Washington DOR Issues Guidance on Sales Taxability of Motor Vehicle Service, Warranty Contracts

The Washington Department of Revenue Oct. 24 issued guidance on the sales and use taxability of third-party service contracts and warranties that are sold as part of the sale or lease of a motor vehicle. The information includes: 1) retail sales tax applies to a service contract or warranty sold to a consumer; 2) service contract and warranty sales are sourced to where the buyer receives the documents, typically the auto dealer’s location; 3) motor vehicle sales and lease tax does not apply to the amount related to the service contract or warranty if the charges for the service contract ...