Washington January 1, 2020 Nexus Changes

Washington State imposes a Business and Occupation (B&O) tax which is a gross receipts excise tax. It is measured on the value of products, gross proceeds of sale, or gross income of a company conducting business in Washington.  It applies to the gross income of the business. No deduction is allowed for labor, materials, taxes or other costs of doing business.

The appropriate B&O tax classification depends on the nature of the business activity.  Different tax classifications with different rates apply for various business activities.  Businesses performing more than one activity may be subject to tax under one or more B&O tax classifications.

Beginning Jan. 1, 2020, the nexus threshold for all B&O tax classifications and sales tax collection will be $100,000 of combined gross receipts per calendar year for businesses without a physical presence nexus. Physical presence nexus will also establish nexus for all B&O tax classifications and sales tax collection.

Physical presence nexus creating activities include, but are not limited to:

• having an employee working in the state
• having property in the state
• having a stock of goods in Washington, including inventory held by a marketplace facilitator or another third party representative
• renting or leasing tangible personal property in Washington
• having an agent or third-party representative engage in activities that are significantly associated with establishing or maintaining a market in the state
• soliciting sales in Washington through employees or other representatives
• installing or assembling goods in Washington, either by employees or other representatives
• constructing, installing, repairing, or maintaining real property or tangible personal property in Washington, either by employees or other representatives
• providing services in Washington, such as accepting returns or providing product training, either by employees or other representatives
• delivering goods into Washington other than by mail or common carrier, including using the seller’s own vehicles
• having an exhibit at a trade show to maintain or establish a market in the state, except for as provided in our Special Notice titled Trade Convention Exception from Nexus for Retail Sales

Register at  https://dor.wa.gov/doing-business/register-my-business

Once you are registered, you will receive information about filing.  Monthly returns are due on the 25th of the following month; quarterly returns are due by the end of the month following the close of the quarter; and the due date for the annual returns changed from January  31 to April 15.