Washington issued interim guidance on the application of retail sales tax and retailing B&O tax to custom website development services, effective October 1, 2025. The guidance confirms that taxable custom website development services include related website consulting and training services and may create Washington tax obligations for remote sellers that exceed the state’s $100,000 economic nexus threshold.
The guidance also provides detailed sourcing rules for services delivered to customers in multiple locations. Taxpayers may allocate charges proportionally based on where services are received, use equal allocation among known locations, or source the service to the customer’s business or billing address when receipt locations cannot be determined. Reseller permits may be used in certain subcontracting arrangements, provided specific requirements are met, while qualifying digital automated services may be eligible for multiple points of use (MPU) exemption. In addition, sales of custom website development services between members of the same affiliated group are excluded from the definition of a retail sale and instead subject to service and other activities B&O tax. (Interim Guidance Statement Regarding Changes Made By ESSB 5814 for Custom Website Development Services, Washington Department of Revenue, September 12, 2025.
For more information on taxability under ESSB 5814, see the articles on tax treatment for live presentations, temporary staffing services, and digital automated services.