Washington Updates Economic Nexus Requirements
The way of calculating economic nexus thresholds in the state of Washington is changing in 2020 as the state attempts to simplify the tax obligations on remote sellers by passing Substitute Senate Bill 5581 (SSB 5581).
Beginning Jan. 1, 2020, the total of all gross income earned by remote sellers from in-state transactions will be used to determine if economic nexus is created. Once cumulative gross receipts surpass $100,000 during the current or previous calendar year, remote sellers will be required to remit the state’s business and occupation (B&O) tax and retail sales tax.
Previously, the economic threshold was measured only using a remote seller’s total retail sales. Now, all income generated in Washington, including retail, wholesale, service and other sales transactions, plus other apportionable activities, count toward reaching the economic nexus sales threshold.
Washington Governor Jay Inslee signed SSB 5581 in March 2019. The legislation also eliminates other nexus requirements, including:
- The 200 or more transaction threshold requirement for economic nexus. Now, only the sales threshold qualifies out-of-state sellers for economic nexus (effective March 14, 2019)
- Click-through nexus and import commerce exemptions (effective March 14, 2019)
- Notice and reporting requirements (effective July 1, 2019)
Physical presence in the state will still create nexus, regardless of the sales amounts.
For a complete list of economic nexus requirements by state, download these nexus charts.
Visit the Cherry Bekaert website for more information about the impact economic nexus requirements has on manufacturers.