Seattle Sales Tax Attorney: How We Can Help With Your Washington State Sales Tax Issues 

Because Washington State doesn’t have an income tax, the state and its localities have to make up this revenue from somewhere else, with sales tax being the primary source of funding. If you operate a Washington-based business, you must figure out how and when to collect the sales tax and remit that money to the Washington State Department of Revenue (DOR).

Unfortunately, this isn’t always easy to do, as there are plenty of rules and exceptions on when to collect sales tax from your customers and clients. Things get even more complicated when you find out that in addition to a state sales tax, there’s almost always a local sales tax. But that’s not all. You’re also required to pay a tax for items purchased in other states where there is no sales tax. In this situation, what you’ll pay isn’t technically a sales tax, but a use tax.

All of this can feel overwhelming, as you’d probably rather work on your business, not worry about its tax obligations. But a failure to properly collect and remit the sales tax to the Washington State Department of Revenue (DOR) can lead to audits, penalties, and/or having your business license revoked. Luckily, Seattle Legal Services, PLLC has tax professionals that can help avoid these problems. In this guide, we’ll briefly outline the rules about sales tax, and then, we’ll explain how and when an attorney can help you.

An Overview of Washington’s Sales Tax Rules 

Sales tax in Washington State and most localities is based on where the customer buys the good or service subject to sales tax. But in cases where the goods are shipped, the rate is based on the delivery address, not the seller’s address.

The state-based rate is 6.5% although most counties and/or cities will have their own sales tax rate on top of that. For example, in Seattle, the local sales tax is 3.75%. So if you sold a product in Seattle subject to the sales tax worth $100, the total sales tax you’d have to collect would be $10.25 and you would remit that to the Washington State DOR.

If you’re curious about what your exact sales tax rate is for your location, you can use the Washington DOR’s Tax Rate Lookup tool.

Use Tax Rules in Washington 

For situations where you buy something subject to the sales tax, but make the purchase outside of Washington (and what you buy is for use in Washington), then you have to pay a use tax. The use tax is equal to the sales tax rate you’d have to pay if you bought the item or service in your local jurisdiction. 

For instance, if you’re a Seattle-based business that bought manufacturing equipment in a state with a 5% sales tax, then you’d pay a use tax of 5.25%. That’s the difference between the rate you paid and the effective rate where you’re using the goods.

Common Sales Tax Problems in WA State

The sales and use tax rules are fairly straightforward, but things can get more complicated in certain situations. Consider the following. 

Determining Economic Nexus

Deciding if you have a nexus with Washington State might be one of the most common sales tax questions that businesses have. Generally speaking, you’re deemed to have a nexus if you have a physical or economic presence in the state, or if you generate sales to Washington-based customers that exceed a certain threshold. As of 2024, this threshold is $100,000. 

To explain, imagine you have an online business based out of state, and you sell $20,000 in taxable goods to customers in Washington. Based on the current rules, you don’t have to collect sales tax from these customers. However, if you sold over $100,000 to customers in Washington state, you would need to register, collect, and remit sales tax to the WA DOR.

You may also have an economic presence with Washington even if your business is based in another state if you engage in certain business activities, like hiring a representative to solicit sales in the state, owning real or tangible personal property in the state, or having an employee that works in the state.

Registering for a State Sales Tax Account 

Another area that Washington businesses sometimes need help with is sales tax registration. Usually, you’ll do this by applying for and obtaining a business license, which you can do on the Washington DOR’s website. After you receive your business license, you’ll get a Unified Business Identifier (UBI) number, which you’ll use to file your sales tax return.

Filing Accurate and Timely Sales Tax Returns

This brings us to our third common sales tax issue faced by many Washington businesses: filing a sales tax return. But before you file your return, you’ll have to determine whether you’re a monthly, quarterly, or annual filer. Then once you figure this out, you get to complete the sales tax return, which isn’t the easiest tax form to fill out.

