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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.


Washington State has provided guidance on the requirements for a sale to qualify as an export sale exempt from retail sales tax when a customs broker is involved. To qualify as an exempt export sale, a sale must meet one of the following requirements:


  • the goods must be delivered to the buyer in another country;
  • the goods must be delivered to a carrier who transfers the goods to another country; or
  • the goods must be delivered to the buyer at shipside or aboard the buyer’s vessel or other vehicle.


If goods are delivered to an out-of-state or foreign buyer’s customs broker in Washington for subsequent delivery to the out-of-state buyer in Washington, the sale is not an exempt export sale. In this case, the delivery is deemed to be to the buyer’s agent in Washington.  The seller must collect retail sales tax and must pay retailing business and occupation (B&O) tax on the sale. (Tax Topics: Customs Broker, Washington Department of Revenue, November 26, 2014)


On December 16, 2014, President Barack Obama signed the Consolidated and Further Continuing Appropriations Act, 2015, for sales and use tax purposes. The Act includes a provision that extends the Internet Tax Freedom Act (ITFA) until October 1, 2015 with all provisions unchanged.


On January 9, 2015, the House of Representative introduced a bill (un-numbered) that would permanently extend the ITFA, banning states and local jurisdictions from imposing any new tax on internet access. The proposed bill removes the current effective dates of November 1, 2003 through October 1, 2015 and changes the effective date to be effective for new taxes imposed after the date of the enactment.  It is not clear if states that have been grandfathered under the existing provision could retain their current tax on internet access but it appears that may be the case.  No formal legislation has been introduced that would incorporate the Marketplace Fairness Act into this bill. The bill is sponsored by House Judiciary Committee Chairman Bob Goodlatte, among others.


For our previous news item on this topic, see Internet Tax Freedom Act is Extended Through December 11, 2014.


For an update on this news item, see Internet Tax Freedom Act Extended Until December 11, 2015.


(Consolidated and Further Continuing Appropriations Act, 2015; H.R. 235)


Washington state has updated a tax advisory on the sales and use tax exemption for certain nonresidents for purchases of tangible personal property, digital goods, and digital codes for use outside the state. As of June 12, 2014, the exemption was amended to clarify that sales of marijuana are not included in the exemption. Marijuana is any product with a THC concentration exceeding 0.03%. Also excluded are sales of products and services that are substantially consumed within the state such as lodging, meals, repair services, parking and towing services, personal services, and amusement or recreational services.  The exemption is available to residents of other states, U.S. possessions, or Canadian territories or provinces that do not impose a retail sales tax, use tax, gross receipts tax on retailing activities, value added tax, or other similar tax of 3% or more. For more information on the exemption, visit Washington’s Nonresident Sales Tax Exemption Does Not Apply to British Columbia Residents. (Excise Tax Advisory No. 3054.2014, Washington Department of Revenue, November 4, 2014)


Trade show visits by employees of an out-of-state seller were sufficient to create nexus for purposes of Washington sales and use and business and occupation (B&O) taxes. For a period of at least seven years, the seller’s representatives made at least four visits per year to trade shows in Washington in which the company displayed its products, made contact with potential buyers, discussed its service model with potential buyers, and distributed its sales catalogs. No sales of merchandise were made at the trade show nor were any orders taken at the shows.  The determination whether in-state activities create nexus looks to the entire collection of a taxpayer’s different activities, the totality of it which creates substantial nexus.  The direct presence of the seller’s representatives at Washington trade shows was significantly associated with establishing or maintaining a market for the sales of its products in the state.  The seller made sales over the Internet, by telephone, and by catalog. Orders were shipped from locations outside Washington to customers by common carrier. The Appeals Division noted that the state’s nexus standard is not whether the in-state activity directly solicits a sale, but, rather, whether the activity is "significantly associated with establishing or maintaining a market within this state." Unlike some other states, Washington does not have a trade show exemption. This decision follows other earlier decisions where taxpayers not only attended trade shows but had other in-state activities.  This decision clarifies that any activity associated with establishing or maintaining a market within Washington include a minimal number of visits will constitute nexus.(Tax Determination No. 14-0062, Washington Department of Revenue, August 28, 2014)



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