Purchases of non-fungible tokens, or NFTs, are taxable in most cases and sellers of NFTs are subject to Washington business and occupation (B&O) tax on gross proceeds, according to an interim statement provided by the Washington Department of Revenue in July.
The Department provides three examples of sales of NFTs, which it defines as “digital code on blockchain comprised of unique identification codes and metadata that distinguish them from one another.”
One example explains the impact a bundled transaction can have on taxability of NFTs. In the case, a band’s sale of digital music is considered digital code, and that code includes a concert ticket to an upcoming concert at the Gorge Amphitheatre. Because it is sold in one package, the entire selling price is subject to retail sales tax and retailing B&O tax.
The Department is also looking for input from external stakeholders. It hopes to develop more comprehensive and permanent guidance and is encouraging anyone with an interest in taxability of NFTs to contact tax policy specialist Nikki Bizzarri at 360-534-1582 or [email protected].
(Washington State Department of Revenue, Interim statement regarding the taxability of non-fungible tokens (NFTs), July 1, 2022)