Taxation of Digital Products and Services in Washington Explained

The Washington Department of Revenue issued a notice explaining Engrossed Substitute House Bill 2075, which affects the taxability of digital products. Beginning July 26, 2009, all digital products, regardless how they are accessed, will be subject to sales or use tax. While downloaded digital goods have always been subject to tax, the new legislation now applies to digital products that are assessed by others means, such as streaming or subscription, digital automated services and remote access software. The Department further explains that the following services remain subject to the business and occupation (B&O) tax, but are not subject to sales tax: web site development or hosting, digital data storage, and online advertising (Tax Topics: Digital Products, Washington Department of Revenue, March 3, 2010).

Posted on March 17, 2010