Determining Which Items Are Not Taxable 

Next up there’s figuring out what’s subject to the sales tax. Most sales to Washington customers will be subject to sale tax, although there are some major exceptions, such as:

• Food
• Newspapers
• Sales delivered to Indian Country
• Certain farm products
• Most personal and professional services
• Precious metals 

Note that for sales delivered to Indian Country, you must note the customer’s name and tribal affiliation or tribal identification information in your records, but you don’t need to send that info to the state. Just keep it in case you are audited.

Dealing With Sales Tax Audits

Finally, audits are another challenge when dealing with sales tax in Washington. If you are selected for an audit, you will need to provide the state with extensive records to back up the info on your sales tax returns. 

How a Seattle Washington Sales Tax Attorney Can Help 

Having a Seattle sales attorney can be a huge help in making sure your business’ sales tax obligations are being met. Even if you do the research yourself and think you’ve got it figured out, having a tax professional review your work and confirm your conclusions can go a long way to helping you sleep at night. 

Besides this reassurance, there are other instances of how a tax attorney with knowledge and experience with Washington sales tax can benefit your business:

• Audits: The Washington DOR regularly audits in-state businesses to make sure state excise taxes, such as sales and use taxes, are being reported and paid. A tax lawyer will not only help you get through the audit as efficiently as possible (without having to give more information than necessary), but help you resolve any concerns if discrepancies are found.
• Uncollected sales tax: Acting promptly once you realize you should have been collecting and remitting sales tax to the WA DOR can minimize the penalties your business could face. A tax attorney can help you go through your sales records to calculate how much sales tax you should’ve collected, and then help you file any delinquent returns. They can also help you apply for the Voluntary Disclosure Agreement (VDA) program.
• Tax settlements and negotiations: There may be situations where you owe the WA DOR additional money due to uncollected sales tax. If you can’t afford the unpaid sales tax bill, a tax lawyer may be able to help you set up a payment plan or settle your tax debt for less than what you owe with a Rule 100 settlement (offer in compromise). However, settlement for less is highly unlikely with WA DOR, and generally, they do require prompt payment. 
• Appealing a sales tax assessment: You can appeal any tax, penalty, or assessment from the WA DOR with a Rule 100 review. You’re not required to have an attorney help you with this review, but it’s strongly recommended.
• Legal defense: A Washington tax attorney can assist if your business ends up facing additional allegations or charges that go beyond forgetting to collect and remit sale tax, such as fraud. 

Washington State Sales Tax FAQs 

Do I need to collect sales tax for my online sales to Washington customers? 

Under current law, you would only need to collect and remit sales tax to the WA DOR if you have $100,000 in gross retail sales or 200 retail transactions in the state of Washington for the current or prior calendar year. 

Do I need to collect sales tax for out-of-state customers? 

No, you’re not required to collect Washington sales tax for your customers located outside the state. But you should check the laws in other states to figure out whether or not you need to collect and remit sales tax to the various states where you have customers. 

Can I negotiate a lower sales tax bill with the Washington Department of Revenue? 

Maybe, as a Washington offer in compromise (Rule 100 settlement) is possible. However, being unable to pay your delinquent sales tax assessment usually won’t be a sufficient reason for the DOR to accept your offer. Instead, Rule 100 settlements are normally applied if there’s a legal question as to the validity of the sales tax debt or if following the letter of WA law would lead to you facing unfairly harsh consequences. 

Are there local sales taxes my business also needs to collect? 

Probably, as many cities and counties in Washington State have set their own sales tax and business licensing requirements. If you’re not sure what these are, it’s a good idea to talk to a Washington sales tax attorney who can help you figure out your registration and sales tax responsibilities. 

Still Have Questions About Sales and Use Taxes in Washington? 

Whether you’re just trying to figure out what your sales tax requirements are, you’re being audited by the Washington DOR, or you’ve just realized you haven’t been collecting and remitting sales taxes, the Seattle Legal Services, PLLC can help. 

Our team of tax professionals, which includes John Georvasilis, a Seattle tax attorney with years of experience handling sales tax problems, can answer any questions you may have as well as spot any additional sales tax concerns. We offer free consultations which you can set up online or by calling 425-428-5262.