Sales Tax Fundamentals
Get up to speed on the basics of sales tax
Do you need to collect sales tax in Washington?
You’ll need to collect sales tax in Washington state if you have nexus there. There are two ways that sellers can be tied to a state when it comes to nexus: physical or economic. Physical nexus means having enough tangible presence or activity in a state to merit paying sales tax in that state. Economic nexus means passing a states’ economic threshold for total revenue or the number of transactions in that state.
Do you have physical nexus in Washington?
Washington considers a seller to have physical nexus if any of the following applies to your business:
- Soliciting sales in this state through employees or other representatives
- Installing or assembling goods in this state, either by employees or other representatives
- Maintaining a stock of goods in this state
- Renting or leasing tangible personal property
- Providing services
- Constructing, installing, repairing, maintaining real property or tangible personal property in this state
- Making regular deliveries of goods into Washington using the taxpayer’s own vehicles
You can click here to read exactly what the Washington Department of Revenue has to say about what constitutes sales tax nexus in Washington.
Do you have economic nexus in Washington?
Effective October 1, 2018, Washington considers vendors who make more than $100,000 in sales annually in the state to have economic nexus. This means the state considers these vendors obligated to collect sales tax from buyers in the state. You can read Washington’s economic nexus guidance for sellers here.
Is what you’re selling even taxable?
Services in Washington are generally not taxable. However – if the service you provide deals with construction services, you will likely have to deal with sales tax.
Tangible products are taxable in Washington, with a few exceptions. These exceptions include certain groceries, prescription medicine, sales to nonresidents and newspapers.
Use tax is collected in Washington if sales tax has not been paid on the good or service. For a detailed breakdown of use tax in Washington, consult the Department of Revenue’s site.
Is SaaS taxable in Washington?
SaaS is taxable in Washington since all software, delivered by whatever means, is considered taxable in the state. (Source)
How to get a sales tax permit in Washington
The state of Washington has a website specifically for attaining your business license and permits, including sales tax. Head to the Business License Application to get started.
If you’d rather do things the old-fashioned paper way, first download and print out the Business License Application. Gather up your applicable fees (the state of Washington requires a $19 non-refundable fee for every business registered, but not necessarily for sales tax) and send everything to:
State of Washington
Business Licensing Service
PO Box 9034
Olympia, WA 98507-9034
You need this information to register for a sales tax permit in Washington:
- Purpose of application
- Ownership structure
- Business name
- Owners & spouses
- Business info including location, business activities, bank name, etc.
- Employment/Elective Coverage
If you’re registering your business for the first time, it will cost $19. However, sales tax alone doesn’t necessarily cost anything. Other business registration fees may apply.
Collecting Sales Tax
The sales tax rate you collect in Washington depends on whether you are based in Washington or out-of-state.
How to Collect Sales Tax in Washington
Washington is a destination-based sales tax state. So if you sell an item to a customer through your online store, collect sales tax at the tax rate where your product is delivered. (I.e. the Buyer’s ship to address.)
The state sales tax rate for Washington is 6.5%. You can look up your local sales tax rate with TaxJar’s Sales Tax Calculator.
Should you collect sales tax on shipping charges in Washington?
According to Washington you will pay tax on shipping. If the item you are shipping is taxable, then the shipping is taxable. If the item isn’t taxable, then the shipping isn’t taxable. If you are shipping both taxable and nontaxable items, then there should be two charges for shipping fairly allocated between the taxable and nontaxable items.
Read a full explanation of sales tax on shipping in Washington here.
When are Returns Due?
When you file and pay Washington sales tax depends on two things: your assigned filing frequency and your state’s due dates.
How often will you file sales tax returns in Washington?
States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.
In Washington, you will be required to file and remit sales tax either monthly, quarterly, or annually.
Washington sales tax returns are generally always due the 25th or the final day of the month following the reporting period. If the filing due date falls on a weekend or holiday, sales tax is generally due the next business day.
Filing Sales Tax
When it comes time to file sales tax in Washington you must do three things:
- Calculate how much sales tax you owe
- File a sales tax return
- Make a payment
How to Calculate How Much Sales Tax You Owe in Washington
Calculating how much sales tax you should remit to the state of Washington is easy with TaxJar’s Washington sales tax report.
All you do is connect the channels through which you sell – including Amazon, eBay, Shopify, Square and more – and we’ll calculate exactly how much sales tax you collected. All the information you need to file your Washington sales tax return will be waiting for you in TaxJar. All you have to do is login.
Washington sales tax filers are also required to file and pay Washington Business & Occupation (B&O) tax along with your Washington sales tax filing. Read more about Washington Business & Occupation tax here.
How to File and Pay Sales Tax in Washington
You have three options for filing and paying your Washington sales tax:
- File online – File online at the Washington Department of Revenue. You can remit your payment through their online system.
- File by mail – You can use various forms to file and pay through the mail.
- AutoFile – The easiest way to file sales tax in Washington is to let TaxJar AutoFile for you. Find out more about AutoFile here.