Upload instructions and a template for the use tax notice and reporting annual report to the Department are now available.
Beginning October 1, 2018, remote businesses that exceed $100,000 in retail sales to, or have 200 or more annual transactions with, Washington consumers must register their business and collect and submit retail sales/use tax.
The threshold is based on the current or preceding calendar year. For example, if you met the threshold in 2017, you are required to begin collecting sales tax on October 1, 2018.
If you exceed the $100,000 or have 200 or more transactions after October 1, 2018, you are required to collect sales tax on the first day of the month that starts at least 30 days after you meet the threshold.
For example, if you meet the threshold on October 12, you would be required to begin collecting on December 1.
Once you meet the threshold, you are required to collect and report for the remainder of the current calendar year, and the following calendar year.
For example, if you meet the threshold in April 2018, you will be required to collect through the 2019 calendar year. Then, if you did not meet the threshold in 2019, and do not meet it in 2020, you would not have to collect in 2020.
If you are concerned you will not be able to begin collecting retail sales tax by October 1, 2018, please email us.
Effective January 1, 2018, remote businesses making between $10,000 and $100,000 in retail sales to Washington consumers must make a retail sales tax choice, and may need to register their business. The $10,000 threshold applies to all of your retail sales, including sales made through a facilitator and through your own website or otherwise.
When you make a choice, you must continue that choice for one full calendar year. If, after that year, you would like to modify your choice, you must notify the Department 30 days before changing. Your new choice must go into effect on January 1.
If, at any time after October 1, 2018, you meet the requirements for threshold one you no longer have a choice and must begin to collect retail sales tax for all sales to Washington customers.
Collect and submit sales/use tax for sales to Washington consumers:
- If you met the $10,000 threshold in 2017, you should collect retail sales tax beginning on January 1, 2018.
When you meet the threshold, you must begin collecting on the first day of the month that starts at least 30 days after the date you meet the threshold.
- For example, if you met the threshold on February 15, 2018, you must begin collecting sales tax on April 1, 2018.
Remote sellers that choose to collect and submit sales/use tax on their retail sales into Washington are required to register in Washington. To register for Washington only, complete a Business License Application online at bls.dor.wa.gov. Be sure to indicate that you are a “Remote seller” in the business activity description of the application. Once processed, you will receive a Unified Business Identifier (UBI).
If you need help registering, call Business Licensing Service at 1-800-451-7985.
Collecting retail sales tax
Remote businesses that choose to collect and pay sales tax on their sales into Washington must collect sales/use tax based on the delivery location (or where the item is sourced) in Washington. The Department of Revenue has information and tools to help businesses determine the correct sales/use tax rate.
Switching from collecting sales tax to doing use tax notification/reporting
If you chose to collect sales tax:
- You must collect tax for at least 12 consecutive months before you can change to use tax notice and reporting.
- You must notify the Department of Revenue in writing at least 30 days before making the change.
- Changes go into effect each year on Jan. 1.
Here are two examples:
- If you start collecting sales tax on January 1, 2018, you can switch to use tax notice and reporting on January 1, 2019.
- You must provide written notification of the change to the Department by December 2, 2018.
- If you start collecting sales tax on February 1, 2018, you can switch on January 1, 2020.
- You must collect tax for at least 12 months (February 1, 2018 – January 31, 2019).
- You must provide written notification of the change to the Department by December 2, 2019.
- Changes go into effect on January 1, 2020.
You should file a tax return.
- Report retail sales under the retailing Business and Occupation (B&O) tax classification. If you do not have B&O nexus in Washington, you can claim a “No Local Activity” deduction.
- 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/use rate.
- If a third party (e.g., marketplace facilitator) collects and submits some or all sales tax for you, you can take the deduction, “Retail Sales Tax Collected by Facilitator” under the state portion of the retail sales tax classification for these sales
Follow the use tax notice and reporting requirements:
- Use tax notice and reporting requirements for marketplace facilitators and remote sellers
- Use tax notice and reporting requirements for referrers
*NOTE: Once a business exceeds $100,000 in retail sales, or has 200 or more transactions, as of October 1, 2018, the business no longer has a choice and must register and collect retail sales/use tax.
If you previously met the $10,000 threshold, and exceed $100,000 or have 200 or more transactions on October 1, 2018, you are now required to collect sales tax. If you previously chose to do use tax notice and reporting, you may remove your platform notices on the day you are required to begin collecting sales tax, or the day you begin to collect sales tax if it is sooner. Your Annual report to Department of Revenue and Annual report to purchasers will apply to the period from January 1, 2018 to the day you begin collecting sales tax.
|Annual retail sales to WA||Annual transactions to WA||Action|
|Less than $10,000||199 or less||You do not need to register or collect tax.*|
|Less than $10,000||200 or more||You must register, collect, and submit retail sales tax|
|$10,000–$100,000||199 or less||
You must choose: register, collect, and submit retail sales tax;
follow use tax notice and reporting guidelines
|$10,000–$100,000||200 or more||You must register, collect, and submit retail sales tax|
|$100,000.01 or more||199 or less||You must register, collect, and submit retail sales tax|
|$100,000.01 or more||200 or more||You must register, collect, and submit retail sales tax|
*This assumes that you do not have a physical presence in Washington.
Legal entity registration for businesses located outside Washington state is not required to complete the licensing process with the Department of Revenue. We recommend that you seek legal counsel before making a legal entity registration decision due to the potential legal ramifications involved.
If you have questions regarding your tax reporting requirements, email DORMarketplaceFairness@dor.wa.gov or call 1-800-426-1776.