What To Know About Washington’s Online Sales Tax

Monika Miles

The online sales tax debate continues, with states taking matters into their own hands instead of waiting for Congress to decide how to settle the matter. However, not all states are approaching the issue the same way. We’ve already looked at current and potential legislation in Colorado and Alabama; next we venture to Washington state!

A Summary of Washington’s Online Sales Tax Legislation

As we’ve previously explained, Washington prompted online sales tax collection by expanding its definition of nexus. Back in 2015, they rolled out the five-point internet sales tax solution, followed by establishing nexus through click-through retail solutions.

To summarize, Washington created special circumstances that make larger internet sellers subject to sales tax laws. These types of laws have become more common throughout the country and are commonly referred to as ‘Amazon Laws’ or “click through” statutes Nolo.com explains that in Washington specifically, “An out-of-state seller must collect sales tax from Washington customers if that seller:

  • Has an agreement with a business or seller located in Washington to pay for customer referrals obtained via a link on the Washington seller’s website or otherwise (a click-through arrangement), and
  • The out-of-state seller’s cumulative gross receipts from these sales to Washington customers exceeds $10,000 during the preceding calendar year.”

Washington’s Potential Upcoming Sales Tax Legislation

There are currently a couple of bills in the Washington State Legislature that have to do with online sales tax:

HB 2186: This bill is focused on improving the fairness of the state’s excise tax system in a number of ways, including a provision specifically for remote sellers, referrers and marketplace facilitators that states those that meet the statutory criteria need to collect sales or use tax, or comply with the notice and reporting requirements laid out in the act. Part VI of this summary provides more of the details.

SB 5855: This bill has to do with requiring remote sellers selling into Washington to collect sales tax. It amends previous legislation to clarify substantial nexus, which is what determines if a business is subject to the rules for collecting and remitting sales tax.

Ramifications of Washington’s Online Sales Tax Legislation

Although these three bills don’t present major changes to retailers, it is important that those selling to Washington state residents check the provisions laid out in the various bills; small changes within each state’s legislation can cost a company tens of thousands of dollars if they’re not careful. Of course, if you need help understanding current law or potential bills circulating in the legislature, we’re happy to provide assistance!

Want more details about the online sales tax debate and how various states are approaching the issue? Keep an eye out for the next post in our series!

Monika founded Miles Consulting Group which focuses on multi-state tax consulting, helping clients navigate state tax issues such as sales tax and income tax in interstate commerce, including e-commerce.

Prior to forming the firm, Monika worked for 12 years combined in Big 4 Public Accounting and private industry. Monika has provided such services as federal and state income/franchise tax compliance and consulting, sales/use tax consulting, audit support, and credits and incentives reviews. She has served clients in a variety of industries including manufacturing, technology, telecommunications, construction, utility, retail and financial institutions.

Monika graduated from the University of Texas at El Paso (UTEP) with a BBA in Accounting/Finance and has a Masters in Taxation from San Jose State University.

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