May 23, 2008

Northwest Chess to begin collecting WA sales tax in July

For many years, the Washington Chess Federation and Northwest Chess paid the Washington State sales tax charged by the printer or publisher on the cost of printing. Beginning about one year ago (in the summer of 2007), Northwest Chess became an officially registered business, with the responsibility of collecting and remitting the Washington State sales tax on the full cost of magazine subscriptions (not just the printing cost), but only for copies mailed to Washington residents. (Note: newspaper subscriptions are exempt from the sales tax, however magazines are not exempt.) So far Northwest Chess has absorbed the additional sales tax, however due to rising expenses and the need to be fair to subscribers outside the state of Washington, Northwest Chess will begin collecting the sales tax on magazine subscriptions mailed to Washington residents beginning July 1, 2008.

July 1 is also the date that Washington State implements “destination based sales tax.” That is, taxes are due at the rate in effect for the jurisdiction where you receive a product or service (in this case the magazine), rather than the rate in the jurisdiction where the product or service is produced or shipped. Northwest Chess will publish new membership/subscription forms in June that include space for entering your local tax rate and tax due. A tax table will also be provided for looking up the correct tax rate for your city or county. If you do not wish to look up the correct tax rate, then you will have the option of paying the highest rate in effect, which is currently 9.0% for most parts of King County.

Membership/subscription payments received without the sales tax will be good for only 11 months instead of 12, an effective tax rate of 9.1%. Payments received before July 1 will still be accepted for 12 months without the tax. Multiple-year payments for up to 10 years will also be accepted, which allows you to “lock in” the current membership rate.

WCF treasurer Robert Allen (who is also a tax accountant) will determine if the WCF membership portion of the annual subscription is tax-exempt. Currently $4.00 out of each $25.00 subscription goes to the WCF, and the remainder covers the cost of the magazine. For junior members, the WCF receives $3.00 from each $17.00 annual subscription. If the WCF portion is tax-exempt, the forms will be adjusted accordingly.

There is still a possibility that there may need to be a general dues increase later this year, which would affect Oregon as well as Washington residents. Advance notice will be given if the Northwest Chess board decides to implement a general dues increase.