Temporary staffing services: Modification to exclusion from retail sales for staff provided to hospitals

Intended audience: Temporary staffing agencies

Starting Jul. 1, 2026, the exclusion from the definition of retail sales of temporary staffing services for staff provided to hospitals is expanded. Previously, temporary staffing services did not include providing workers to hospitals licensed under chapter 70.41 RCW or 71.12 RCW.

What is the new exclusion?

Temporary staffing services also do not include staffing services that are utilized:

• By hospital-based clinical providers to supplement their fulfillment of hospital contracts for professional services; and
• For limited periods of time to supplement hospital staffing.

How will I report these services?

You will report staffing services that are excluded from the definition of temporary staffing services based on the activities performed by the staff. Medical and administrative services are subject to business and occupation (B&O) tax under the Service and Other Activities classification.

How do I document that the services are excluded?

The department is developing a declaration form that buyers can use if they qualify for the exclusion from retail sales. The declaration form will be available before the July 1, 2026, effective date. You must keep a copy of the declaration in your records for five years.

Do I have to collect sales tax on excluded services provided prior to July 1, 2026?

You do not have to collect sales tax if the excluded services meet the requirements for existing contract treatment as provided in our interim guidance statement. The department is extending the grace period for newly excluded services through June 30, 2026. You must collect sales tax through June 30, 2026, if you do not meet the requirements for existing contract treatment.

Tribal consultation and guidance status

This notice provides information on select changes enacted during the 2026 legislative session. The department has not issued an Interim Guidance Statement, Excise Tax Advisory, or initiated rulemaking on this topic. The department is consulting with tribes on ESSB 5814 (2025). Vendors with tribal customers should request a ruling.