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Tax Law

Washington determines that marketplace facilitator fulfillment centers can create physical presence for marketplace sellers

In Determination 18-0255, the Washington Department of Revenue determined that a marketplace seller established substantial nexus in Washington for business and occupation tax purposes by participating in the marketplace facilitator’s “digital reassignment” process.  This process allows the facilitator to ship to the marketplace seller’s customers a competitor’s equivalent product if the marketplace seller’s product is not available at a nearby fulfillment center, while also transferring back ownership of one unit of the marketplace seller’s product in another fulfillment center to that competitor to refill the competitor’s inventory.  The Department concluded that this digital reassignment process resulted in the marketplace seller owning inventory in Washington fulfillment centers at various points in time and establishing physical presence in state.