Dealer Alerts

DOR Excise Tax Advisory on Retail Sales & Use Tax on Goodwill Vehicle Repairs

The Department of Revenue issued an Excise Tax Authority (ETA) for guidance on how Washington's retail sales & use tax laws apply to "goodwill repairs" that are performed by dealers.

The Department of Revenue defines goodwill repairs to mean "repairs or services performed on a vehicle by a dealer or manufacturer when those repairs or services are not covered by any warranty." Usually these types of repairs often have no contractual obligation and are authorized at the sole discretion of the dealer or manufacturer and the repair is free of charge.

When a goodwill repair is done on a vehicle, the customer does not owe retail sales tax on the repair because there is no sale being made to the customer since the repair is being made free of charge; however, there may be retail sales or use tax due by the dealer or manufacturer.

If a dealer provides a goodwill repair to a customer's vehicle, there is no retail sales tax due by the customer but the dealer does owe use tax on the value of the parts used to perform the repair if those parts were purchased with a reseller permit and no sales tax was paid by the dealer at the time of purchase for those parts. However, no use tax is due on labor the dealer provides to make the repair.

We reached out to the Department of Revenue for clarification on how this ETA applies in the situation where, as part of the condition of a retail vehicle sale, a independent motor vehicle dealer promises to make a repair on the vehicle a purchaser is buying from the dealer, and the promise to repair is done on the Due Bill form at time of vehicle purchase and, as negotiated at the time of vehicle purchase, the repair will be performed at a later date after the vehicle purchase and will be free of charge.

The Department of Revenue's response: Since the 'Due Bill' for repairs was negotiated at the time of sale as a condition of the sale, the parts the dealer pulled from their inventory in this situation, are not subject to use tax. However, if the repairs were negotiated independently from the purchase of the vehicle, then the dealer would be subject to use tax on the parts pulled from their inventory. The fact that the repair is actually done at a later date, does not affect this.

The ETA also gives guidance to dealers when the goodwill repair is authorized by the manufacturer and completed by the dealer. The dealer may have obligations for collecting or owing retail sales or use tax in these situations.

PLEASE NOTE: The response we received from the Department of Revenue is not binding to any one specific dealer. If you would like a binding tax ruling on this specific situation for your dealership or if you would like a binding tax ruling on any question or issue you may have, visit Request a Tax Ruling.

For more information about this ETA, please visit Department of Revenue's ETA 3228.2021 Retail Sales and Use Tax on Goodwill Vehicle Repairs.

Multi-Factor Authentication Security Feature Will Be Added to the My DOR Login - Effective September 14, 2021

A new multi-factor authentication security feature will be added to the My DOR login on Tuesday, September 14th. The multi-factor authentication (MFA) will require users to verify their identity using more than just a username and password as an added layer of protection to the site. MFA is required by many banks and other businesses to prevent unauthorized individuals from accessing client accounts.

The DOR is asking users to verify that their mobile number and email address in their Secure Access Washington (SAW) profile is current. Authentication codes will only be sent to verified email addresses or mobile phones listed in the SAW account.To update and verify information in your SAW account:

  • Log in to MyDOR at MyDOR Sign In.
  • On the My DOR Services page, click Get Started.
  • On the Account Summary page, click the Manage My Profile link in the top right corner.
  • On the Manage My Profile page, click the Profile tab.
  • Click the Use your SAW profile link to update your name and email address.

For more information, visit My DOR Security Changes: Multi-Factor Authentication (MFA).

Statewide Mask Mandate Extended To Include Vaccinated Individuals In Public Indoor Settings - Effective August 23, 2021

Governor Inslee expanded the existing statewide mask mandate to include vaccinated people in most all public indoor settings.

The mask mandate applies to all public places, with some limited exceptions, across the state regardless of vaccination status. One exception when face coverings are not required include workspaces that are not accessible to customers, visitors, or non-employees and all workers in those types of areas are fully vaccinated.

For more information, visit WA State Department of Health - Face Coverings & Masks.

WA State Legislature EHB 1049: Concerning Off-Site Vehicle Delivery & Retail Installment Contracts - Effective July 25, 2021

The Washington State Legislature passed EHB 1049, concerning the off-site delivery of a vehicle by a licensed motor vehicle dealer and modifies the established place of business and retail installment contract requirements.

