Beginning January 1, 2018, marketplace facilitators with a physical presence in Washington, or $10,000 or more in retail sales sourced to Washington—including sales made on behalf of marketplace sellers—must either:
- Choice one: Collect and pay sales tax on sales to Washington purchasers, or
Choice two: Use tax notice and reporting requirements.
What is a marketplace facilitator?
A marketplace facilitator is a business that does the following three activities: (RCW 82.13.010(3)):
1. Facilitates the sale of a marketplace seller’s product through a marketplace for payment.
2. Engages, directly or indirectly, in any of the following with respect to bringing the buyer and seller together:
- Transmitting or otherwise communicating the offer or acceptance between the buyer and seller
- Owning or operating the infrastructure, electronic or physical, or technology that brings buyers and sellers together
- Providing a virtual currency that buyers can use to purchase products from the seller
- Software development or research and development activities related to any activities with respect to the seller’s products listed below, if such activities are directly related to a marketplace operated by the person or an affiliated person.
3. Does any of the following activities with respect to the seller's products:
- Payment processing services
- Fulfillment or storage services
- Listing products for sale
- Setting prices
- Branding sales as those of the marketplace facilitator
- Order taking
- Advertising or promotion
- Providing customer service or accepting or assisting with returns or exchanges
A marketplace facilitator facilitates sales of a seller’s products through a marketplace and engages in other specified activities as provided by the law and outlined above. Websites that merely advertise goods for sale and do not handle transactions do not meet the definition of a marketplace facilitator.
If you have questions about whether you qualify as a marketplace facilitator, you may request a binding tax ruling.
Determining Choice eligibility:
Facilitators with physical presence:
Marketplace facilitators that have a physical presence in Washington must collect and send sales tax on their own sales (in addition to sales made on behalf of physically present marketplace sellers), but must choose to either collect/send or notify/report for marketplace sellers without a physical presence in this state.
Facilitators without a physical presence:
Marketplace facilitators that do not have a physical presence in Washington, but meet the $10,000 receipts threshold, must choose to either collect/send or notify/report on their own sales and sales made by remote sellers without a physical presence in this state. The choice must be the same for both. However, the facilitator must collect/send for sellers with a physical presence in Washington.
The marketplace facilitator will collect sales tax on all marketplace sales sourced to Washington State. The facilitator will then send the collected sales tax directly to the Department; the marketplace facilitator may not give the sales tax to the marketplace seller to send.
To register a new tax reporting account in Washington, complete a Business License Application online at bls.dor.wa.gov. Be sure to indicate that you are a “Marketplace facilitator” in your business description when completing the application. Once processed, you will receive a Unified Business Identifier (UBI)/Account ID.
If you need help registering, call Business Licensing Service at 1-800-451-7985.
Marketplace facilitators electing to collect and send sales/use tax must report all third-party sales separately from their own sales into Washington. Third-party sales must be reported under a separate tax reporting account (branch account) or separate legal entity account. To request a branch account, contact our Business Registration Team at (360) 705-6211.
- Report your Washington sales under the retailing B&O tax classification and claim a deduction for “Other” for these sales. The explanation for the “Other” deduction should be “Third-Party Sales.” Marketplace facilitators do not owe retailing B&O tax on these sales.
- Report the state portion of the sales tax under the retail sales tax classification and the local portion under the local sales tax classification. The delivery location determines the sales tax rate and four-digit location code used to report local sales. The Department of Revenue has information and tools to help businesses determine the correct sales tax rate.
We need your help
The Department of Revenue is looking for marketplace facilitators who could assist us in developing a process to submit supplemental data as authorized under RCW 82.08.0531 (1) (b).
The Department is seeking test data, file format options, and transmission methods that would work for most marketplace facilitators. The work in this area will help in the rule drafting process which begins in mid-March.
If you are interested in participating in this effort, please contact Patti Wilson.
If you have questions regarding your tax reporting requirements, email DORMarketplacefairness@dor.wa.gov