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The State of Washington is now among the states that have adopted a “click-through” presumption of nexus standard for certain sales by out-of-state retailers. According to the state department of revenue’s website, the presumption of nexus applies for both retailing retail sales tax purposes and business and occupation retail sales tax purposes. [See "New Presumption of Nexus for Click-Through Retail Transactions - Effective Sept. 1, 2015,", Department of Revenue, Washington State.]
According to the announcement, for both retailing and business and occupation retail sales tax purposes, an out-of-state retailer will be presumed to have physical nexus with the State of Washington if the retailer:
(1) enters into an agreement with a resident of the state and pays a commission or other consideration for referrals; and
(2) has more than $10,000 in gross sales in the state during the prior calendar year under such an agreement. The announcement provides that, a referral by a Washington resident, for purposes of the “click-through” presumption of nexus standard, includes “linking on a website”. [Id].
The announcement states that the definition of the term “Washington resident” “. . . includes, but is not limited to, business entities physical located in [Washington] and individuals maintaining a residence in [Washington].” [Id]. The announcement further states that “[i]n addition to online or other referral arrangements, an out-of-state retailer may engage in other activities in [Washington] through a resident or nonresident agent or other representative that establish[es] nexus with [Washington].” Businesses with nexus in the state must register and also collect sales taxes and pay business and occupation taxes. [Id].
As to rebutting the click-through presumption of nexus standard, the announcement explains:
“A business may rebut the presumption of click-through-nexus by showing that: (i) each in-state person with whom the remote seller has an agreement is prohibited from engaging in solicitation activities in [the State of Washington] that refer potential customers to the remote seller, and (ii) such in-state person or persons have complied with that prohibition.” [Id].
The announcement further explains that the presumption of click-through nexus “may also be rebutted by any other means as may be approved by the department.” [Id]. An out-of-state retailer unsure of its tax reporting and payment requirements can submit a written request to the Washington Department of Revenue for a tax ruling. The announcement also mentions the state’s Voluntary Disclosure Program for out-of-state retailers who believe that they should have been registered and making tax payments for prior periods. [Id].
For additional information on the nexus laws of the State of Washington and all 50 states, see the Lexis State Tax Guide on Digital Content & Cloud Services available in the LexisNexis® Store at LexisNexis® Store.