Stay up to date with sales tax: Join our mailing list!

Washington has provided guidance on the new nexus standards that apply to out-of-state sellers making sales in Washington. Effective September 1, 2015, out-of-state sellers making wholesale sales into Washington will be liable for wholesaling business and occupation (B&O) tax on sales delivered into the state for the current year if they meet any of the economic nexus thresholds during the prior calendar year. An out-of-state wholesaler will have economic nexus if it has:


  • More than $267,000 in gross income in Washington;
  • More than $53,000 of payroll in Washington; 
  • More than $53,000 of property in Washington; or
  • At least 25% of total property, payroll, or income in Washington.


To determine if a wholesaler exceeds the $267,000 gross income threshold, both apportionable income attributable to the state and wholesale sales delivered to Washington are included.


Effective September 1, 2015, a click-through nexus standard will apply for retailing B&O tax and sales tax purposes. An out-of-state seller will be presumed to have nexus with Washington if it:


  • Enters into agreements with Washington residents and pays a commission or other consideration for referrals via a website link or otherwise; and
  • Has more than $10,000 in sales into Washington during the prior calendar year due to these agreements.


The click-through presumption may be rebutted by showing that each in-state resident with whom the retailer had an agreement was prohibited from engaging in solicitation activities on behalf of the retailer and did not engage in such solicitation.


For our previous news item on this topic, visit Washington Enacts Click-Through and Economic Nexus Provisions.


(Tax Topics: New Nexus Standards for Wholesale and Retail Sales — Effective September 1, 2015, Washington Department of Revenue, August 18, 2015)


Washington has enacted legislation that includes both click-through and economic nexus provisions for sellers. Effective September 1, 2015, a seller is presumed to have substantial nexus in Washingtonfor sales and use tax purposes if the seller enters into an agreement with one or more residents under which the resident, for a commission or other consideration, directly or indirectly, refers potential customers, by a website link or otherwise, to the seller. In order for the presumption to apply, cumulative gross receipts from sales by the seller to customers in the state who are referred to the seller must exceed $10,000 during the preceding calendar year. The presumption can be rebutted by demonstrating that the residents with whom the seller had agreements did not engage in solicitation on behalf of the remote seller that would satisfy the nexus requirements of the U.S. Constitution during the calendar year. Remote sellers engaging in such agreements with state residents will be presumed to have substantial nexus with Washington for purposes of the Business and Occupation (B&O) taxand taxed under the retailing business and occupation tax classification.


An additional provision was enacted that imposes an economic nexus standard for the Business and Occupation tax only.  Effective September 1, 2015, economic nexus provisions also apply for purposes of B&O tax on out-of-state businesses making wholesale sales in Washington. Economic nexus will apply to remote sellers that in the immediately preceding tax year had:


  • More than $50,000 of property in Washington (which includes the average value of property including intangible property, owned or rented and used in the state during the immediately preceding tax year) ;
  • More than $50,000 of payroll in Washington;
  • More than $250,000 of receipts from Washington; or
  • At least 25% of the person’s total property, total payroll, or total receipts in the state.


For an update on this news item, visit Washington Issues Guidance on Changes to Nexus Standards.


(S.B. 6138, Laws 2015, effective as noted)


The Washington Department of Revenue has issued an advisory providing the substantial nexus thresholds for business and occupation (B&O) tax purposes. When the cumulative percentage change in the consumer price index for all urban consumers changes by 5% or more from the measurement date, the department must adjust the thresholds to reflect that change. For the 2015 calendar year, the threshold amounts are: receipts threshold, $267,000; property threshold, $53,000; payroll threshold, $53,000. The thresholds remain unchanged from 2014.  (Excise Tax Advisory No. 3195.2015, Washington Department of Revenue, February 3, 2015)


An out-of-state company established nexus in Washington in 2013 under the business and occupation tax statutory threshold because the taxpayer had payroll of more than $53,000 in the state during the year. In October 2012, the taxpayer hired an employee who lived and worked remotely in Washington. The taxpayer’s argument that a portion of the amount of payroll it paid in 2013 was attributable to 2012 was rejected. Per a rule provision, "payroll" is defined as the total compensation paid during the calendar year. The taxpayer also argued for a waiver of any tax liability because its payroll was only slightly above the $53,000 threshold. This argument was also rejected. The Appeals Division had no authority to waive tax liability for a taxpayer that meets any of the nexus thresholds in the relevant law. Even though the taxpayer ceased having an employee in Washington, nexus is established for 12 months and the B&O Tax was due for the 12 months following the cessation of nexus. (Tax Determination No. 14-0306, Washington Department of Revenue, February 26, 2015)


On March 10, 2015, a bipartisan group of senators introduced the Marketplace Fairness Act of 2015. Similar legislation – the Marketplace Fairness Act of 2013 – was previously introduced in February 2013 and passed by the Senate on May 6, 2013. That legislation failed to be enacted. If passed, the Marketplace Fairness Act of 2015 would authorize states meeting certain requirements to require remote sellers that do not meet a "small seller exception" to collect their state and local sales and use taxes. For more information on the previous legislation, visit Federal Government Introduces New Remote Seller Bill. (Marketplace Fairness Act of 2015, March 10, 2015)


UPDATE: This bill failed to pass during the 114th Congressional Session running from January 3, 2015 to January 3, 2017.  Therefore, this bill has died and would need to be reintroduced to be considered and voted on.



Scroll to Top