Washington state now requires businesses to collect sales tax for items shipped to out-of-state customers.
The mandate, enacted Monday was announced by the Washington state Department of Revenue earlier this year following a U.S. Supreme Court ruling that states may charge tax on purchases made from out-of-state sellers, even if the seller does not have a physical presence in the taxing state. Online retailers Wayfair, Overstock.com, and Newegg challenged a South Dakota law enacted in 2017 that required out-of-state retailers with sales exceeding $100,000 or 200 transactions annually to pay sales tax.
Justices in June ruled 5-4 in the state’s favor. Before the Supreme Court decision, many states were prohibited from collecting tax on sales from sellers that didn’t have a physical presence in the state. Now, more than 30 states are acting to pass regulations to collect sales tax from online retailers.
Taxes from online sales typically include local and state sales tax from the location where the items are shipped to or from which orders are filled. In Washington, companies that have more than $100,000 in retail sales or 200 transactions now must register with the state and collect sales tax from customers. Sellers with less than $100,000 in sales they must comply with the state’s Marketplace Fairness law, which has been in effect since the first of the year, and requires businesses to collect sales tax or follow use tax notice and reporting requirements.
The Revenue Department says taxable online retail and mail order sales in Washington hit $3.1 billion in 2017. Washington – which doesn’t collect state income tax – relies on sales tax revenue to fund social services as well as schools and parks. (Spokesman-Review)
