Washington compliance for subscription-based businesses

Research summary and findings for: "Washington compliance for subscription-based businesses" Steps taken - Performed targeted web searches for Washington-specific statutes, agency guidance, enforcement actions, and tax treatment for subscription/recurring billing models (searches targeted RCW/legislation, WA Attorney General, WA Department of Revenue, WA Secretary of State, and reputable legal/regulatory summaries). - Scraped and extracted authoritative materials (WA Dept. of Revenue guidance on digital entertainment taxation; WA Attorney General news release and prior enforcement; WA Secretary of State guidance on maintaining business compliance; 2025 Senate Bill 5207 (proposed legislation addressing refunds for term-based electronic media subscriptions); commentary about the FTC Final Rule and state automatic-renewal laws).

Key findings (state-specific, actionable)

Research summary and findings for: "Washington compliance for subscription-based businesses" Steps taken

- Scraped and extracted authoritative materials (WA Dept. of Revenue guidance on digital entertainment taxation; WA Attorney General news release and prior enforcement; WA Secretary of State guidance on maintaining business compliance; 2025 Senate Bill 5207 (proposed legislation addressing refunds for term-based electronic media subscriptions); commentary about the FTC Final Rule and state automatic-renewal laws).

Key findings (state-specific, actionable)

• Performed targeted web searches for Washington-specific statutes, agency guidance, enforcement actions, and tax treatment for subscription/recurring billing models (searches targeted RCW/legislation, WA Attorney General, WA Department of Revenue, WA Secretary of State, and reputable legal/regulatory summaries).

Washington consumer-protection & automatic-renewal enforcement - The Washington Attorney General (OAG) has actively enforced deceptive auto-renewal/negative-option practices (example

Synapse Group enforcement and refunds required). The OAG has publicly signaled focus on automatic renewals as part of an "Honest Fees" initiative and solicited consumer complaints; prior settlements required clear, conspicuous disclosures and advance reminder notices ahead of renewal. Enforcement expectations include clear disclosure of material terms, advance reminder notices, and easy cancellation mechanisms. - Practical effect: WA will scrutinize buried or unclear auto-renewal terms; businesses should adopt explicit, conspicuous disclosures, send renewal reminders, and make cancellation easy and immediately effective.

Washington statutes and pending legislation - State-level legislation continues to evolve. Senate Bill 5207 (2025 session) would require pro rata refunds for early cancellation of term-based electronic media subscriptions, mandatory disclosure of refund schedules and cancellation fees, and timely disbursement of refunds (within a reasonable time not to exceed six months). If enacted, this would add refund obligations for electronic media subscription providers. - Practical effect

Monitor status of SB 5207 and similar bills; consider implementing pro rata refund mechanics voluntarily or design cancellation/refund policy to accommodate possible new statutory expectations.

Taxation

sales tax and B&O treatment for subscriptions - Washington Department of Revenue guidance states retail sales tax applies to digital entertainment subscription fees (streaming, e-books, music, apps, games, etc.). Providers with a physical presence in Washington and/or with Washington subscribers may also owe B&O tax under the retailing classification. Washington treats many subscription/digital offerings as taxable digital goods and expects collection and remittance of retail sales tax where taxable. - Practical effect: Register with WA DOR, determine whether your subscription offering is taxable (digital entertainment, software, SaaS distinctions), collect and remit sales tax where required, and file/ pay B&O tax as applicable. Determine nexus (physical presence; significant Washington subscriber base) and the correct tax classification for your product/service.

Business formation & state filings (LLCs/Corporations) - Maintain good standing with the Washington Secretary of State

file annual reports on time, maintain a registered agent, and follow entity maintenance obligations. Use WA Business Licensing Service where required for state/local business licensing. - Practical effect: Ensure entity remains active and filings (annual report, registered agent) are current; obtain any state business licenses and local permits required for your operation.

Federal/state regulatory developments to watch - The FTC released a Final Rule on negative option/recurring-subscription programs (publication noted Nov 15, 2024) and multiple states have updated automatic renewal laws in recent years. Washington OAG enforcement plus evolving state and federal rules increase compliance risk for subscription businesses. - Practical effect

Implement ARL-compliant processes even if specific WA statute details differ—clear consent, conspicuous disclosure, advance renewal reminder notices, simple cancellation, and recordkeeping. Practical compliance checklist (recommended next steps for Washington-based or Washington-facing subscription businesses) - Disclosures & consent - Conspicuously disclose price, recurring charges, billing frequency, renewal terms, any introductory/discounted pricing and what it will renew to, cancellation process and deadline, refund/cancellation fees. - Obtain clear affirmative consent / a check-box or equivalent for contracts with negative-option enrollment. - Reminder notices - Send advance renewal reminder notices for term renewals (best practice and sometimes required by state laws/settlements); clearly mark the notice as an automatic renewal notice and include renewal terms and cancellation directions. - Cancellation mechanism - Provide a simple, accessible cancellation method (ideally via the same channel the consumer used to enroll), immediately effectuate cancellation where possible, and document cancellation confirmations. - Refunds & billing adjustments - Implement pro rata refund calculations or a documented refund policy; be ready to issue refunds in a timely manner (pending rules/bills may require pro rata refunds and timely disbursement). - Tax & registration - Register with the Washington Department of Revenue, evaluate whether subscription revenue is taxable (digital entertainment, SaaS, software), collect and remit retail sales tax, and file/pay B&O tax if applicable. - Corporate compliance - Keep WA Secretary of State filings current (annual report), maintain registered agent, obtain WA business license(s) if required by the Business Licensing Service, and ensure local tax/permit compliance. - Policies & records - Update Terms of Service, cancellation/ refund policies, and privacy policy; keep records of consents, disclosures shown at checkout, renewal notices sent, and cancellations/refunds processed for enforcement defense. - Monitor legal changes - Track WA OAG guidance/enforcement, the outcome of SB 5207 and other WA bills, and the implementation and legal status of the FTC negative-option rule. Conclusion and recommendation - We have collected authoritative Washington-specific guidance and enforcement history showing that Washington treats subscription auto-renewals and digital subscription taxation seriously. For a Washington-based or Washington-facing subscription business, implement state-tailored compliance now: conspicuous disclosures, affirmative consent, advance renewal notices, simple cancellation, robust recordkeeping, registration with WA DOR for sales and B&O tax where required, and maintain Secretary of State filings and licenses. Also monitor the progression of SB 5207 and the implementation status of federal and other state ARL updates.