Under EHB 1049:

  • Dealers are allowed to deliver vehicles for inspection, test drive, lease, or purchase and have customers sign agreements over the Internet or at a location other than the dealer’s established place of business or licensed or temporary subagency.
  • The consumer's right to timely cancel certain retail installment transactions is modified to exclude off-site retail installment transactions for the purchase of a motor vehicle. The requirement to include a right-to-cancel notice in certain retail installment contracts is modified to exclude retail installment contracts for the off-site sale of a motor vehicle by a licensed vehicle dealer, however, when a dealer sells a vehicle through a retail installment contract at a place other than the dealer’s established place of business, the dealer must disclose to the purchaser or lessee in writing that there is no statutory right to cancel the contract under RCW 63.14.154.

The Department of Licensing issued guidance on the new regulation:

  • The new ability to conduct remote vehicle sales or delivery does not eliminate the requirements for an Established Place of Business and these must continue to be maintained.
  • If a sale or lease is conducted off site and a hard copy permit is issued, this information must be submitted into the E-permit system within 24 hours.
  • Auto dealers must ensure their bond coverage is adequate for remote sales, leases, or transactions outside of their established place of business.

EHB 1049 goes into effect on July 25, 2021.

For more information, visit Engrossed House Bill 1049 - Final Bill Report.

DOL Updating DRIVES System & License eXpress Will Be Offline July 4th Weekend

The Department of Licensing will be updating their DRIVES system. The update will include enhancements to their License eXpress system with a new look, navigation, and help features.

License eXpress will be down from Saturday, July 2nd through Monday, July 5th. All services are expected to resume normal operation on Tuesday, July 6th.

Dealers are allowed to purchase and use hard copy Vehicle Title Applications & Dealer Temporary Permits during this downtime, but all information from the hard copy application must be entered into the E-permits system when the system comes back online.

In observance of the 4th of July holiday, all vehicle licensing offices will be closed on Monday, July 5th.

L&I Employer Requirements and Guidance for Preventing COVID-19

Our State is fully reopened and businesses are allowed to operate at full capacity; however, there are a few requirements employers must follow to prevent the spread of COVID--19.

L&I requires employers to:

  • Ensure unvaccinated employees wear a mask while working indoors.
  • Verify vaccination status before lifting employee mask requirements and be able to show the process used for verification.
  • Keep employees with possible or confirmed cases of COVID-19 from working around others.
  • Provide handwashing facilities and supplies.
  • Train employees to recognize and respond to workplace hazards, including COVID-19.
  • Assess recognized hazards, including COVID-19, as part of the ongoing requirement to provide a safe and healthful workplace and, where appropriate, take additional steps to protect unvaccinated employees.
  • Notify employees in writing within one business day if someone they had close contact with tests positive for COVID-19 and do so without disclosing the person’s identity.

For more detailed information on employer requirements and general guidance, visit L&I Requirements and Guidance for Preventing COVID-19.

Alert from NIADA - PPP Loan Recipients' Information Made Public

The Small Business Administration was required to release public data on all businesses that received loans through the Paycheck Protection Program. The information that was released, including borrower's names, addresses, loan amounts, and lender information was in response to a court order from a Freedom of Information Act lawsuit that was filed by the Center for Public Integrity and 10 other organizations challenging the SBA’s refusal to release records on borrowers and their loan information.

Now third-party businesses can use the disclosed information to target PPP loan recipients with deceptive marketing materials and fraudulent claims. NIADA is urging all businesses who received PPP loans to be aware of any third-party marketing in reference to your PPP loan that may imply an affiliation with the PPP loan program, the Small Business Administration, or your PPP loan lender. NIADA suggests you should check with your lender or the SBA to confirm any claims being made.

NHTSA's Final Rule On Odometer Disclosure Requirements and Electronic Odometer Disclosure Systems

The U.S. Department of Transportation’s National Highway Traffic Safety Administration announced their Final Rule that revises the odometer disclosure requirements and also allows for individual states to implement their own electronic odometer disclosure system.

The average vehicle age is around 12 years and the NHTSA believes that these older vehicles, that are exempt from mileage disclosure, are at risk for odometer fraud. The NHTSA addresses this issue by increasing the odometer disclosure requirements from vehicles that are less than 10 years old to requiring an odometer disclosure for any vehicle that is less than 20 years old beginning with the model year 2011.

The Final Rule also sets requirements and establishes standards for states to implement their own system to accept odometer disclosures in electronic format. By doing so, the NHTSA states that this will remove the last remaining federal obstacle to paperless motor vehicle title transfers.

The Final Rule takes effect on January 1, 2021.