Washington – Out of State Retailer with In-State Affiliate Had Nexus

SALT Report 1299 – The Washington Department of Revenue ruled that an out-of-state retailer had substantial nexus with Washington due to the activities of its in-state affiliate.  The affiliate distributed the retailer’s catalogs free of charge; sold gift cards that were redeemable through mail-order, online, or in a retail store; and assisted customers with returns by contacting customer service and requesting free shipping labels.

Washington law states that nexus is established under Rule 193(7) (v) when, “The out-of-state seller, either directly or by an agent or other representative, performs significant services in relation to [the] establishment or maintenance of sales into the state, even though the seller may not have formal sales offices in Washington or the agent or representative may not be formally characterized as a salesperson.”

The WDOR concluded, based on the above Rule, that the affiliate performed activities on behalf of the retailer that were significantly associated with the seller’s ability to establish and maintain a viable market in the state, and for that reason, have nexus.

The retailer petitioned the WDOR requesting a cancellation of the B&O tax and retail sales tax assessments and was denied.

For Further Information:

Washington Department of Revenue – Tax Determination No. 10-0057


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