Reed Smith Client Alerts

Washington Governor Jay Inslee signed EHB 2163 July 7, imposing sales and use tax obligations on “remote sellers,” “referrers,” and “marketplace facilitators" beginning January 1, 2018. Businesses subject to the new law may elect to either collect sales or use tax on taxable retail sales, or comply with notice and reporting requirements, similar to the reporting regime that went into effect in Colorado July 1. The bill contains a multi-layered penalty regime. In Ohio, Governor John Kasich signed into law H.B. 49, the state’s biennial budget bill, which includes a provision imposing sales and use tax collection requirements on certain Internet sellers based on “cookie nexus.”
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Washington Marketplace Legislation

The State of Washington has enacted sweeping economic nexus legislation that requires almost any online retailer making sales to Washington customers to either (1) collect sales tax on its Washington sales; or (2) comply with reporting and notice requirements for its sales to Washington customers. The legislation creates a web of economic nexus rules that apply to both remote sellers and “marketplace facilitators,” through which sellers’ products are sold to Washington customers. 

The notice and reporting requirements for vendors and marketplace facilitators should be of particular concern to businesses making mail-order and online sales to Washington customers. Significantly, businesses that meet the statute’s very low economic nexus thresholds, but that choose not to collect tax on their sales to Washington customers, will be required to comply with the notice and reporting requirements, which carry substantial penalties for non-compliance.