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Washington state sales taxes

Mark Linder's Profile


We are an AZ based corporation.  We do not have a nexus in Washington state.  The tax "expert" at our outside CPA firm told us there is a new law that requires us to collect and report sales tax in Washington.  They told us that Washington now requires sales tax to be based on the delivery point (which I agree with) and even if you do not have a nexus in the state you are still required to collect and report sales tax (which I do not agree with).  I went through the tax information on the Washington state website and could not find anything.  We have mostly wholesale sales into WA, but have the occasional retail sale.  Can anyone confirm what our tax person is telling us?  We really don't want to have to register with WA and file sales tax returns with them.

Answers

Larry Liederman
Title: Controller
Company:
(Controller, ) |

I have never heard of having to collect and pay sales tax without having nexus in a state. States are desperate for revenue, however, and their efforts to get more will be aggressive and insatiable. So, I'd suggest that you call them directly and inquire about this "supposed" new requirement.

Peter Papano
Title: Chief Financial Officer
Company: Apex Learning
(Chief Financial Officer, Apex Learning) |

I suggest you contact a tax expert at a CPA firm in Washington. One possible contact is James Hunt, Director of State and Local Taxes at the Seattle office of RSM McGladrey. It's very important to get a correct answer because the potential liability keeps increaseing there is no statute of limitations for an unfiled return.

Jeff Taylor
Title: CFO
Company: Communications Co.
(CFO, Communications Co.) |

Call John Murphy at Mohler, Nixon and Williams (https://www.proformative.com/provider/mohler-nixon-williams)before you do that! I am a many-time CFO and I have dealt with state sales tax at a number of companies with national sales, both tangible and intangible goods, and the currents are very swift on state tax issues right now. You simply must have a tax advisor who knows what they are doing. John is great, but find your own if you care to. Just find someone b/c this issue can get you into a lot of trouble if mis-managed.

States are trying to tax all commerce going to their citizens and businesses and are simply creating new tax laws to do it. The old idea of "must have nexus" is flying out the window as fast as state legislatures can change it, and all 50 states have different requirements.

And if you do call the state to get clarification, for Pete's sake don't give them your real name or real company name. I'm not kidding. If they get wind of your company and have any inkling that you should be paying them state tax, you can bet they will keep a close eye out for you!

Topic Expert
Paul Benedetto
Title: CFO, Director of Finance, Consultant
Company: Nextwave Software, Rethink Fabrics
(CFO, Director of Finance, Consultant, Nextwave Software, Rethink Fabrics) |

I'm a controller and live and work in WA State. This issue is something that has not been widely communicated, but anyone selling goods in or out of SEVERAL states should begin to address.

The destination based sales tax requirement mainly addresses in state sales situations. However, the government made this change in order to comply with the larger initiative of "Streamlined Sales Tax Reporting". There are currently 19 states that are part of this project that agree to collect sales tax within their jurisdictions. The short of it is that although you may have no direct nexus, you will need to charge sales tax for sales made within these states.

By registering with the SSTP, your company will obtain one ID and be able to handle the sales tax administration WITHOUT having to register as a foreign corporation in every state.

Yes, this cross-border sales tax issue is a pain in the behind, but unfortunately not going away. Several East Coast states have reciprosity (sp?) agreements in place much like this initiative, but I personally feel it won't be long before the entire nation is covered. Each state government is looking for any way they can to raise additional revenues...

Here are some links to get more information. Will be using myself, having recently stated with a company that appears not to have focused on these changes either.

Destination Based Sales Tax Info for Washington State

http://dor.wa.gov/Content/FindTaxesAndRates/RetailSalesTax/DestinationBased/MoreSST.aspx

Streamlined Sales Tax Project FAQ Section
https://www.sstregister.org/sellers/SellerFAQs.Aspx#faq3

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If anyone would like to carry on the conversation directly, please feel free to send me a request.

Respectfully,

Paul

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