Washington compliance for high-volume online sellers

Summary of Washington compliance requirements for high-volume online sellers and the sources used (see citations_excerpts). Key findings and practical checklist: 1) Economic nexus threshold and registration - Threshold: More than $100,000 in combined gross receipts sourced or attributed to Washington in the current or prior calendar year triggers registration and tax obligations (sales tax collection and B&O tax reporting). Marketplace sales count toward the threshold. - If you exceed the threshold in the prior year, you have nexus for the entire current year; if you exceed it in the current year, you must begin collecting on the first day of the month that starts at least 30 days after you met the threshold. - How to register: file a Business License Application (Business Licensing Wizard / My DOR) to receive a UBI and tax account; indicate you are a Remote seller. 2) Sales & use tax collection and marketplace facilitators - Marketplace facilitators (per RCW/DOR definition) that meet thresholds must collect and remit retail sales tax on facilitated sales. Marketplace sales still count toward a seller’s economic nexus threshold even if the facilitator collects tax. - Marketplace facilitators must provide monthly gross-Washington-sales reports to marketplace sellers (report access by the 15th of each month). Sellers should use those reports when filing and may take deductions for sales where the facilitator collected tax. - Liability relief is limited: facilitators that meet reporting requirements may have some relief for certain errors, but Type 2 relief phased out after 2019; statutory language clarifies agent status and collection obligations. 3) Business & Occupation (B&O) tax - Washington imposes a gross receipts B&O tax measured on gross business income. Retailing classification rate is 0.00471 (0.471%). The B&O tax is separate from sales tax and is paid by the seller (no deduction for costs). - Sellers with nexus must file excise tax returns (report B&O under Retailing) even if a CSP or facilitator collects sales tax on retail sales. - Filing frequencies: monthly returns due the 25th of the following month; quarterly returns due by the end of the month following the quarter; annual returns due April 15. 4) Physical presence nexus and third-party fulfillment (FBA / warehouses) - Physical presence nexus exists where you have tangible personal property in Washington — this includes inventory stored by a marketplace facilitator or other third-party representative (e.g., Amazon FBA, 3PLs). Storing inventory in WA can create immediate nexus regardless of sales threshold. 5) Reporting, deductions, and practical filing notes - When a facilitator collects tax on your behalf, report gross Washington retail sales under Retailing B&O and take the appropriate deduction for Gross Sales Collected by Facilitator on the DOR return (or the “Other” / explanation on paper returns). Use DOR sales & use tax tools and the taxability matrix to source sales and determine taxability. - CSPs do not relieve you of B&O filing obligations — you must still file B&O/ excise returns even if a CSP files sales tax for you. 6) Additional compliance and consumer-safety rules - Washington enacted HB1065 addressing online marketplaces and high-volume third-party sellers: marketplaces must collect/verify identity, bank/payee, tax ID, email/phone and disclose certain seller information to consumers for “high-volume third-party sellers” (the bill defines thresholds and verification/disclosure rules). This is separate from tax registration but affects marketplace sellers and their information flows with marketplaces. 7) Practical compliance checklist for high-volume online sellers (action items) - Monitor Washington sales (including marketplace sales) to detect crossing the $100k threshold in current/prior year; include exempt sales in the calculation. - If you store inventory in Washington (FBA/3PL), assume physical nexus and register immediately. - Register via the Business License Application (My DOR) to get a UBI and tax accounts; indicate “Remote seller.” - Set up systems to collect and remit sales tax, and to file B&O excise returns (Retailing classification rate 0.471%). - If selling through marketplaces, obtain the monthly reports from facilitators; keep records and claim deductions for facilitated sales where appropriate. - Maintain robust recordkeeping (sales sourcing, marketplace reports, inventory locations, invoices) and consult DOR or tax counsel for voluntary disclosure if you have unreported past liabilities. - Review HB1065 (marketplace verification/disclosure) implications if you are a marketplace or high-volume third-party seller; ensure marketplaces you use comply and that you provide required verification information when applicable.