Tax

University’s Tax Classification

With limited exceptions, the University is not considered tax-exempt. When asked by vendors, unless any purchases will be sold on with the University acting as a reseller, the University is not tax-exempt. The University is federally exempt from income tax for receipts in line with our purpose, but not exempt from paying sales and other taxes.

Sales Tax

Sales tax is a prescribed percentage of retail sales a seller is responsible for collecting from a customer at point-of-sale while disclosing that rate to the buyer. In Seattle, sales tax is calculated as 10.35% on any retail sales conducted within the city of Seattle. The components of this 10.35% are as follows: 6.5% of every dollar in a retail sale is levied by the state of Washington, 2.35% to the city of Seattle and King County, and 1.4% to the Regional Transit Authority.

The General Ledger Accounting team will compile monthly Excise Tax returns, on which the Sales Tax withheld in retail transactions is remitted to the taxing authority.

Washington Department of Revenue Excise Tax Guidance

Use Tax

Use tax is imposed on purchasers in retail transactions when the purchaser is not charged full sales tax due to what is known as “nexus”, which is effectively geographical presence for purposes of taxation. For example, making a purchase from Vancouver, OR, where no sales tax is levied while a resident of Seattle, where sales tax is 10.35%, the purchaser in the retail transaction is required to file to pay Use Tax to remit 10.35% of the all-in purchase price.

There are limited examples routinely applicable to the University, and the General Ledger Accounting team is responsible for preparing this section of the Excise Tax return for remittance to the tax authority.

Unrelated Business Income

Any income unrelated to the mission and programs of the University will be considered taxable. There is a broad definition for what constitutes related to mission and programs, but examples like lodging available to the public unrelated to a University program and admissions for events available to the public will be taxed as though by an entity that is not a registered 501(c)(3) non-profit.

Payroll Taxes

Please refer to the Payroll Wiki page for taxes related to payroll.