Beginning Jan. 1, 2020 the nexus threshold for all B&O tax classifications and sales tax collection will be $100,000 of combined gross receipts per calendar year for businesses without a physical presence. Physical presence will also establish nexus for all B&O tax classifications and sales tax collection (SSB 5581).
Effective July 1, 2017, the timeframe for applying the economic nexus standards for out-of-state businesses with service, royalties, and other apportionable income has changed. Businesses not organized or commercially domiciled in Washington with apportionable income attributed to Washington will be subject to business and occupation (B&O) tax under apportionable classifications, if during either the current or prior calendar year they meet any of the economic nexus thresholds.
Economic nexus is established in 2019 if any of the following thresholds are met:
- An individual that is a resident of this state or an entity that is organized or commercially domiciled in Washington in 2018 and/or 2019
- More than $285,000 of gross receipts sourced or attributed to Washington in 2018 or 2019
- More than $57,000 of payroll in Washington in 2018 or 2019
- More than $57,000 of property in Washington in 2018 or 2019
- At least 25 percent of total receipts, payroll or property in Washington in 2018 or 2019
Thresholds for previous years are found in ETA 3195.
In determining whether a business has exceeded a receipts threshold, apportionable income attributed to Washington is included along with its retail and wholesale sales sourced to this state.
If you meet one or more of the above economic nexus thresholds, you must register your business with the Washington State Department of Revenue and report and pay Washington B&O tax.
How do I register my business in Washington?
Register your business online where you will find step-by-step instructions, information and resources.
If you have questions, call us at 360-705-6705 or request a binding tax ruling.