A reseller permit documents qualifying purchases for resale and can change whether retail sales tax is charged between a prime contractor and subcontractor.
Washington DOR says qualifying contractors may use a reseller permit for materials that become part of a retail or wholesale construction project and for qualifying contract labor purchased for resale.
Examples of component materials include lumber, concrete, wiring, pipe, insulation, drywall and similar items that become part of the completed real-property improvement.
A reseller permit generally is not used for tools, equipment, equipment rentals or consumable supplies that do not become part of the project. DOR also identifies special treatment for public road construction, U.S. government contracting and speculative building.
DOR states that a subcontractor performing qualifying work for a prime contractor should obtain a valid reseller permit or other approved exemption documentation from the prime contractor to support wholesale treatment. Without valid documentation, the subcontractor generally needs to collect sales tax.
Washington reseller permits are generally valid for four years, but contractor permits are generally valid for two years. Other circumstances can also result in a two-year permit.