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DOES YOUR COMPANY HAVE “NEXUS”IN

WASHINGTON STATE?

It is important to consider whether your company has what is known as “nexus” in the state of Washington.  States can collect sales and use tax only from businesses that have an actual presence in the state of the buyer’s residence.  This presence is known as nexus, and it is surprisingly easy to have in the state of Washington. 

In Washington State, every person who maintains a place of business in the state, maintains a stock of goods in the state, or engages in business activities within the state is considered to have nexus.  Engaging in business activities includes having independent contractors and employees making sales into Washington State, even if there is no inventory of goods or physical office located in the state. 

The nexus distinction is an important one because all entities considered to have nexus in Washington State are required to collect sales and use taxes when they sell tangible personal property at retail to their Washington based customers.  These entities also must pay a Business and Occupation (B&O) Tax based on a percentage of gross sales into Washington State.

It is entirely possible that your company has nexus in Washington State and doesn’t know it.  For example, your business may be located outside of Washington, but if it has an inventory of goods located in Washington and sales are made from that inventory to Washington based customers, your company has nexus in Washington State.  This is true whether the inventory is located in a warehouse that is owned or rented, or in a public warehouse that is not under your direct control.  This is only one example of the many situations that could result in Washington State nexus.

Varner, Sytsma & Herndon would be happy to examine any possible nexus exposure that you may have to assist your company in its compliance and help you avoid any unexpected tax obligations.