Aug 2009: Linda Miller Baldwin - Nexus

Speaker Highlights

August 26, 2009

 

Nexus

Presented by

 

Linda Miller Baldwin

Washington State Department of Revenue

360-705-6649

 

 

Topics

1. WAC 458-20-193
2. WAC 458-20-194
3. Apportionment
4. Reseller’s Permits
5. Digital Products

 

 

1.      Rule 193 General Provisions

• Nexus is defined as the activity carried on by the seller in Washington that is significantly associated with the seller’s ability to establish or maintain a market for its products in Washington.
• A company doesn’t need a physical location in the state to be subject to Washington’s tax laws.
• For Washington Taxes to apply:

-        Seller must have nexus in state AND

-        Buyer must receive goods/services in state

 

2.      Rule 194 General Provisions

• Applies to businesses that perform services both within and outside the State of Washington
• Performing services within Washington establishes Nexus
• Nexus for Rule 194 is not the same as for Rule 193
• Minimum connection with Washington to tax activities
• Activities in the state by either employees or representatives
• Permanent office not required

 

3.      Rule 194 Apportionment

• Apportionment principles under Rule 194 do not apply to:

-        Financial Institution (Rule 14601)

-        Construction Services (Rule 170)

-        Public Utility (Rule 179)

-        Interstate Retailing, Wholesaling (Rule 193)

-        Professional Sports Teams (Rule 236)

 

4.      Reseller’s Permits

• Resale certificates eliminated as of 12-31-09

-        SSB 6173 (chapter X, Laws of 2009)

• Effective January 1, 2010

-        Purchases for resale made with “Seller’s Permit” issued by DOR

• DOR will rule on applications within 60 days
• Can apply for initial seller’s permit once DOR provides information
• Renewals
• 50% misuse penalty

 

5.      Digital Products

• Effective July 26, 2009, sales or use tax is due on digital products

-        Defines digital products as goods and services transferred electronically

-        Includes certain exemptions for business and end consumers

-        Requires sellers of digital products to electronically file their tax returns

• Retail sales tax for online digital products and services
• Exceptions

-        Telecommunications and internet access are not considered digital products.  Their tax treatment is not change by this bill.

• Exemptions include digital products purchased:

-        For resale

-        Ingredients or components of a new product

-        To be given away for free

-        For business purposes, if the digital product is standard information

 

DOR Services

Telephone assistance

1-800-647-7706

Personal and 24-hour automated services

Available Monday through Friday 8:00am – 5:00pm

 

Website

www.dor.wa.gov