New Washington Law Simplifies B&O & Sales Tax Economic Nexus, Marketplace Facilitator Nexus
S.B. 5581 was signed by the Governor Jay Inslee on March 14, 2019, with the goal of improving the effectiveness and adequacy of state tax laws by clarifying and simplifying nexus provisions, by decreasing compliance and administrative burdens for taxpayers and the department of revenue, by facilitating the collection of new tax revenue resulting from the United States supreme court’s decision in South Dakota v. Wayfair, Inc., by providing more consistent tax obligations for both domestic and foreign sellers, and by simplifying the expiration of sales tax sourcing mitigation payments to local governments on September 30, 2019.
The law modifies and clarifies the following:
- The nexus threshold for marketplace facilitators and remote sellers to align state law with Wayfair. The nexus threshold of at least 200 transactions in WA is eliminated effective with the passage of this act.
- The nexus standards related to property and payroll in the state are eliminated, including the standard established if an individual or business has at least 25 percent of their total property, payroll, or receipts in the state. The click-through nexus standard is eliminated.
- Any person or business entity establishing nexus for B&O and retail sales tax purposes is required to pay all other applicable taxes and fees administered by the DOR.
- Beginning October 1, 2018, marketplace facilitators must collect and remit retail sales tax on all taxable retail sales made or facilitated by the marketplace facilitator, whether in its own right or as an agent of a marketplace seller, regardless of whether the marketplace seller is subject to a tax collection obligation. For marketplace facilitators, receipts and transactions counting towards the receipts and transactions thresholds include:
- receipts from the marketplace facilitator’s own sales into this state; and
- receipts from marketplace seller’s sales into this state through the marketplace facilitator’s marketplace, including sales by marketplace sellers that do not have nexus with this state.
- Beginning January 1, 2020, the collection obligation of a marketplace facilitator also applies to any other taxes and fees imposed on a retail sale made or facilitated by the marketplace facilitator, whether in its own right or as an agent of a marketplace seller, regardless of whether the marketplace seller has a tax collection obligation.
- Eliminates the option for marketplace facilitators and remote sellers to elect to not collect tax and instead comply with notice and reporting requirements.
- Limits the import tax exemption to import sales involving a parent company and a wholly-owned subsidiary.
- Clarifies certain provisions under the Streamlined Sales and Use Tax Agreement and repeals sections related to local jurisdiction mitigation payments.
If you want to discuss how your tax situation may be impacted by this law, let us know here, and we’ll connect you with a team member at no charge, or let us know by calling 513-241-8313.