United States

Washington: B&O Tax Economic Nexus Standard Expanded to Include Retailers

Jul 17, 2017
From KPMG TaxWatch

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Recently-enacted House Bill 2163 made significant changes to Washington’s laws designed to increase sales and use tax collections on remote sales. Specifically, remote sellers and marketplace facilitators must collect and remit Washington sales and use tax or comply with certain use tax notice requirements effective January 1, 2018, if they have at least $10,000 in sales to Washington consumers. Referrers must likewise elect to collect and remit or comply with specified use tax notice requirements. However, for referrers the gross receipts threshold is at least $267,000 of gross income from providing referral services apportioned to Washington.

Although these “collect or report” provisions have attracted a good deal of attention, House Bill 2163 also extends the state’s Business and Occupation (B&O) Tax economic nexus provisions to taxpayers engaged in making retail sales. Currently, the B&O economic nexus provisions apply only to taxpayers engaged in certain apportionable activities and taxpayers making wholesale sales. Under House Bill 2163, a person, including a person engaged in any selling activity, is deemed to have substantial nexus for B&O purposes if the person, in the current or immediately preceding calendar year, has more than $53,000 of property or payroll in Washington State or more than $267,000 of receipts from Washington customers. Nexus also exists if at least 25 percent of the person's total property, payroll or total receipts are in Washington State during the current or immediately preceding calendar year. Please contact Michele Baisler at 206-913-4117 with questions on House Bill 2163.

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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.