Washington compliance for marketplace arbitrage businesses

Research steps and summary: Steps taken 1. Ran a multi-source web search and extracted Washington-specific materials focused on marketplace facilitator and marketplace seller rules (Washington Department of Revenue pages, Washington Administrative Code, and Washington statutes). 2. Scraped and compressed primary official sources: Washington Department of Revenue (Marketplace Facilitators and Marketplace Sellers pages) and the statutory authority (RCW 82.08.0531). 3. Retrieved Washington Secretary of State corporate/LLC guidance for business formation and ongoing compliance. What I analyzed - Statutes and rules that create and govern marketplace facilitator obligations, seller registration thresholds, and reporting requirements in Washington. - Washington Department of Revenue guidance for marketplace facilitators and marketplace sellers about registration, filing, deductions, monthly reporting, liability relief, and how sellers should report facilitated sales on their returns. - Secretary of State resources for forming and maintaining an LLC and links to state business resources. Compressed, actionable summary (what a marketplace arbitrage operator or LLC founder needs to know and do in Washington) 1. Business formation and state registration - Form an entity (LLC) or register a foreign entity via the Washington Secretary of State. File and maintain annual reports and a registered agent as required. (See SOS guidance on starting/registering a business) - Obtain a UBI / state business license through Washington’s Business Licensing Service (BLS) as part of registering for excise taxes and licenses with the Department of Revenue. 2. Registration thresholds and when to register with WA DOR - Remote marketplace sellers and marketplace facilitators must register with the WA Department of Revenue if they: (a) are organized or commercially domiciled in Washington; (b) have physical presence nexus in Washington; or (c) have more than $100,000 in combined gross receipts sourced or attributed to Washington in the current or prior year. (Effective Jan 1, 2020 threshold guidance.) - Once a seller meets the threshold, they must collect and report for the remainder of the current and the following calendar year; if triggered mid-year, collection begins the first day of the month starting at least 30 days after the date the threshold was met. 3. Marketplace facilitator rules (what marketplaces like Amazon, Etsy, Walmart must do) - Marketplace facilitators that meet collection obligations must collect and remit sales or use tax on all taxable retail sales sourced to Washington on behalf of marketplace sellers, beginning Oct 1, 2018 for sales tax and expanded to other taxes/fees beginning Jan 1, 2020. - Facilitators must determine correct combined state + local tax rates and remit applicable taxes/fees (including lodging and other applicable fees when applicable). - Facilitators must provide marketplace sellers a monthly report/access to gross Washington sales information for the previous month within 15 calendar days following the end of each month. Timely provision of this report is required for certain liability protections. - Marketplace facilitators that earn commissions on facilitated sales may owe B&O tax on commission income (Service & Other Activities classification) if they have nexus. 4. Marketplace seller obligations (arbitrage sellers) - If all sales are through a marketplace facilitator that collects/remits tax and provides required documentation, a marketplace seller generally does not need to collect/ remit retail sales tax on those facilitated sales. However: - Sellers still must determine whether they meet registration thresholds and, if so, register and file WA returns (including B&O tax) even if the marketplace collects sales tax. - Sellers must report gross Washington retail sales (marketplace + direct) under Retailing B&O and take a deduction for sales where the facilitator collected the sales tax (e.g., claim “Gross Sales Collected by Facilitator” deduction on the State Sales & Use page or mark Other and explain on a paper return). - If a seller does not receive the monthly report required of facilitators, the seller may estimate Washington sales using a department-approved method for calculating B&O. 5. Resale/sales-for-resale documentation - Marketplace facilitators (and sellers) must accept, retain, and produce documentation verifying sales for resale when applicable. Sellers and facilitators should collect and keep reseller/resale certificates or other supporting documents to substantiate exempt sales for audit. 6. Reporting mechanics and filing - Use the My DOR portal to file and report sales/use tax and B&O tax; the DOR provides specific return lines and deduction choices for marketplace-facilitated sales. - Sellers should report gross Washington retail sales under Retailing B&O, claim No Local Activity deduction if appropriate, and list facilitated sales under the Gross Sales Collected by Facilitator deduction. 7. Liability relief and limits - Washington statute provides limited liability relief to facilitators under defined conditions (e.g., if facilitator provides timely monthly reports and meets agent/non-affiliation criteria). Liability relief limits were time-limited for earlier calendar years and generally do not provide the same relief for sales occurring after 2019—practical takeaway: sellers and facilitators should not rely on generous liability relief and should ensure compliance and documentation. 8. Audits, recordkeeping, and enforcement risks - The Department of Revenue may require facilitators and sellers to provide detailed sales information, documentation of exemptions, and other records. Facilitators are subject to marketplace audits and must produce information electronically upon request. Keep: monthly facilitator reports, sales records (by location), invoices, shipping/delivery documentation, reseller certificates, and marketplace statements for at least the period recommended by DOR (and consistent with tax record retention rules). 9. Local licensing and city-level requirements - In addition to state registration and DOR obligations, many cities (e.g., Seattle) require local business licenses, tax registrations, or privilege/business taxes. Check city-specific licensing and tax departments for where you have physical presence or make deliveries. 10. Practical compliance checklist for marketplace arbitrage operators/LLC founders - Form your business (LLC) and register with WA Secretary of State if operating as a WA domestic business or register as foreign if you’re doing business in WA. - Get UBI and state business license through BLS and register with WA DOR. - Monitor Washington-sourced gross receipts across all platforms; register if you exceed $100,000 (current/prior year) or have physical presence. - If selling via marketplaces, confirm the marketplace facilitator is registered and collecting/ remitting WA tax; keep copies of facilitator documentation and monthly gross-sales reports. - File WA excise returns (B&O and sales/use) timely via My DOR, claim facilitator-collected sales deduction where appropriate, and pay B&O tax as required. - Maintain reseller certificates and records; be prepared for audits and provide DOR requested data. Next steps to finish deliverables (blog, newsletter, SEO content) - I collected the core official sources and statutory/regulatory authority needed to write compliance-focused blog and newsletter content tailored to Washington. If you want, I can now: (A) draft the full blog post (with SEO headings, practical how-to steps, examples for arbitrage workflows, and a compliance checklist) and (B) produce the newsletter copy and subject line drafts using the provided template. Indicate whether you want the content optimized for founder-level brevity or a long-form guide with examples and citations.