Washington Denies Out-of-State EV Sales Tax Refund

The Washington Department of Revenue’s (DOR) Administrative Review and Hearings Division (Division) has ruled that a Washington resident who bought a used electric vehicle in another state is not entitled to a refund of the sales tax she paid there. She claimed the DOR had told her she qualified for a refund of 50% of that tax. The question was whether the DOR’s statements and Washington tax law entitled her to the refund.

The Background of the Dispute

On October 9, 2023, the taxable person requested a refund of sales tax paid to another state under Washington’s sales tax refund program. On November 17, 2023, the DOR’s Taxpayer Account Administration Division (TAA) denied the request. It explained that no Washington sales tax had been collected at the time of purchase and that the Department of Licensing had correctly applied the relevant exemption when registering the vehicle.

The taxable person appealed, arguing that the DOR had previously told her she was eligible for a refund of half the sales tax paid to the other state.

On review, the TAA explained that Washington had calculated the use tax due by applying the relevant tax rate to the vehicle’s taxable purchase price. It then credited the sales tax already paid to the other state. This credit reduced her Washington use tax liability to zero or below. Because Washington had collected no tax from her for the vehicle, there was no Washington tax to refund.

Division's Analysis and Decision

The Division noted that the state imposes both retail sales tax and use tax, where the sales tax applies to purchases made within the state and is paid by the buyer to the seller. Use tax applies when tangible personal property is used in Washington but Washington sales tax has not been paid.

Washington sales and use tax exempts qualifying electric vehicles, including certain new and used passenger cars, light-duty trucks, and medium-duty passenger vehicles. To qualify, a vehicle must meet specified clean-fuel or electric-propulsion requirements. A used vehicle’s fair market value at the time of purchase must not exceed USD 30,000, and the exemption is capped at USD 16,000 of the purchase price.

The Division found that the taxable person’s vehicle qualified for the used electric vehicle exemption because its purchase price was below USD 30,000. It also found that the Department of Licensing had correctly calculated the taxable amount and applied a credit for the sales tax paid to the other state. Because the Division did not collect any Washington tax, it denied the refund request.

Conclusion

This ruling shows that a tax exemption or credit in one state does not guarantee a refund from another. For businesses that buy vehicles or other equipment out of state, such as fleet operators, dealers, and companies adding electric vehicles to their operations, this can change the real cost of a purchase. Companies should confirm how each state will tax a purchase before closing, and seek written confirmation or a formal ruling.