and the Retailing B&O tax would be due on $90.
If the repair labor and parts are covered by a warranty or maintenance agreement, the senior discount will not apply to any part of the charge (including the deductible).
References
Washington Administrative Code (WAC) 458-20-107
Washington Administrative Code (WAC) 458-20-108
Revised Code of Washington (RCW) 82.04.160
What is a rebate?
A rebate is a refund given to the buyer by the manufacturer, the distributor or the dealer.
How is a rebate used?
The customer may use the rebate as a portion of the down payment on the vehicle or may take the rebate as cash and not apply it to the vehicle sale. Many manufacturers require that the rebate be used against the purchase price of the vehicle.
How are rebates taxed?
Rebates from the manufacturer or distributor are part of the selling price of the vehicle. The amount of the rebate may not be deducted from the selling price before retail sales tax is charged, nor may it be deducted before computing the B&O tax.
Rebates from the dealer are considered discounts and are not part of the selling price. These rebates/discounts are not subject to the Retailing B&O tax or the retail sales tax.
Example
Manufacturer A offers a $1,000 rebate for the purchase of a new pickup truck. The customer may elect to use the $1,000 as part of the down payment or take the $1,000 cash and spend it in some other manner. The agreed selling price of the pickup truck is $15,295. In either case, the amount subject to retail sales tax is $15,295. When using the rebate as part of the down payment, the customer will only finance or pay $14,295 plus interest. When taking the rebate for cash, the customer will finance or pay $15,295 plus interest.
What is the difference between discounts and rebates?
With a discount, the customer does not have the option to receive the cash and the seller is actually taking a loss. With a rebate, the amount is given to the customer to be used as a part of the sale or to take as cash. The seller does not take a loss.
Manufacturers may also give discounts to dealers. See Factory Flooring for more details.
References
Washington Administrative Code (WAC) 458-20-108
FAQs
It can take up to 90 days to process your application and receive your credit.
Are rebates taxable in Washington state? ›
How are rebates taxed? Rebates from the manufacturer or distributor are part of the selling price of the vehicle. The amount of the rebate may not be deducted from the selling price before retail sales tax is charged, nor may it be deducted before computing the B&O tax.
How long does it take to get a Washington state tax refund? ›
Where's my refund? Processing times will be different for each application and will depend on your unique tax situation. It is possible your refund will come sooner; however, please be aware processing can take the full 90 days.
How do I get reimbursed for sales tax in Washington state? ›
On the My DOR Services page, in the Individuals and Families section, click the Apply for a consumer sales tax refund. On the Select Type of Refund page, select Consumer, and click Next. On the Consumer Refund page, select the type of tax you would like refunded and enter the reason for the refund, and click Next.
What disqualifies you from earned income credit? ›
You can't claim the EIC unless your investment income is $11,000 or less. If your investment income is more than $11,000, you can't claim the credit. Use Worksheet 1 in this chapter to figure your investment income.
How much is the Washington state working families tax credit? ›
The maximum credit amount ranges from $300 to $1,200 depending on the number of qualifying children (see table below). These amounts are then reduced based on income thresholds, similar to the federal program. The minimum credit amount is $50, regardless of the number of qualifying children.
Are rebates taxed as income? ›
The IRS guidance provides that taxpayers receiving rebates for purchases of subsidized products do not need to include the rebates in income but must reduce their basis in the property by the amount of the rebate.
Do rebates count as taxable income? ›
Why do I need to submit a W-9? All rebates over $600 are considered taxable income by the IRS.
Are rebates considered other income? ›
In some cases, rebates are considered income. This happens when a business provides a service to another business or directly to a customer, and there's a vendor rebate being offered by a third party. An easy example of this is when a company installs solar panels and the utility company is offering a rebate.
Is Washington state getting a stimulus check? ›
The pandemic stimulus checks are long gone, but states have continued to find ways to give money to their residents since the federal payments expired in 2021. This month, residents in Alaska, Minnesota, Montana and Washington are eligible to get money from their state governments.
The IRS says that tax returns can be delayed for the following reasons: It was sent by mail. It contains errors or is incomplete. It needs further review.
When should I expect my refund? ›
We issue most refunds in less than 21 calendar days. However, if you mailed your return and expect a refund, it could take four weeks or more to process your return. Where's My Refund?
What are some tax incentives that are available to you in the state of Washington? ›
In addition, Washington State offers a range of incentives, including:
- Manufacturers' Sales / Use Tax Exemption on Machinery and Equipment.
- Opportunity Zones.
- Warehouse Sales Tax Exemption.
- Distressed Area B&O Tax Credit for New Employees.
Washington law exempts most grocery type food from retail sales tax. However, the law does not exempt “prepared food,” “soft drinks,” or “dietary supplements.” Businesses that sell these “foods” must collect sales tax. In addition, all alcoholic items are subject to retail sales tax.
Who is exempt from Washington state sales tax? ›
Some customers are exempt from paying sales tax under Washington law. Examples include government agencies, some nonprofit organizations, and merchants purchasing goods for resale. Sellers are required to collect a valid exemption or resale certificate from buyers to validate each exempt transaction.
How long does it take to get the employee tax credit? ›
With the stricter compliance reviews in place during this period, existing ERC claims will go from a standard processing goal of 90 days to 180 days – and much longer if the claim faces further review or audit. The IRS may also seek additional documentation from the taxpayer to ensure it is a legitimate claim.
How long does it take to get tax credit? ›
If you file electronically, most refunds are processed within 21 days after the receipt. If you mail your paper return, it may take up to 4 weeks to get processed. You can click here to find out when you will receive the EITC refund.
How long does it take to get federal tax credit? ›
Certain tax credits: The IRS can't legally issue refunds for certain tax credits until mid-February. If you claimed the Earned Income Tax Credit or Additional Child Tax Credit, even if you file your return early, you shouldn't expect to receive it until the second half of February.
What does "we have received your refund and it is being processed" mean? ›
This means the IRS has your tax return and is processing it.
