The Washington State Department of Revenue is reminding out-of-state companies that they could see some changes to their Washington tax obligations due to new legislation taking effect Sept. 1.
Under the new rules, businesses located outside Washington must begin paying the state’s business and occupation tax if they make more than $267,000 in wholesale sales to Washington customers, based on their 2014 sales. These companies were already required to pay the tax if they had a physical connection with the state, which could include a stock of goods, employees or non-employee representatives.
The 2015 Legislature also approved a second tax change: out-of-state sellers paying a commission or other type of payment to a state resident or business to promote their products online could be required to collect the retail sales tax. The law presumes these types of sellers have substantial nexus when sales to Washington customers referred through this arrangement exceeded $10,000 in 2014.
This “click-through” nexus provision is modeled after a New York state law. With the new law taking effect Sept. 1, Washington will join approximately 15 other states implementing this type of legislation. The new legislation is expected to generate $185 million in new revenue to the state by June 30, 2017. More information is available on the Economic Nexus page of the Department of Revenue website, http://dor.wa.gov.
