Dear Clients,
We want to bring your attention to two important updates from the Washington State Department of Revenue that may affect your business operations later this year.
New Services Subject to Sales Tax – Effective October 1, 2025
Under Engrossed Substitute Senate Bill (ESSB) 5814, Washington State is expanding the definition of “retail sales.”
Starting October 1, 2025, the following services will be subject to retail sales tax:
- Information technology services
- Custom website development
- Investigation, security, and armored car services
- Temporary staffing
- Advertising services
- Live presentations
- Custom software and software customization
- Certain digital automated services (DAS)
Additional Guidance
The Department of Revenue will release more details in the coming months.
https://dor.wa.gov/taxes-rates/retail-sales-tax/services-newly-subject-retail-sales-tax
For now, you can review the Frequently Asked Questions on DOR’s website here:
If you provide or purchase any of these services, we recommend preparing now for the upcoming changes in how these transactions will be taxed.
Voluntary Disclosure Program for Investment Income – Now Available
Beginning July 1, 2025, a temporary Voluntary Disclosure Program is available under ESSB 5167 for businesses with unreported investment income subject to business and occupation (B&O) tax.
Key details include:
- Qualifying businesses MUST report this income where applicable looking back 5 years
- Investment income is deductible up to Safe Harbor limit of 5% gross receipts (as long as the primary purpose of the business is not investment income)
- Penalties still apply to collected but unremitted retail sales tax (reduced penalty and interest is completely waived)
- This is a limited-time opportunity to come into compliance
Please review whether your business may qualify for this program.
If you have questions about how either of these changes apply to your business, please don’t hesitate to reach out. Our team is available to assist and support you.
Sincerely,
Alisa Na CPAs & Advisors
