Washington – Guide for Out-of-State Businesses

SALT Report 1875 – The Washington Department of Revenue updated their business guide for out-of-state businesses.  The guide provides an overview of nexus creating activities, sales and use taxes, business and occupation (B&O) taxes, and licensing requirements.

Physical Presence

Businesses that make wholesale or retail sales in Washington have substantial nexus if the person has a physical presence in the state.  A person is considered physically present in Washington if the person has property or employees in the state and participates in one of the following activities:

  • Soliciting sales in this state through employees or other representatives
  • Installing or assembling goods in this state, either by employees or other representatives
  • Maintaining a stock of goods in this state
  • Renting or leasing tangible personal property
  • Providing services, or
  • Constructing, installing, repairing, or maintaining real property or tangible personal property in the state

Economic Nexus

Washington has implemented an economic nexus standard rather than a physical presence standard for certain business activities.  Businesses that earn apportionable income, which includes activities subject to the service and other activities tax, and the royalty B&O tax from Washington customers, are subject to tax whether or not they maintain offices in the state or have any physical presence.

Business Registration

An out-of-state business must register with the Department if its business activities establish nexus sufficient to impose B&O tax or public utility tax; or the business collects retail sales tax, use tax, or any other taxes administered by the Department.

The Department offers a voluntary disclosure program for taxpayers that have been doing business in Washington but have not registered with the Department.

For Further Information:

Washington Department of Revenue – Industry Guide for Out of State Businesses