Do You Need to Get a Sales Tax Permit in Washington?
Quick Answer: You need to get a sales tax permit in Washington if you have a physical presence or meet economic nexus requirements. Read on for more detailed information.
What is Sales Tax Nexus Anyway?
Your business owes sales tax in any state where it has “sales tax nexus”. In short, if you have sales tax nexus you need to get a sales tax permit in order to collect and remit sales tax. If you don’t have sales tax nexus, you generally don’t need to get a permit.
Sales tax nexus is a legal term that means you have crossed a threshold and now have a sales tax collection responsibility in the state. Nexus can be created by having a physical presence, economic presence, or by other factors. Nexus rules vary by state and retailers have specific nexus rules based on where they have people, property or inventory.
What Should You Do Once You Determine You Have Sales Tax Nexus?
Once you determine that you have sales tax nexus in Washington, your next step is to register for a sales tax permit in the state. Check out our blog post on getting a sales tax permit in Washington or more information about that process.
If you are not interested in doing the work of getting the permit yourself, TaxValet can handle the permit registration for you with our Sales Tax Permit Registration Service.
Common Ways to Have Sales Tax Nexus in Washington
1. Economic nexus in Washington
If you made $100,000 of sales in Washington in the current or prior calendar year, then you are required to register for, collect, and pay sales tax to the state. If you meet this threshold, it does not matter if you have a physical presence in Washington. Nexus has been created based on your volume of sales.
For more information see the registration requirements for out-of-state businesses.
If you need help determining which states you have crossed economic nexus thresholds, check out our Sales Tax Starter Kit service.
2. Physical presence nexus in Washington
The following creates physical presence nexus in Washington. If you have any of the following in Washington, you need to get a sales tax permit:
- An employee working in the state
- Property in the state
- A stock of goods in Washington, including inventory held by a marketplace facilitator or another third party representative
- Renting or leasing tangible personal property in Washington
- An agent or third-party representative engaging in activities that are significantly associated with establishing or maintaining a market in the state
- Soliciting sales in Washington through employees or other representatives
- Installing or assembling goods in Washington, either by employees or other representatives
- Constructing, installing, repairing, or maintaining real property or tangible personal property in Washington, either by employees or other representatives
- Providing services in Washington, such as accepting returns or providing product training, either by employees or other representatives
- Delivering goods into Washington other than by mail or common carrier, including using the seller’s own vehicles
- Having an exhibit at a trade show to maintain or establish a market in the state (except for as provided in the Special Notice titled Trade Convention Exception from Nexus for Retail Sales)
For more information, please see WA DOR Physical Presence Nexus.
If you need help determining which states you have a physical presence in, check out our Sales Tax Starter Kit service.
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Do You Need a Sales Tax Permit in Washington If You Only Sell on Marketplaces?
If you are an out-of-state online retailer who ONLY sells on approved marketplaces (such as Amazon, eBay, etc), Washington sales tax will be remitted by the marketplace on your behalf. However, you are still required to get a sales tax permit in the state. Washington has a Business and Occupation tax (B&O) in addition to sales tax. B&O tax is paid by the business, not the customers, based on the total sales in the state. The current retail B&O rate as of the publishing of this blog is 0.471% or just under one-half percent. There is a credit against B&O tax for small business sellers of up to $850.00.
For more information about this please see WA DOR Marketplace Sellers.
If you are an e-commerce seller who is unsure of where you need to get a sales tax permit, feel free to check out our Sales Tax Starter Kit service.
Disclaimer: Our attorney wanted you to know that no financial, tax, legal advice or opinion is given through this post. All information provided is general in nature and may not apply to your specific situation and is intended for informational and educational purposes only. Information is provided “as is” and without warranty.