Economic nexus tutorial helps clarify interstate tax standard
OLYMPIA – October 27, 2010 – An online video tutorial by the Department of Revenue aims to help multi-state businesses determine if a new Washington State tax standard applies to their business. The short video is online here.
On June 1, 2010, new economic nexus standards took effect for businesses providing certain services to Washington customers, such as professional services or earning income from loan interest, fees and royalties.
The new standards mean certain out-of-state businesses such as banks will now be liable for business and occupation (B&O) taxes on income derived from customers in Washington. Conversely, Washington-based businesses that provide services to out-of-state customers may pay less B&O tax through apportionment.
Under the new economic nexus standards, a business does not necessarily have to have a physical presence in Washington to be subject to B&O tax. Washington joined more than 30 other states this year in enacting an economic nexus standard for certain business taxes.
The online video is divided into sections with information for businesses located both inside and outside of Washington. It covers information and resources on topics such as:
- Determining if a business has nexus with Washington.
- Calculating a business’s taxable income.
- Apportioning Washington State taxable income.
The Department also maintains a comprehensive economic nexus website at dor.wa.gov/economicnexus with links to rules, tax calculators, and frequently asked questions (FAQs).