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The Ultimate Guide To Washington Sales Tax

Welcome to our handy guide on Washington sales tax. We'll walk you through everything you need to know, from the specific sales tax rates in different counties and cities across Washington to answering some of the most common questions. Plus, we'll guide you on how to efficiently collect and file your sales tax in Washington.

Sales Tax Rate

6.00%

Local Rate?

No

Website

Washington DC Office of Tax Revenue

Sales Threshold

$100,000

Tax Line

(202) 727-4829

Transactions Threshold

200

What is Nexus?

You'll need to collect sales tax in Washington if you have nexus there. There are two main ways that sellers can be tied to a state when it comes to nexus: physical, or economic.

Physical nexus means having enough tangible presence, or activity in a state to merit paying sales tax in that state.

Economic nexus means passing a states' economic threshold, for total revenue, or the number of transactions in that state.

Calculating Nexus in Washington

Physical Nexus

If you're doing business in Washington, DC, you'll need to collect sales tax from your customers there, but only if you have a significant connection, or nexus, in the District. Here's what might create a nexus for you in Washington, DC:
  • You have an office or store in the area.
  • You're keeping your products in a warehouse or distribution center in DC.
  • Your employees or representatives are in DC taking orders, providing services, or making sales.
  • You're selling, delivering, or providing tangible goods to customers in the District.

Economic Nexus

Good news for Amazon sellers: there aren't any Amazon fulfillment centers in Washington, DC, so you don't have to worry about creating a nexus from your inventory stored there.

In 2019, DC set up an economic nexus rule. This means if you're a remote seller with either $100,000 in sales or 200+ retail transactions in DC, you'll need to register to collect sales tax. Plus, there's a marketplace nexus rule for platforms facilitating these sales. So, if you're hitting these numbers, you'll need to get on board with collecting sales tax.
Did you know logo

In Washington DC, luxurious fur coat comes with a 6% 'Fur Tax' on items where fur value triples that of the other materials. Time to replace that fox with faux.

Sales Tax Registration in Washington

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Guide to collecting sales tax in Washington

Is Washington an Origin or Destination Sales Tax State?

In Washington DC, sales tax is added to shipping costs. Here's how it works: if the product you're selling is taxed, then the shipping fee gets taxed too. The same goes the other way around: no sales tax on the item means no tax on the shipping. Now, if you're sending a mix of items, some taxable and some not, the shipping fees for the whole package will be taxed.

What Sales are Subject to Sales Tax in Washington?

When you’re running a small business in Washington, DC, it’s pretty straightforward: most of what you sell, if it’s a tangible item, is going to be taxable.

But when it comes to services, it's a different story – most aren't taxable. However, there are a few exceptions, like data processing, information services, and any work done on real property.

Is Software as a Service (SaaS) Taxed in Washington?

SaaS, short for Software-as-a-Service, is all about those cloud-based software products that customers access online. Now, when it comes to categorizing SaaS, it sometimes wanders into the somewhat fuzzy territory of being a "digital service." In Washington DC, they do tax SaaS products, but it's a good idea to pop over to their website just to make sure that their definition aligns with what you're offering.

What is Exempt from Washingtonne Sales Tax?

Now, let's talk exemptions. Things like groceries, prescription drugs, a lot of non-prescription drugs, and medical devices – these are off the sales tax hook.

But here’s a heads-up: both off-the-shelf and custom software are taxable in DC, and it doesn't matter how you deliver it, electronically or on a physical medium. And if you’re shipping something that's taxable, then the shipping charge gets taxed too.
Did you know logo

Vending machine items are taxed at a whopping 10% in Washington DC, making that quick snack a bit pricier. To Twix or not to Twix; that is the question.

Steps for Filing a Washington Sales Tax Return

If you've got a small business and are planning to make taxable sales in Washington, DC, you'll need to get yourself a sales tax license first. It's part of staying on the right side of tax laws. Good news: you can do this online, and it won’t cost you anything to apply or register. Plus, once you have your license, there's no need to renew it. When you register, you'll be given a schedule for how often you need to file your sales tax returns. This is based on how much sales tax you think you’ll owe each month, and it can change if your sales go up or down over time.

Here's how it breaks down:
  • If you're averaging less than $200 per month in sales tax, you'll file and pay once a year.
  • If your average is between $200 and $1,200, you're looking at filing quarterly.
  • And if you're over $1,200 monthly, you'll need to file every month.
Filing your sales tax can be done easily online, or you can go old school and mail in a printed return if that’s more your style.

Sales Tax Due Dates in Washington, DC

Alright, let's talk about when to file your sales tax returns and what happens if you're a bit behind schedule. No matter how often you file, your returns and payments are due by the 20th of the month after the period you’re reporting on. For those who file annually, your due date is January 20th of the next year.

Here's a quick rundown of the monthly and quarterly due dates:
  • Monthly Filers:
    • January sales? File by February 20.
    • February sales? March 20 is your date.
    • Continue this pattern, and you'll always file by the 20th of the following month, with December sales due by January 20.
  • Quarterly Filers:
    • For Q1 (January to March), file by April 20.
    • Q2 (April to June) is due by July 20.
    • Q3 (July to September), you've got until October 20.
    • And for Q4 (October to December), January 20 is your deadline.
If the 20th falls on a weekend or holiday, don’t stress. You get until the next business day to file without any penalty.

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