Starting July 1, 2008, Washington will implement a destination-based system for collection of sales taxes. This means that retailers will have to collect sales tax based on the destination, or location where the customer receives an item.

For physical retail stores, there will be no change, and there won’t be any change for installation or construction activities (which already use a destination-based system). The businesses most affected are mail-order or Internet retailers who ship sales to customers throughout WA state. Instead of using the sales tax rate for the retailer’s location, the sale will use the sales tax rate for the customer’s location. When reporting B&O/Sales tax to the state, you will have to report each location code in which a customer lived.

This may require significant changes in your bookkeeping and shopping cart systems. Washington’s Department of Revenue offers two online video demonstrations to help businesses understand and comply with the new laws: an Overview and Tools demonstration.

Categories: Tax News and Tips
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