Are you selling products in the state of Washington through independent distributors?

You should know that each independent distributor selling in the state of Washington is responsible for collecting and paying retail sales tax to the Department of Revenue.

Distributors may also be required to pay Washington's Business and Occupation (B&O) tax, Litter Tax and Regional Transit Authority tax on their sales. B&O tax is also required for commissions on instate activities.

Because of this, the distributors are each required to register with the Washington State Department of Revenue and report and pay tax on their instate activities.

However, direct sellers and multi-level organizations may agree to report taxes on behalf of their distributors, relieving the distributors of their tax obligations. The Department offers two standard tax collection agreements to direct sellers and multi-level organizations:

Collection Agreement for All Taxes

Under this agreement, the direct selling organization assumes responsibility for collecting and paying the Sales, Use, Litter, Regional Transit Authority, and B&O taxes, on behalf of their distributors. See Collection Agreement for All Taxes (pdf).

Collection Agreement without B&O Taxes

Under this agreement, the direct selling organization assumes responsibility for collecting and paying the Sales, Use, Litter, and Regional Transit Authority taxes, on behalf of their distributors.

In this case the direct seller or multi-level organization agrees to disclose to the Department any distributor that has sales or commissions exceeding predetermined thresholds during a calendar year. See Collection Agreement without B&O Taxes (pdf).

For More Information

Special Notice to Direct Sellers (pdf)

RCW 82.04.423

WAC 458-20-246