Washington Department of Revenue (DOR) has proposed ETA 3174.2013 concerning “B&O Tax and Out-of-State Printers.” The ETA publicizes the DOR’s long-standing position with respect to printing activities. The DOR concludes that printing is an inherently local activity. Further, the ETA indicates that the production and selling activities are merged within a single classification under the statute, hence only the production activity is subject to B&O tax.
As such, a business with nexus in Washington that prints and sells materials from outside of Washington is not subject to Washington B&O tax on its printing activities, or on the sale of the printed material delivered to a Washington business. Meanwhile, businesses that print and sell materials from within Washington are subject to Washington B&O tax on that printing activity, regardless of where the materials are ultimately delivered to the customer.
Interestingly, although Washington does not require the out-of-state printer to pay B&O tax on printed materials delivered to Washington consumers, the out-of-state printer must still collect retail sales tax on all printed materials delivered to Washington customers. Somehow, apparently the merger of the production and selling activities is not applicable for purposes of retail sales tax collection. Regardless, even if a printer could successfully assert that retail sales tax collection was not required because of the merger of the production and selling activities, the printer would still have a requirement to collect use tax under RCW 82.12.040.
It is also important to note that the sale of printed materials by a person with Washington nexus, other than the printer, will be subject to both Washington retailing B&O tax and retail sales tax when delivered to a Washington location. The text of the ETA can be found at ETA 3174.