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Washington Sales Tax Guide for Businesses

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We wrote this guide for online sellers who want to know if they even have to bother with sales tax in Washington, and if so, how best to tackle the sales tax situation in the Evergreen State.

After reading this, you’ll know:

  • Do you or don’t you need to collect Washington sales tax?
  • Which customers do you collect from?
  • How much do you collect?
  • What do you do with all the sales tax you’ve collected?
  • Way more than you probably ever wanted to know about Washington sales tax!

Do you have sales tax nexus in Washington?

Good news! You only have to begin thinking about Washington sales tax if you have sales tax nexus in Washington.

“Sales tax nexus” is just a fancy way of saying “significant presence” in a state.

Washington considers a seller to have sales tax nexus in the state 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 (Washington’s taxing authority) has to say about what constitutes sales tax nexus in Washington.

Do you have sales tax nexus in Washington if you sell on FBA?

If you sell on Amazon FBA, you may have sales tax nexus in Washington. Storing physical products in a state can create sales tax nexus, and Washington is home to multiple Amazon Fulfillment Centers.

To determine whether or not you have items stored in an FBA warehouse in Washington, you can do one of two things:

  1. Login to Amazon Seller Central and pull your inventory report
  2. Sign up for a 30-day free trial of TaxJar and find out from where your Amazon inventory ships with our Amazon badge feature

You may find that your inventory is stored in one or more of Washington’s Amazon fulfillment centers in this list:

Read here for more about Amazon FBA and sales tax nexus. Here’s a list of all Amazon Fulfillment Centers in the United States.

Important to note: Beginning January 1, 2018, some online marketplaces, including Amazon, will collect sales tax from Washington buyers on behalf of 3rd party sellers. This means that if you sell on Amazon, even if your inventory stored in an Amazon fulfillment center and you have sales tax nexus, Amazon will collect sales tax on your behalf. But because you still have nexus, you’ll still be required to register for a Washington sales tax permit, file Washington sales tax returns, and file and pay Washington B&O tax. You will also still be required to collect sales tax from buyers on your other sales channels (Walmart, Shopify, etc.) You can read more about what Amazon’s decision to collect Washington sales tax means for Amazon sellers here.

Is what you’re selling even taxable?

You’ve probably read this far because you realized you have sales tax nexus in Washington. Your next step is to determine if what you’re selling is even taxable.

Services in Washington are generally not taxable. So if you’re a designer or a computer programmer, you’re in luck and you don’t have to worry about sales tax. But watch out – 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.

So if you sell lawn furniture, then charge sales tax to your Washington customers.

But if you’re an accountant, don’t charge sales tax to your Washington customers.

If you have sales tax nexus in Washington and your products are taxable, your next step is to register for a sales tax permit.

How to Register for a Sales Tax Permit in Washington

Sellers with sales tax nexus in Washington must apply for a Washington sales tax permit.

Don’t skip this step! Many states consider it unlawful to collect sales tax in their name without a permit. Go here for more on how to register for a sales tax permit in Washington.

How to Collect Sales Tax in Washington

So you’ve determined that you have sales tax nexus in Washington and what you’re selling is taxable. And you’re all set and registered for your Washington sales tax permit(s).

The next step is to determine how much sales tax to collect.

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.)

You can look up your local sales tax rate with TaxJar’s Sales Tax Calculator or by going to TaxJar.com/mobile on your mobile device.

Example: You live and work in Issaquah, WA 98027, which has a sales tax rate of 9.5%. You sell and ship a product to Puyallup, WA 98374 for a customer. You would charge the Puyallup, WA sales tax rate of 9.4%.

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 Washington Sales Tax 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.

How often you are required to file sales tax in Washington follows this general rule:

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.

2018 Washington Monthly Sales Tax Filing Due Dates

*indicates a due date pushed back due to a weekend or holiday

2018 Washington Quarterly Sales Tax Filing Due Dates

*indicates a due date pushed back due to a weekend or holiday

2018 Washington Annual Sales Tax Filing Due Dates

*indicates a due date pushed back due to a weekend or holiday

Click here for more info on Washington sales tax filing due dates.

How to File Sales Tax in Washington

When it comes time to file sales tax in Washington you must do three things:

  1. Calculate how much sales tax you owe
  2. File a sales tax return
  3. Make a payment

We’ll walk you through these steps.

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 two options for filing and paying your Washington sales tax:

Other Facts You Should Know about Washington Sales Tax Filing

There are a few more things you should know about sales tax in Washington:

If you sell on Amazon: Starting January 1, 2018, Amazon will collect sales tax from Washington buyers on behalf of 3rd party sellers. However, as an Amazon seller, you are still required to hold a Washington sales tax permit, file and pay Business & Occupation tax along with your Washington sales tax return, and remit any sales tax you collected on your other online shopping carts and marketplaces. As for the sales tax that Amazon collected on your behalf, you will still be required to include that on your Washington sales tax filing as an “Other” deduction. (You can read more about how Amazon sellers should handle Washington sales tax filings here.

Penalties:

  • Late Filing and Payment Penalty 9 percent penalty due if the tax is not paid by the due date; 19 percent penalty due if the tax is not paid on or before the last day of the month following the due date. A total penalty of 29 percent is imposed if the tax is not paid on or before the last day of the second month following the due date.

Other penalties for fraud or serial offenses include higher penalties and even criminal charges.

“Zero returns”:

Washington requires that any seller with a sales tax permit file a sales tax return on your due date even if you don’t have any sales tax to report or pay. Click here for more about states that require zero returns.

And that’s it. You’ve mastered Washington sales tax filing! Now that sales tax is out of the way, you can get back to what you do best – running your business.

Washington Sales Tax Resources

For more about Washington sales tax, check out the Washington section of the TaxJar blog.

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