• For Immediate Release
• May 26, 2009

Washington – Computer Transactions Get Further Clarification for B&O Taxes

It’s the Washington Department of Revenue’s turn to further explain and adopt a rule on the application of taxes to transactions relating to computer hardware, software, information services, and computer services. This time it’s the Business and Occupation Tax (B&O Tax) that the state imposes.

Computer Hardware

The sale of computer hardware is subject to retail sales tax and B&O tax under the retailing classification. Installation or repair of computer hardware is also subject to retail sales tax and retail B&O tax.

Computer Software

Prewritten computer software is subject to sales tax and B&O tax under the retailing classification. If no sales tax is collected, use tax is due, unless it is provided free of charge or for temporary use in viewing information.

The sale of a site license for prewritten software is also subject to retail sales tax and retailing B&O tax. Id sales tax is not paid, and the site license is used only partly in the state, only the part of the site license use in the state is subject to use tax.

Information and Computer Services

Sales of services, such as information services, data processing services, Internet services, hosting services, and data warehousing services, just to name a few, are subject to B&O tax under the service and other activities classification.

The sale of intranet services and voice over Internet protocol (VolP) services is a sale of telecommunications services and, as such, is subject to retail sales tax and B&O retailing tax.

If you would like additional information on this topic or have any questions, please contact the taxdesk@ustaxrp.com