Sales Tax Nexus in Washington: What Online Sellers Need to Know

The Short Answer

Washington is one of the more involved states for remote sellers — it has both a retail sales tax AND a Business & Occupation (B&O) tax on gross receipts. Both are triggered by the same $100,000 threshold. What makes Washington unique: even if a marketplace like Amazon collects sales tax on your behalf, you may still need to file a Washington excise tax return for B&O purposes. Marketplace-only sellers are not automatically off the hook.

Economic Nexus Threshold

• Dollar threshold: $100,000 in combined gross receipts attributed to Washington (current or prior calendar year)
• Transaction threshold: None
• Measurement period: Current or prior calendar year
• Effective date: January 1, 2020

The threshold applies to both the retail sales tax obligation and the B&O tax obligation.

Does Washington Count Marketplace Sales Toward Your Threshold?

Yes. Washington requires you to include all Washington sales in your threshold calculation — direct sales plus marketplace-facilitated sales (Amazon, Etsy, Shopify Payments, etc.).

Here's the critical nuance: even if the marketplace collects and remits the retail sales tax on facilitated sales, you as the seller may still need to file a Washington excise tax return to report and pay B&O tax on those same sales. Washington is unusual in that the marketplace handling sales tax does not eliminate the seller's B&O filing obligation.

In practice: file a Washington excise tax return that shows your gross Washington retail sales (all channels), claims a deduction for the portion where the marketplace collected the sales tax, and reports B&O tax on all gross receipts.

What Taxable Products Look Like in Washington

Washington's combined rates vary by locality, including in the Seattle area — check the Washington DOR's rate lookup for your buyer's exact combined rate.

• Clothing: Taxable in Washington
• Groceries/Food: Food and food ingredients for home consumption are exempt from Washington retail sales tax (RCW 82.08.0293). This is a clear, broad exemption.
• Prescription drugs: Exempt
• Digital goods and SaaS: Washington broadly taxes "digital automated services," which includes SaaS, cloud software, and streaming services. If you sell software subscriptions or digital products, they're taxable in Washington.
• B&O tax note: Washington's B&O tax applies to gross receipts regardless of profitability — you owe it even if you're not making money yet.

How to Register in Washington

Washington accepts SST registration via the SSTRS portal, or you can register directly:

• SST portal: sstregister.org
• State portal: dor.wa.gov/open-business/apply-business-license
• Cost: Free (standard registration)
• UBI Number: Upon registration you'll receive a Unified Business Identifier needed for filing

Filing Requirements

Washington assigns frequency based on your tax liability. File via My DOR at secure.dor.wa.gov.

On your return, you'll report:

1. Gross Washington retail sales (all channels) under Retailing B&O
2. Deduct "Gross Sales Collected by Facilitator" for marketplace-handled portion
3. Report local sales tax on direct sales by location
4. Pay B&O on full gross receipts

Due date: Last day of the month following the reporting period.

What Happens If You Don't Register

Washington's penalties apply to both the retail sales tax and B&O tax:

• Graduated late filing and late payment penalties
• Interest on unpaid amounts
• Washington has a voluntary disclosure program through the DOR

The B&O tax liability can be particularly significant because it applies on gross receipts — not profit. A seller with $150,000 in Washington gross receipts but thin margins still owes B&O tax on the full $150,000.

How Taxero Handles Washington

Washington's dual-tax obligation (sales tax + B&O) is one of the most commonly misunderstood compliance requirements in e-commerce. Many sellers think "marketplace handles it" and stop there — then get surprised by a B&O notice. Taxero tracks both obligations separately, files the correct Washington excise tax return that covers both, and ensures you're claiming the proper marketplace deduction so you're not paying sales tax on sales already remitted by Amazon or others. We watch both thresholds, not just the sales tax one.

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