TITLE: Washington Nexus Ruling: What Remote Sellers Must Know
A Washington appeal decision is a clear warning for international ecommerce sellers: having no physical presence in the state does not protect you from sales tax obligations once your sales cross its economic nexus threshold. Nor can you rely on the state to tell you when to register.
What the Board decided
On November 6, 2026, the Washington Board of Tax Appeals upheld a $27,113.18 assessment against an Oregon-based seller with no physical presence in Washington. The amount included tax, penalties, and interest.
The Board found that the seller established substantial nexus with Washington when its cumulative Washington gross receipts exceeded the $100,000 economic nexus threshold in 2020. The seller did not collect and remit retail sales tax until 2023.
The seller argued that the assessment was retroactive enforcement and that the Washington Department of Revenue should have notified it of its obligations. The Board rejected both arguments. It held that taxpayers are responsible for independently determining their filing and payment duties.
The decision was reported by Bloomberg Tax. The practical message for sellers in the UK, EU, Canada, and Australia is direct: do not wait for Washington to contact you before checking whether you have crossed the threshold.
Count all Washington income, not just direct online sales
Washington defines a remote seller as an out-of-state business making retail sales to Washington consumers without physical presence nexus in the state.
A remote seller must register to report business and occupation (B&O) tax. It must also collect retail sales tax if it has more than $100,000 in combined gross receipts sourced or attributed to Washington in the current or prior year.
The threshold is broader than sales through your own Shopify store. According to the Washington Department of Revenue’s remote seller guidance, you must include all Washington income, such as:
- Retail and wholesale sales
- Service and other business activities
- Direct sales through your own store
- Exempt sales
- Sales made through a marketplace facilitator, such as Amazon
This means marketplace sales can count toward your threshold even when the marketplace handles retail sales tax collection on facilitated transactions. Marketplace collection does not remove your own B&O registration and reporting responsibilities. Direct and other non-marketplace sales still need to be accounted for, and Washington says remote sellers meeting nexus criteria must report Washington-sourced sales on their excise tax return.
Apply the threshold date correctly
Crossing the threshold can create more than one compliance date. Washington’s timing depends on whether you met the threshold in the previous year.
If you did not meet the threshold in the previous year, you generally begin collecting retail sales tax on the first day of the month that starts at least 30 days after the date you crossed the threshold. B&O reporting begins from the date nexus is established.
The Department’s example illustrates the timing: an out-of-state seller that reaches $130,000 in current-year Washington sales on October 15 must report B&O from October 15 and begin collecting retail sales tax on December 1.
If you met the threshold in the previous year, you must report Washington income during the current period under the applicable tax classifications. Don’t assume a quieter sales period erases an obligation created by the prior year’s receipts.
Include delivery charges and budget for tax you did not collect
Washington sales tax is destination-sourced. The delivery location determines the applicable rate, and shipping and delivery charges are part of the selling price.
More importantly, the seller remains liable for the correct tax even if it did not collect the right amount from customers. If you discover a registration or collection gap, you may therefore need to fund tax due from business cash rather than assuming it can still be recovered from past customers.
Keep records that let you test your Washington exposure consistently:
- Reconcile sales by destination. Use order and delivery records to identify Washington transactions.
- Combine channels. Include direct-store, marketplace, exempt, wholesale, service, and other Washington receipts in your threshold review.
- Track the crossing date. Record when cumulative receipts pass $100,000 and whether the threshold was met in the previous year.
- Review tax collection and filings. Compare marketplace reports, payment processor data, sales records, and filed returns.
- Maintain a repeatable process. Reviewing activity regularly helps you spot a threshold crossing before missed collection periods accumulate.
This is where reliable ecommerce bookkeeping UK sellers maintain can support a US compliance process: accurate channel and location-level records help you test thresholds and reconcile filing data. A UK business selling into the United States may also work with an ecommerce accountant UK companies use to coordinate records across jurisdictions. These bookkeeping steps do not replace the need to confirm each state’s rules.
Understand the exposure if Washington finds you first
Washington’s standard Voluntary Disclosure Program (VDP) may offer qualifying unregistered businesses a more limited lookback and penalty relief. Under the program, the general lookback is four years plus the current year, the assessment penalty is waived, and statutory interest still applies.
There are important exceptions and deadlines. If the Department discovers an unregistered seller first, the seller may be liable for tax for the prior seven years plus the current year. Washington may assess collected-but-unremitted retail sales tax with no limit on how far back it can go, and penalties may reach 39% of the tax due, plus statutory interest.
The standard VDP remains open, but the temporary International Remote Seller VDP window that ran from February 1 to May 31, 2026, has closed. Do not treat that temporary program as currently available.
If you use the standard VDP, follow its process carefully. An anonymous application must disclose the business’s identity within 15 calendar days when requested. The signed agreement must be returned within 30 days. Missing these deadlines can extend the lookback and bring penalties back into play. Check the Washington DOR’s VDP FAQs for eligibility and current process details before applying.
Keep state sales tax separate from federal reporting
Washington sales tax is a state-level obligation. It is separate from federal information reporting.
A foreign-owned U.S. entity may have a federal Form 5472 filing obligation, generally with a pro forma Form 1120. The IRS states that the penalty for each failure to file a complete and correct Form 5472 is $25,000. A Washington sales tax case does not change that separate federal requirement.
Form 5472 penalties are not a substitute for resolving state sales tax issues.