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Washington State Law Updates Sales Tax Collection Requirements for Out-Of-State Businesses

On March 14 Gov. Jay Inslee signed Substitute Senate Bill 5581 (SSB 5581) into law, thereby simplifying Washington tax responsibilities for businesses without a physical presence in the state.

Prior to SSB 5581, Remote Sellers, Marketplace Sellers and Marketplace Facilitators without a physical presence were required to collect and remit Washington sales tax if they exceeded 200 transactions or $100,000 in sales to Washington. Effective immediately, the law removes the transactional volume nexus standard. Instead, these businesses should solely use $100,000 in sales to Washington as the standard for collecting sales tax.

Additionally, effective July 1st, 2019, SSB 5581 eliminates the previously enacted Notice and Reporting requirements. When first implemented, businesses were required to either disclose their sales to Washington consumers or voluntarily collect sales tax on behalf of their customers if sales exceeded $10,000.

Click-Through nexus is also eliminated immediately. Click-Through nexus refers to a presumption that a remote seller has physical-presence nexus with Washington when the remote seller makes sales in which a Washington resident referred the customer to the remote seller through a link on a website or by any other means.

SSB 5581 is estimated to affect approximately 15,000 taxpayers and increase state revenue by $115.9M between 2019-2021.

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