We have received a lot of calls over the past few months from out of state online retailers who were contacted by Washington’s Department of Revenue (DOR). DOR asserted that these retailers must start collecting Washington state sales tax (WSST) on their sales made to customers residing in Washington state if they owned inventory stored… CONTINUE
Buying or Selling a Small Business? Don’t Overlook Washington’s Iron Fisted Successor Liability
Many years ago we represented several local waste disposal businesses that were bought out by large national firms. The price was negotiated by the parties, and the contracts were largely written by national law firms and given to the seller and to me for review and comment. When we got to the question of Washington… CONTINUE
How Washington Revenue Imposes Sales Tax on Architectural and Design Services
Unlike the Federal income tax Washington’s tax system is not based on a uniform tax on net income derived from all sources: it is a gross receipts tax with rates dependent on what classification an activity fits into. Moreover, a business may perform several different activities which fall into different classifications, taxable at different rates,… CONTINUE
Washington “Zapper” Criminal Prosecution – Use of Zapper May Have Tipped off Auditors to Unreported Cash Sales
The Department of Revenue announced on its website on February 5, 2016, that the state had filed charges against the owner of Facing East, a Bellevue restaurant, alleging among other charges the use of sales suppression software to hide cash transactions, and “pocketing nearly $395,000 in sales tax collected from her patrons.” Revenue has for… CONTINUE
Washington State Seen as Prosecuting for Failure to Remit Smaller Amounts of Sales Tax.
We reprint in full below a report of a criminal conviction published on the Department of Revenue’s website. We do so because the amount of restitution ordered, some $41,000, indicates that the amount of sales tax collected but not remitted was fairly small (we have participated in audits where no criminal charge occurred even though literally… CONTINUE
2015 Washington Legislation Expands Nexus to Tax Out of State Wholesalers
Washington has a confusing set of tests for determining whether an out of state business must pay B & O tax to this state on sales of tangible personal property delivered here or for services rendered. First, a “physical presence” nexus standard has historically applied to businesses engaging in sales of tangible personal property either at… CONTINUE
INTEREST RATES for STATE EXCISE TAXES for CALENDAR YEAR 2015
Clients who are appealing a state tax audit to the Department of Revenue’s appeals division sometimes ask me whether they should pay the items in the audit report that they do not dispute. They reason that this will save interest and it may improve their position before the appeals division. Unless I am asked to… CONTINUE
What is Washington State’s Enhanced Voluntary Disclosure Program?
There has been talk recently about the Department of Revenue (DOR) “Enhancements” to its Voluntary Disclosure Program (hereafter referred to as “Program”). That talk suggests that something new is available to businesses wishing to avail themselves of the benefits of voluntary disclosure. In appropriate circumstances voluntary disclosure may well be beneficial, but the fact… CONTINUE
IRS 1099-K Increases Risk of Washington State Sales Tax Audit
In 2008 Congress enacted legislation requiring institutions processing credit cards for businesses that take cards in exchange for goods or services to give such businesses a IRS 1099-K form annually, and to furnish the IRS with a copy of the form. Section 6050W (which was added to the Internal Revenue Code by the Housing… CONTINUE
New Year’s Eve Court of Appeals Decision Roils Washington’s Nexus Waters
Washington law provides that for this State to assert B & O tax jurisdiction over an out of state business that makes wholesales into this State two things must occur: (1) the seller must have nexus with this State, and (2) the goods must be received by the buyer in this state. WAC 458-20-193(7). That there… CONTINUE