The Washington Department of Revenue has issued updated guidance on the application of the multiple points of use (MPU) sales tax exemption for software maintenance agreements. This guidance clarifies Washington’s position on MPU exemptions. Plus, it provides a framework for businesses to manage compliance when purchasing software maintenance agreements used across multiple jurisdictions.
This exemption allows businesses to avoid Washington sales tax on qualifying purchases when the software or digital services will be available for use both within and outside the state. Instead of sales tax, the buyer is responsible for reporting and paying apportioned use tax based on the proportion of users in Washington compared to users elsewhere.
The MPU exemption applies to software maintenance agreements that include prewritten software or access to prewritten software maintained by a third party. It also extends to mixed element software maintenance agreements (MESMAs), which contain both retail-taxable and non-retail-taxable components. A MESMA may qualify for the MPU exemption if it includes at least one MPU-eligible product that is concurrently available for use inside and outside Washington, and if any non-retail-taxable components—such as help desk services—are directly related to the MPU-eligible product by providing support, maintenance, or improvements. The agreement must not include any other retail-taxable products beyond those that qualify for the exemption.
To claim the exemption, the buyer must provide a properly completed MPU exemption certificate to the seller. This relieves the seller of the obligation to collect Washington sales tax. However, the buyer remains liable for use tax, which must be apportioned based on the number of eligible product users in Washington versus the total number of users. Local use tax apportionment is also permitted if supported by the buyer’s ordinary business records. Importantly, users of non-retail-taxable components are excluded from the apportionment calculation (Excise Tax Advisory No. 3242.2025, Washington Department of Revenue, March 27, 2025).