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Washington State Tax Updates

For the Latest News and Updates on Washington State and Local Tax

March 29, 2021

WA DOR Issues Proposed Rule On Marketplace Facilitator Requirements

The State of Washington has imposed sales tax reporting and collection obligations on marketplace facilitators since October 1, 2018.  The Washington DOR recently issued a draft, proposed regulation explaining marketplace facilitators’ tax collection and reporting requirements.  It also includes guidance on sales information provided to marketplace sellers, liability relief, and audits.  A public hearing on the draft regulation is scheduled to be held virtually on April 28, 2021.  The DOR is also accepting written comments.  The intended date of adopting the proposed regulation is May 24, 2021.  See the draft proposed rule for additional details.

March 3, 2021

Update to Pandemic Relief Loans in Washington

The State of Washington is exempting the value of pandemic relief loans or grants received by businesses since February 29, 2020 from the business and occupation tax, public utility tax, and sales and use tax. Federal Paycheck Protection Program loans and Economic Injury Disaster Loans are among the types of assistance that qualify for the exemption if the loans are forgiven.

November 2020

The State of Washington Expands Voluntary Disclosure Program

The State of Washington has expanded their Voluntary Disclosure Program through November 30, 2020. Unregistered businesses that have not collected or remitted prior sales or use tax liabilities are encouraged to comply with Washington laws and voluntarily register to pay prior tax obligations and become compliant. The process requires a online application on the state department website.

To qualify for the full voluntary disclosure benefits businesses are required to meet all three of the following qualifications:

  1. Have never registered with the department or reported taxes
  2. Have not been contacted by the department for enforcement purposes such as audits, reporting, or compliance purposes
  3. Have not participated in evasion or misrepresentation in reporting tax liabilities

If a business is discovered through the departments normal investigation such as examination or audit procedures, the tax liabilities discovered can be subject to interest, penalties of 39% of the tax due, and a “look back” period of seven years plus the current year. Benefits to the voluntary disclosure program include up to 39% of potential penalties being waived, limited lookback period of four years, and summarized unreported liability in single tax assessment.

If you think your business may qualify or would like to discuss other options, please contact a member of Withum’s State and Local Tax Team.

July 2020

Washington State VDA Program is Temporarily Expanded

Washington State on a provisional basis has expanded the eligibly for its Voluntary Disclosure Agreement (VDA) program. The program is expanded to businesses whose most recent enforcement contact was prior to July 1, 2019. Further, the program is expanded for businesses that previously registered, as long it had closed its department registration account or was placed on “Active Non-Reporting” status prior to Jan. 1, 2020, including those that previously filed tax returns. This expanded eligibility is effective July 15 through November 30, 2020. Refer to the Department of Revenue’s guidance for additional details on the expanded program.

March 2020

Seattle’s Mayor Durkan Announces Provisions to Provide Immediate Relief for Those Impacted by COVID-19

To provide relief to small business owners and community stakeholders impacted by COVID-19, Mayor Durkan announced provisions to provide immediate relief. The provisions are as follows:

  1. Deferral of B&O Taxes: Effective immediately, the Department of Finance and Administrative Services (FAS) will defer business and occupation (B&O) tax collections for eligible business owners, allowing small business owners increased flexibility during a period of financial duress caused by the COVID-19 outbreak.
  2. Expansion of Small Business Stabilization Fund: OED is expanding its Small Business Stabilization Fund to support income-qualified microbusinesses.
  3. Assistance to Access SBA Loans: OED will provide direct technical assistance to local small businesses and nonprofits to ensure they can immediately access the Small Business Administration’s (SBA) federal loan program once it becomes available.
  4. Relief for Utility Payments: As announced earlier by Mayor Durkan, all SPU and SCL customers can set up deferred payment plans if their financial stability has been jeopardized by COVID-19.

New Small Business Recovery Task Force: The Mayor has appointed former Governor Gary Locke and former Council President Bruce Harrell to lead the COVID-19 Small Business Recovery Task Force, which will advise on long-term policy recommendations and provide technical assistance and outreach.

More on Taxes and the Coronavirus Pandemic.

Tax Penalty Relief Measures for Businesses Affected by Coronavirus

The Governor of Washington State announced that the Department of Revenue is implementing tax penalty relief measures for businesses affected by COVID-19. Emergency provisions have been put in place providing for a waiver of financial penalties, which a business may have incurred for filing their tax reports late or cannot pay their taxes on time due to the outbreak. Businesses can request an extension or penalty waiver by sending an email through their My DOR account or by calling the Department of Revenue’s customer service line. In addition, businesses can request to reschedule planned audits, extension of time to file a business license or registration renewal, or obtain an extension of an expiring resellers permit.

Disclaimer: Please note this is the information that is readily available at this time, it is subject to change so please consult your Withum tax advisor.

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