Bellingham and Whatcom County officials presented a legal challenge to a recent state ruling that would have allowed Canadian shoppers to forgo paying sales taxes on some purchases in Washington.
Skagit County Superior Court judge Michael Rickert granted a preliminary injunction (PDF) on July 16, 2010 requiring the state Department of Revenue to instruct all Washington retailers to collect state sales taxes from residents of all Canadian provinces while a lawsuit is still pending.
Judge Rickert ordered the state Department of Revenue to tell retailers that the exemption originally intended to address tax issues on the Washington-Oregon border won't apply to Canadian shoppers while legal steps are in process. Attorneys representing Whatcom County and the City of Bellingham had argued that British Columbia residents should not get the exemption, but Rickert expanded the ruling to include all Canadians under a similar taxation system to avoid inconsistencies and confusion at the cash register.
Rickert said the case would be expedited to the state Court of Appeals for further review.
While the opportunity for savings may attract more B.C. shoppers to our communities, Whatcom County officials say the increase in total sales, and subsequent increase in B&O taxes collected, would not make up for the loss of sales tax revenues to local governments if the Department of Revenue ruling prevails.
The Washington State Department of Revenue is responsible for advising retailers about their sales tax responsibilities. Retailers should review updated instructions from the Department of Revenue to inform their sales tax collection practices.
Updated: Jul 22, 2010
