Washington Issues Guidance on Changes to Nexus Standards

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)