A law limiting sales tax exemptions for Oregon residents doing business in Washington is now in effect, though a clause regarding goods delivered across state lines is anticipated to alleviate some of what business owners are calling a bad move on state lawmakers’ part.
Senate Bill 5997 removes the automatic sales tax exemption for residents of states without the tax, like Oregon. The legislation has been in effect since July 1 and allows for the reimbursement of state sales tax over $25 annually, requiring residents to file for that reimbursement once per year.
Prior to the bill being signed into law, dozens of state lawmakers, including several representing Clark County, sent a letter to Gov. Jay Inslee asking him to veto the removal of the automatic exemption.
Though the removal of the exemption is likely to affect the bottom lines of a variety of retail establishments in North County, a clause that keeps the exemption in certain circumstances will help those who sell construction and other heavy equipment on this side of the river. There is a provision on items delivered into Oregon that keeps the exemption, which has some local businesses feeling better about the situation.
Dan’s Tractor Owner Skip Ogden said that about 20% of his business was with Oregon residents, mainly construction equipment and tractors. That equipment was almost entirely all delivered, which he speculated to now be the only case given the incentive to have it shipped across state lines.
Ogden said he first learned that the exemption would be going away only a few weeks before it was supposed to go into effect, later learning that purchases delivered to Oregon would not lose the exemption about two days before the effective date of July 1.
“I’m hopeful. We always think positive,” Ogden said about the situation. He questioned the rationale behind removing the exemption.
“It sounds like they were thinking that everybody would continue as normal and now they would have that tax revenue off all these sales,” Ogden said. “I don’t know if they just ignored people or didn’t ask them about the reality of Oregon shoppers.”
Clark County Lawn & Tractor General Manager Kevin Williquette said about 12% of the business’ sales was from Oregon residents. He said rumors had been swirling for a while but it was this year when the seriousness came into view.
Williquette said it was obvious the law was approved “without a whole lot of homework” on how businesses near the border would be impacted. He said that although there was some walk-in business from Oregonians buying “small stuff” he didn’t feel that portion of business was too big compared to equipment sales.
“We won’t be seeing Oregon residents over here buying stuff unless we can deliver it,” Williquette remarked.
The effects of the law remained to be seen when comparing year-to-year sales, Williquette said. He also pointed to potential taxing on businesses who have sales in Oregon from that state’s legislature as possibly exacerbating the effects the Washington exemption removal would have.
“It’s not going to be favorable. There’s no way it can be,” WIlliquette remarked. He, like Ogden, took issue with the assumption that removing the exemption would increase state revenues.
“Anybody that thinks people are going to come over here and willingly give Washington State money hoping they will get it back later, they’re giving people no credit for being intelligent,” Williquette remarked.