Penalty relief program available for sales tax on services changes

OLYMPIA, Wash. – June 25, 2026 - The Washington State Department of Revenue is offering a temporary penalty relief program for businesses affected by retail sales tax changes for services under ESSB 5814.

As of Oct. 1, 2025, certain services became subject to retail sales tax under ESSB 5814. Many businesses faced challenges understanding and implementing the changes before the law took effect.

To support voluntary compliance, the department will waive certain penalties for businesses that voluntarily report and pay retail sales tax and use tax owed as a result of these changes.

Important: This program waives penalties only. Businesses must still pay the tax owed and any applicable interest.

What the program covers

The program waives certain penalties for:

• Uncollected retail sales tax and unpaid use tax resulting from ESSB 5814 changes.
• Reporting periods from Oct. 1, 2025, through Dec. 31, 2026.

Who qualifies

Businesses may qualify if they:

• Owe retail sales tax or use tax due to ESSB 5814 changes.
• Submit an application for penalty relief by Sept. 30, 2027.

For preexisting contracts that qualify for temporary sales tax relief:

• Penalty relief begins when the contract no longer qualifies for temporary relief or on April 1, 2026, whichever occurs first.
• Relief ends Dec. 31, 2026.

How to apply

All requests for penalty relief must be submitted through the department’s online application. Learn more about the program, steps involved, and how to apply.

Businesses not registered should review the department’s Voluntary Disclosure Program to determine their eligibility.

For specific questions about this program, businesses can contact us:

• By phone: 360-704-5649.
• Email: voluntarydisclosure@dor.wa.gov.