Source: https://www.reedsmith.com/de/perspectives/2017/07/recent-nexus-developments-washington-enacts-legislation
Timestamp: 2019-04-19 02:44:17+00:00

Document:
The State of Washington has enacted sweeping economic nexus legislation that requires almost any online retailer making sales to Washington customers to either (1) collect sales tax on its Washington sales; or (2) comply with reporting and notice requirements for its sales to Washington customers. The legislation creates a web of economic nexus rules that apply to both remote sellers and “marketplace facilitators,” through which sellers’ products are sold to Washington customers.
The notice and reporting requirements for vendors and marketplace facilitators should be of particular concern to businesses making mail-order and online sales to Washington customers. Significantly, businesses that meet the statute’s very low economic nexus thresholds, but that choose not to collect tax on their sales to Washington customers, will be required to comply with the notice and reporting requirements, which carry substantial penalties for non-compliance.
Marketplace Provisions. The new statute creates a new class of companies subject to tax collection or reporting requirements—“marketplace facilitators.” A marketplace facilitator is defined as anyone that contracts with a seller to facilitate sale of the seller’s products through a marketplace operated by the marketplace facilitator, if certain other requirements are met.1 Under the new law, a marketplace facilitator will be on the hook for collecting sales tax on all Washington sales made through its marketplace if it is either physically present in Washington, or makes $10,000 in gross receipts from sales to customers in Washington (whether through its sales or others’ sales using the marketplace) in the current or preceding calendar year.2 If the marketplace facilitator does not collect and remit sales tax on its sales to Washington customers, it is required to comply with the notice and reporting requirements.
Washington’s law directly contravenes Quill v. North Dakota8 by providing that a remote seller or marketplace facilitator has nexus with Washington solely as a result of making sales sourced to the state. Physical presence is not the determinative factor to ascertain whether nexus exists under the law. Washington joins Minnesota as the only states seeking to impose sales tax obligations on marketplace facilitators. Remote sellers or trade associations will likely challenge the new Washington law in court. As the pending lawsuit challenging South Dakota’s law attempting to overturn Quill demonstrates, remote sellers are ready and willing to challenge unconstitutional efforts by the states to impose sales tax obligations on non-physically- present sellers.
“In-state software” means computer software, as that term is defined in section 5739.01 of the Revised Code, that is stored on property in this state or is distributed within this state for the purpose of facilitating a seller's sales.
EHB 2163 § 202(1)(a)(i), (2)(b).
A seller has the same meaning as provided in RCWA § 82.08.010 (generally, every person making sales at retail to a buyer, purchaser, or consumer), and includes marketplace facilitators, whether making sales on their own right or on behalf of marketplace sellers, and referrers. EHB 2163 § 204(12).
EHB 2163 § 204(7), (10).
EHB 2163 § 202(1)(a)(i), (2)(a).
EHB 2163 §§ 206(1)(a), (2)(a), (3).
H.B. 49 § 5741.01(I)(2)(h) and (i).
H.B. 49 § 5741.01(I)(6)(d) and (e).

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