What exemptions apply to sales of precious metals in Washington state retail sales tax law?
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Executive summary
Washington law historically exempted qualifying precious metal bullion and monetized bullion from retail sales tax and the retailing and wholesaling B&O tax, with narrow exceptions for items transformed into jewelry or art and for paper currency; however, the 2025 legislative repeal (SB 5794) ends that exemption effective January 1, 2026, making most bullion and monetized bullion sales taxable going forward [1] [2] [3].
1. What the exemption used to cover — bullion and monetized bullion defined
Under longstanding Department of Revenue guidance and WAC 458-20-248, “precious metal bullion” meant refined or processed precious metal whose value depends on metal content (gold, silver, platinum, palladium, rhodium, etc.), and “monetized bullion” meant coins and similar items recognized as money; gross income from sales of these qualifying bullion and monetized bullion was generally excluded from retail sales tax and retailing/wholesaling B&O tax prior to 2026 [4] [5] [6].
2. Important carve-outs that limited the exemption in practice
Washington’s rule historically did not exempt transactions when the metal’s value derived from its form rather than content—most notably when bullion was sold as or converted into manufactured items like jewelry or works of art, which were taxable and subject to the appropriate wholesale or retail B&O classification; dealers who knowingly sell to jewelry manufacturers had to document the purchaser’s intent to avoid retail tax [1] [5] [7].
3. Currency and coins: a separate treatment
Paper currency sold or exchanged as legal tender has always been treated differently and remained exempt from retailing B&O tax and retail sales tax; monetized bullion (coins that function as money) was, until the repeal, generally treated under the bullion exemption, though numismatic or collectible coins could be taxed if their value derived from rarity or form rather than metal content [5] [4].
4. Why the exemption changed: JLARC and legislative action
Nonpartisan auditors at the Joint Legislative Audit and Review Committee recommended legislative review of the preference, finding the exemption’s public-policy objective unclear and its competitive impact ambiguous, and the Legislature elected to repeal the exemption among many others in 2025 as part of broader budget and tax preference reforms—resulting in SB 5794 (effective Jan. 1, 2026) that removes the exclusion and brings bullion and monetized bullion into the ordinary definitions of wholesale and retail sales subject to B&O and sales tax [8] [9] [2].
5. What the repeal actually does for sellers and buyers
Beginning January 1, 2026, gross income from sales of precious metal bullion and monetized bullion to end consumers is subject to the Retailing classification of B&O tax and sellers must collect state and applicable local retail sales tax; wholesalers may still transact tax-free only when a valid reseller permit is presented, but retail customers will see bullion purchases taxed at the prevailing combined state/local rates [2] [10] [3].
6. Industry reaction and political context
Dealers, trade groups like the National Coin & Bullion Association, and advocates for the numismatic community argued the exemption supported local businesses and investment activity and warned of economic harm and “forced” relocation, while the Legislature and JLARC emphasized fiscal neutrality and the need to trim tax preferences that no longer served clear public-policy goals—presenting a classic policy clash between industry competitiveness claims and government fiscal review [11] [12] [8].
7. Practical compliance notes and remaining uncertainties
Department of Revenue guidance and special notices spell out definitions and compliance steps for businesses to classify sales correctly and collect the tax after Jan. 1, 2026, but market participants should consult the DOR publications and legislation for transaction-specific rules (resale certificates, mixed-use sales, commissions) because the reporting materials emphasize differing B&O treatments depending on whether a sale is wholesale, retail, or a service [2] [1] [10]. This reporting set does not exhaust every statutory nuance (for example, precise local rate impacts or post-2025 administrative clarifications), so any unanswered technical questions require direct review of the law, WACs, or DOR advisories [2].