Destination Based Sales Tax

Twenty-two states, including Washington, have banded together to try to increase tax revenues by targeting internet sales. Unfortunately, their solution once again is to increase the burden on all businesses, and in particular, small businesses. In all my years of dealing with state laws and regulations, this one is very possibly the most insane one I have encountered.If you are one of the hundreds of affected businesses you will spend more time and money every month to comply with this new tax law, in addition, you will need to purchase expert services and products, to help you comply. Initially, Washington State will be lenient regarding your compliance, as long as you are trying, but they will access penalties for non-compliance in the near future. If you currently do not sell and deliver products to tax jurisdictions outside the one your business is located in, you are not affected by this law. If you do sell and deliver to any area outside of the tax jurisdiction where your business is based then things get a lot more complicated. There are over 300 jurisdictions in Washington State, so virtually every business that delivers products will be affected. For example, a repair service that supplies parts as part of their service will be affected. Instead of combining all of your sales into one category and tax rate as you do now, you are going to have to keep separate records for each sale you make in anyone of the 300 tax jurisdictions. You will have to match the address where your product was delivered to the corresponding tax jurisdiction. Then you will have to calculate the appropriate tax due by each jurisdiction’s tax rate, and remit the total to the Department of Revenue, along with the report detailing each sale.  This law will be a bookkeeping nightmare for the businesses affected. If you are one of the hundreds of businesses unlucky enough to have to comply with the new law, help is available.