WAC 155-03

Digital Products The Department engaged in this rule making to amend WAC 458-20-15501, and adopt two new rules (WAC 458-20-15502 and 15503) to explain the impacts of 2009 and 2010 legislation, and to address other tax issues related to computer hardware, computer software, and computer services below. WAC 458-20-155 is being repealed. Chapter 535, Laws of 2009 (ESHB 2075), made major changes to the taxation of certain products and services provided or furnished electronically (commonly referred to as "digital products").

Digital Products The Department proposes to amend WAC 458-20-15503 to recognize the provisions of Engrossed Substitute Senate Bill (ESSB) 5882, Part VII [Chapter 13, Laws of 2013, 2nd Special Session]. This legislation established an exemption from retail sales tax and use tax for purchases of standard financial information by qualifying international investment management companies.

Digital Products-General Analysis of Tax Liability. The Department initially issued ETA 9003.2010 Digital Products – General Analysis of Tax Liability on November 30, 2010. This ETA is readopted as ETA 3177.2013 so that it is renumbered in a manner consistent with other existing ETAs. This ETA explains the overall process of digital products tax analysis; highlights key considerations in the analysis process; and directs taxpayers to other ETAs and rules for more information.

Taxation of Alarm Monitoring This ETA explains the taxation of a single alarm monitoring service. The ETA discusses alarm monitoring services that qualify as digital automated services (DAS) under RCW 82.04.192, including instances where services are not considered DAS. The ETA further explains the application of the primarily human effort exclusion from DAS in this context, providing related examples.

Exemptions Extended for Certain Purchases by Eligible Data Centers

Exemptions Extended for Certain Purchases by Eligible Data Centers

Tax Exemptions Extended for Certain Purchases by Eligible Data Centers and Their Tenants

RCW 82.04.192, RCW 82.04.050: RETAIL SALE – DIGITAL AUTOMATED SERVICES. Domain name registration services purchased from a domain name registrar are “digital automated services” under RCW 82.04.192(3)(a).

RCW 82.04.050, RCW 82.04.190: RETAIL VS. WHOLESALE SALE – CONSUMER – END USER. Computer data center’s purchase of digital automated services from a domain name registrar for resale to its own customers is a wholesale sale.

RCW 82.04.050, RCW 82.04.190: RETAIL VS. WHOLESALE SALE – CONSUMER – END USER. Computer data center’s sales of digital automated services to its customers are “retail sales” under RCW 82.04.050(8)(a).

RCW 82.04.(2)(g): B&O TAX –– “DIGITAL GOODS” -- DIGITAL ENHANCEMENT – BUSINESS PURPOSES. “Photoshop enhancement” of digital photographs for businesses for use in their online advertising is the “altering” or “improving of digital goods subject to the retailing classification of the B&O tax.

RCW 82.08.02087: RETAIL SALES TAX – “DIGITAL GOODS” – DIGITAL ENHANCEMENT – BUSINESS PURPOSE. “Photoshop enhancements” performed on digital photographs that will be used for solely business purposes are exempt from retail sales taxes when customers provide Digital Products and Remote Access Software Exemption Certificates.